GLOSSARY

TVL (total value locked)

TVL (total value locked) is the total US-dollar value of crypto assets deposited in a DeFi protocol or blockchain: the collateral, liquidity and staked funds its smart contracts hold. It is the standard proxy for how much capital a protocol has attracted and, loosely, how much users trust it with their funds.

How it is calculated

TVL sums every asset deposited in a protocol's contracts and multiplies by each asset's current US-dollar price. Because it is denominated in dollars, TVL moves both when users deposit or withdraw and when the price of the deposited assets changes. A rally can lift TVL with no new capital arriving.

TVL = Σ (deposited asset amount × current USD price) valuation check: market cap / TVL

Why it matters

TVL is the closest thing DeFi has to an assets-under-management figure. A protocol with deep TVL has more liquidity for swaps, more collateral backing loans, and more skin in the game. Growing TVL suggests inflows and confidence; rapidly draining TVL is often the first sign of lost trust or a better yield elsewhere.

How to read it

Compare market cap to TVL: a low mcap/TVL ratio can suggest a protocol is cheap relative to the capital it secures. Watch for mercenary TVL that arrives for token incentives and leaves when they end, and for double-counting where a staked asset is re-deposited elsewhere and inflates the total.

Common misreads

TVL is not revenue and not profit. A protocol can hold billions and earn little. It is inflated by the price of its own token when that token is a large share of deposits, and leverage or looping can count the same dollar several times. Treat TVL as traction, not value.

FAQ

What does TVL mean in crypto?

TVL, or total value locked, is the total dollar value of assets deposited in a DeFi protocol or blockchain — its liquidity, collateral and staked funds. It is the standard measure of how much capital a protocol has attracted.

Is a high TVL good?

Generally higher TVL means more liquidity and more trust, which is positive. But TVL can be inflated by rising token prices, incentive farming and double-counting, so it should be read as a proxy for traction, not as revenue or intrinsic value.

TVL vs market cap — what is the difference?

Market cap values a protocol's token; TVL values the assets deposited in the protocol. Comparing the two — the mcap/TVL ratio — is a rough gauge of whether the token is cheap or expensive relative to the capital it secures.

Can TVL be inflated?

Yes. TVL rises with the price of deposited assets even if no new capital arrives, incentive programs attract short-lived mercenary deposits, and leverage or re-staked assets can count the same dollar multiple times. Always check what is driving a TVL change.

How the desk uses it

The desk reads TVL in token units before dollars, because a dollar-denominated rise can be price alone. Works best with the top protocol's share and with the TVL chart: concentration turns a sector number into a single-venue risk. Used in TT by Cross-chain Flow.

Related terms

FDV RWA Stablecoin dominance All terms