Definition
Total Value Locked, commonly known as TVL, measures the total value of assets deposited in a decentralized finance protocol. TVL is often used to assess the size, popularity, and activity of a DeFi platform. A higher TVL generally indicates stronger user participation and greater liquidity, although it should not be the only metric used to evaluate a protocol.
Simple Explanation
TVL shows the total value of assets locked inside a DeFi platform.
Example
A DeFi lending protocol reports a TVL of $5 billion.
Why It Matters
TVL helps investors evaluate the scale and adoption of DeFi projects.
Frequently Asked Questions
What does TVL stand for?
Total Value Locked.
Why is TVL important?
It helps measure protocol adoption and liquidity.
Does higher TVL mean a better project?
Not always, but it is an important indicator.