What is TVL (Total Value Locked)?. TVL measures the value of assets deposited in a protocol. It signals usage and liquidity but can fluctuate with prices.
How it works
Trackers add up balances across contracts at current market prices. Sudden TVL changes can reflect incentives, not lasting adoption.
Why it matters
TVL helps compare scale across protocols, but context matters.
Common pitfalls
- Treating TVL as a safety score
- Ignoring that mercenary incentives can inflate TVL
- Comparing TVL across chains without FX adjustments
Quick example
A new rewards program doubles TVL for a month, then falls back once incentives end.
See also
- Yield Farming
- APY
- Liquidity
TL;DR: What is TVL (Total Value Locked)? defined in plain English with practical next steps.
Add comment
You must be logged in to post a comment.