TVL (Total Value Locked)
Definition
The total value of crypto assets deposited in a DeFi protocol, serving as the primary metric for measuring the size and adoption of decentralized finance platforms.
Total Value Locked is the most widely used metric for evaluating DeFi protocols. It represents the total dollar value of assets deposited by users into a protocol's smart contracts — whether for lending, liquidity provision, staking, or other purposes. A protocol with $5 billion TVL has that much user capital entrusted to it.
TVL serves as a proxy for trust, utility, and adoption. Higher TVL generally indicates that more users trust the protocol with their assets, the protocol provides enough value (yield, utility) to attract capital, and the smart contracts have been battle-tested with significant value at stake.
However, TVL can be misleading. The same dollar of capital can be counted multiple times across interconnected protocols (e.g., depositing ETH in Lido, then using the stETH in Aave, which counts toward both protocols' TVL). This "rehypothecation" inflates aggregate DeFi TVL numbers.
TVL fluctuates with crypto prices since it's denominated in USD. If ETH drops 20%, a protocol's TVL drops proportionally even if no users withdrew. This is why some analysts also look at TVL denominated in native tokens or adjust for price changes.
Major DeFi protocols by TVL include Lido (liquid staking), Aave (lending), MakerDAO (stablecoin), Uniswap (exchange), and Eigenlayer (restaking). Tracking TVL trends across protocols gives insight into where capital is flowing in the DeFi ecosystem and which use cases are gaining or losing traction.
Where this appears in Clarity
Clarity automatically tracks and calculates these concepts across your connected accounts.
Related Terms
Frequently Asked Questions
Is higher TVL always better?
Not necessarily. High TVL shows adoption but can also mean lower yields (more capital competing for the same returns). Some protocols inflate TVL through token incentives that are unsustainable. Look at TVL alongside revenue, fees, and yield to assess real value.
Where can I check a protocol's TVL?
DeFi Llama (defillama.com) is the most comprehensive TVL tracker, covering hundreds of protocols across dozens of chains. It shows TVL trends, chain breakdowns, and protocol rankings. CoinGecko and individual protocol dashboards also display TVL data.