What is TVL (total value locked)?

TVL stands for total value locked. It measures the monetary value of assets within a defined protocol or network scope. DeFi dashboards commonly display it in US dollars.

How is TVL calculated?

Example

The basic calculation multiplies each included asset’s quantity by its price, then adds the results. In a hypothetical example, 100 ETH at $2,000 per ETH is worth $200,000. If the price rises to $2,200 with no change in quantity, the value becomes $220,000. TVL has risen by $20,000, but new ETH deposits are zero.

The contracts, networks and components included in the calculation affect its scope. Counting receipt tokens that represent the same collateral again across different protocols can introduce double counting. Check the methodology before comparing two TVL figures.

What does high TVL fail to prove?

TVL is not protocol revenue, token market capitalisation or daily trading volume. On its own, it does not establish user numbers, immediate withdrawal availability or smart-contract safety.

Fee flows and token rights need separate examination when assessing project economics. Growth in TVL does not mean that someone holding the protocol’s token has earned the same percentage return.

The DeFiLlama review illustrates TVL filters and comparison limits when checking what a dashboard figure includes.