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This crypto guide will go over the concept of TVL in crypto. TVL, or total value locked in crypto, is a metric of stored funds, usually on a decentralized project. The crypto TVL is a proxy for overall protocol activity, its reputation, and the presence of whales or other large-stage traders.
TVL Definition and Meaning
What TVL Represents in DeFi
TVL is a metric in decentralized finance (DeFi), which represents the total value of all coins, tokens, stablecoins, wrapped tokens and even NFTs locked in a smart contracts of a specific protocol. Those assets are locked for different functions, meaning they cannot be moved unless certain financial conditions are filled. The TVL in DeFi serves for lending, staking, and liquidity pools.
How TVL Became a Key Metric for Protocols
TVL in crypto became a key metric after DeFi protocols more or less started unifying their business model. The TVL metric helps contrast and compare the varying DeFi protocols and their structure.
TVL vs Market Cap – Key Differences
TVL differs from a protocol’s market cap. The market cap reflects the notional value of a protocol’s token. By contrast, TVL measures the total value of assets deposited to the protocol, based on their current value.
How Is TVL Calculated?
TVL in crypto is calculated based on the market value of all assets locked in a protocol’s smart contracts. The asset value is usually supplied by oracle services, which may differ for each crypto DeFi app.
TVL represents the total value of assets locked across all blockchains where the protocol has been deployed. Multi-chain protocols calculate the value of assets on each network.
Locked Assets Across Protocols
Protocols hold assets in DeFi smart contracts, for various tasks. Assets may be locked into liquidity vault contracts, lending contracts, decentralized trading pairs, liquid staking contracts, or other types of smart contracts. Protocols, also known as crypto dApps, then enact permissionless operations, such as trading, lending, granting passive yield or other rewards.
Price Impact on TVL (Fluctuations with ETH/BTC Value)
The TVL metric is one of the key gauges for investors to determine the strength of a protocol. The TVL in DeFi depends on the market value of assets. Since ETH and BTC are often fluctuating, TVL may rise rapidly during bull markets and shrink during bear markets. Stablecoins, when included in TVL calculations, make for a more reliable metric.
TVL in USD vs Native Tokens
TVL in DeFi apps measures the value of tokens, native chain assets like Ethereum and Solana, as well as stablecoins. The TVL is usually measured in US dollars, especially when the assets locked are stablecoins. Sometimes, the total value locked is measured in terms of the amount of native tokens locked, providing a glimpse of the percentage of the total supply deposited into the protocol.
Unlike the dollar value, which naturally fluctuates, the amount of native tokens is a constant and can give a realistic metric of growth.
TVL Across Chains (Ethereum, BSC, Solana, Avalanche, Arbitrum, etc.)
The total value locked (TVL) across entire chains is the sum of the value locked in each DeFi app. The value across chains gives a glimpse on what share of the native coins or tokens are locked, staked or fueling other dApps.
Why TVL Matters in DeFi
Indicator of Protocol Adoption and Liquidity
DeFi TVL is an indicator of the readiness of users to lock their assets. The metric is a proxy for protocol adoption, especially when data shows relatively small individual deposits, instead of institutional liquidity flowing in.
TVL is also an important metric for the available liquidity in protocols. For instance, a decentralized exchange (DEX) with a higher TVL suggests deeper liquidity pools and lower risk for some trading pairs.
Proxy for User Trust and Security
A protocol or DeFi app with higher TVL is also a metric of security and trust. A trend of long-term inflows, no significant setbacks in liquidity, may signal a reliable dApp that has become key to DeFi earnings.
Over time, TVL grows for the most successful protocols, both in dollar value, and in the number of tokens deposited. A higher TVL also means users are willing to lock their tokens and tap their value through lending, rather than sell on the open market.
Role in Yield Farming and Lending Protocols
Yield farming is one of the most common decentralized activities, which contains a dose of risk. In yield farming, users lock in their assets with a protocol, thus securing the main source of liquidity. In an exchange, they receive rewards in the form of a share of the fees, or another valuable token. TVL is one of the key metrics in yield farming, which offers a general glimpse of the protocol’s adoption, user trust, and growth potential.
Lending protocols also reveal their locked value to attract more users. In lending, locked value includes the collateral posted on loans. Higher TVL also includes the usual requirement for over-collateralization, to counteract volatile crypto prices.
Limitations of TVL as a Metric
TVL is widely used, but remains an imperfect metric. The final figure often conceals how liquidity is structured, fails to show what portion of TVL comes from whales, and does not distinguish between organic and synthetic liquidity. We will discuss the limitations of TVL as a crypto metric below.
TVL Doesn’t Equal Revenue or Profitability
TVL is not connected to the protocol’s revenues or profitability. The metric does not automatically translate into economic liveliness. Additionally, some protocols with immense staking or locking requirements in fact have very limited economic activity.
Vulnerable to Price Volatility
TVL may reflect the price volatility of underlying assets. For instance, ETH value locked has lost up to 50% of its value, though the amount of tokens locked remained the same. The nominal locked value may fluctuate significantly in the short term.
