TVL (Total Value Locked)
Total value locked, or TVL, is the combined value of crypto assets deposited in a decentralized finance (DeFi) protocol or on a blockchain, usually measured in US dollars. It is the most common way to compare the size of DeFi projects.
What counts as locked
TVL adds up the assets users have placed into a protocol's smart contracts: tokens in liquidity pools, collateral deposited in lending markets, coins staked through liquid staking protocols and similar deposits. The figure is usually updated continuously by reading balances on-chain and multiplying them by current market prices.
Despite the word locked, most of these funds can be withdrawn at any time. Locked simply means deposited in the protocol's contracts.
Why TVL rises and falls
TVL changes for two reasons: users deposit or withdraw, and the prices of deposited assets move. Say a protocol holds 10,000 ETH. If ETH rises from 2,000 to 3,000 dollars, TVL grows from 20 to 30 million dollars without a single new deposit. Comparing TVL in units of tokens, or alongside price charts, helps separate real growth from price effects.
What TVL tells you and what it does not
TVL is a reasonable measure of how much capital a protocol attracts and how deep its pools are. It is not a measure of safety or trustworthiness. Several protocols with large TVL have been hacked or collapsed; the Terra ecosystem held tens of billions of dollars before it collapsed in May 2022.
TVL can also be inflated. The same asset can be counted more than once when it moves through several protocols, for example a staked token used as collateral to borrow another token, which is then deposited elsewhere. Temporary reward programmes can attract deposits that leave as soon as incentives end.
Using TVL sensibly
Look at how TVL develops over time, how concentrated it is among a few large depositors, and how it compares with fees or revenue the protocol actually generates. Pair it with research on audits, governance and how the protocol has handled problems in the past.
Ask Coach about it
Coach is the AI on AtenaCrypto. It explains crypto with live market data, in plain words.
Which metrics besides TVL should I look at to judge the health of a DeFi protocol?Ask Coach →
Frequently asked questions
Does high TVL mean a DeFi protocol is safe?
No. High TVL shows that many people deposited funds, but it says nothing about code quality or design risk. Protocols with large TVL have been exploited.
Can I withdraw funds that are locked in TVL?
Usually yes. Most deposits can be withdrawn at any time, although some staking, vesting or fixed-term products have waiting periods.
Why does TVL fall when the market drops?
TVL is measured in dollars, so when the prices of deposited tokens fall, TVL falls too, even if no one withdraws.
Related terms
Learn it step by step
AC Learning explains these ideas in interactive lessons — the first eight sections are free.
Open AC Learning → Create a free accountAll glossary terms · Educational reference only — not investment, legal, tax or financial advice.