Total value locked, or TVL, is a figure used in decentralized finance to measure how much value users have deposited into a protocol. It adds up the assets locked in things like lending pools or liquidity pools, giving a rough sense of how much is being used within that application.
People often use TVL as a size indicator. A protocol with a high TVL is handling a large amount of deposited assets, which some take as a sign of activity or trust. It is a common way to compare the relative scale of different DeFi applications.
TVL has limits, though. It can rise or fall simply because asset prices change, and a high number does not by itself guarantee safety or quality. It is one data point among many, useful for context rather than as a judgement on its own.
Frequently Asked Questions
Does high TVL mean a protocol is safe?
Not necessarily. TVL shows how much value is deposited, which reflects scale and activity, but it does not by itself guarantee a protocol is secure or well-designed.
Why does TVL change even without new deposits?
Because it is measured in value, TVL can rise or fall simply as the prices of the deposited assets move, even if the amount of assets stays the same.
