Library · Crypto, word by word · DeFi
What is TVL?
TVL (total value locked) is the total value of crypto deposited in a DeFi protocol, or in DeFi as a whole, measured in a currency such as dollars. It is commonly used to gauge how large a protocol is.
What it means for you
TVL rises and falls with token prices even when nobody deposits or withdraws. Methods differ between data providers, some figures rely on unverified self-reported data, and the same funds can be counted twice when reused across protocols. A large TVL does not mean deposits are protected.
A common mistake: “A higher TVL means a protocol is more secure.”
In fact: TVL measures how much is deposited at current prices, not whether the contracts are sound. Methods vary between data providers, and re-used tokens or self-reported data can inflate it.
How it works
A TVL figure adds up the value of the tokens deposited in a protocol's contracts, read from balance queries and priced in a currency. A BIS study of 939 protocols on Ethereum found no standard method: 68 alternatives to plain balance queries, about a tenth of protocols depending on external servers, frequent reliance on community self-reports, and standardized calculations matching published figures for only 46.5% of protocols. The ECB notes TVL can be overstated when the same tokens are re-used across protocols, such as a deposit receipt token deposited again elsewhere.
An example
Say a protocol holds 1,000 of a token priced at 10, so its TVL is 10,000. If the price halves and nobody withdraws, TVL becomes 5,000. If the receipt tokens for those deposits are deposited in a second protocol, a simple total across both can show 20,000.
Sources: BIS Working Paper 1268: Towards verifiability of total value locked (TVL) in DeFi, ECB Macroprudential Bulletin: Decentralised finance · checked 4 October 2026
Often confused with
On Cryptominium
Related words
Educational content, not financial advice. Written by hand and checked against the source named above. Something wrong? Tell us and we reply within two business days.