Possible TVL Manipulation Through Incentives or Wash Lending
A protocol or DeFi app with high or growing TVL is not necessarily sustainable. There are many reasons for non-organic TVL growth. The simplest one is incentives, such as point farming. Apps or protocols will issue points for users that lock in and hold liquidity, later swapping the points into a token airdrop. The initial locked value may quickly dissipate once the incentive is gone.
The other reason is wash lending, which uses the initial deposit to mint stablecoins, then buy more of the underlying asset and deposit that. In the case of a market downturn, the protocol may go through liquidations and lose value.
Short-Term vs Long-Term Sustainability
TVL in DeFi protocols can vary over time, depending on each protocol’s design. Some platforms discourage withdrawals, or place limits or long cooldown periods. Others allow users to freely lock or remove liquidity. For instance, during peak token trading-activity, liquidity on DEXs may increase, as there is more demand for swaps. The liquidity may be taken away if trading slows down, as some of the liquidity providers are large-scale entities, teams, or market makers.
TVL in Popular DeFi Protocols (2025)
MakerDAO
Maker DAO, rebranded to Sky Protocol, uses self-reported TVL. As of October 2025, the value was over $16B. The total value locked in the protocol includes the value of USDS and SKY tokens locked for passive income.
Aave
Aave is the leading lending protocol, accepting multiple assets as collateral. The value locked in Aave is based on the aggregated price of all assets locked. As of October 2025, the protocol holds upward of $43B. The TVL on Aave is higher than the aggregate value of loans, since all lending is over-collateralized.
The total value locked of Aave calculates the value in all vaults, on all chains where the protocol is represented.
Uniswap
Uniswap is also a multi-chain protocol, where the TVL is calculated based on the sum total of liquidity trading pairs. The total value locked of Uniswap takes into account the value of all assets in each pair. DEX TVL counts the number of tokens multiplied by the market price of the token, calculating for both assets in each liquidity pair.
Uniswap carries $5.63B in total value locked as of October 2025.
Curve Finance
Curve Finance also operates as a DEX, so its TVL is calculated as the sum of the prices of all assets in trading pairs, similar to the calculation for Uniswap. Curve Finance carries $2.32B in liquidity, a lower level compared to its peak performance during the 2021 bull market.
Lido (Staked ETH TVL Example)
Lido is the leading liquid staking protocol on Ethereum. Its TVL is calculated based on the value of ETH in its smart contracts. Lido requires ETH staking, so its smart contracts have a function to always report the amount of staked ETH. For a more intuitive value, the locked ETH is represented in US dollars.
Lido has $35.56B locked as of October 2025.
Tools to Track TVL
DeFiLlama
DeFiLlama is one of the easily accessible free tools to track TVL. It counts most tokens locked in a smart contract as TVL. The protocol does not double-count the tokens, and does not include liquid staking tokens in TVL for chains. The metrics of DeFiLlama may differ from self-reported values. DeFiLlama does not measure native staking and excludes some liquid staking tokens from double-counting.
DappRadar
DappRadar tracks the activity and user count of apps, similarly tracking all assets from known smart contracts. It also uses the Adjusted Value Locked metric, freezing the price of tokens for a specific period. DappRadar often uses the value of tokens at the start of a 90-day period, and the value may differ significantly due to market price fluctuations.
DefiPulse (historical influence)
DeFi Pulse focuses on the Ethereum ecosystem, accounting for the amount of tokens and their market value. The platform uses open-source on-chain data for the Ethereum chain, and evaluates all prices in US dollars.
The Future of TVL as a DeFi Metric
Beyond TVL – Revenue, Active Users, Protocol Fees
TVL has received criticism for disguising the real activity of protocols. To evaluate DeFi apps, mode metrics are needed in combination with TVL. Revenue is one measure reflecting real on-chain actions, incurring regular fees. The protocol fees for a period of time also give a glimpse on real demand and activity. The TVL must also be matched with active users, to make sure a protocol is not controlled by only a handful of whales.
TVL in Real-World Assets (RWAs)
Recently, the crypto space started tracking tokenized real-world assets (RWAs). At the end of September 2025, those assets broke above $30B in value locked. The total value locked of tokenized assets is based on the calculation of the token price. The sum of all tokens reflects the market value of underlying assets: treasuries, private credit, precious metals, stocks, or other assets.
TVL Across Layer 2 and Multi-Chain Ecosystems
With the expansion of decentralized apps (dApps), the calculation of TVL becomes more complex. Different methodologies track TVL to include or exclude bridges. However, the basic calculation remains similar for swapping, lending, or staking.
Layer 2 (L2) chains pose a specific challenge in accounting for bridged or wrapped ETH. One mistake to be made is to double-count the tokens as part of the Ethereum ecosystem, although they are active on another chain. The challenge is to measure real liquidity that is accrued and used, instead of passive staking.
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