What Is Total Value Locked (TVL)?
Total value locked (TVL) is a metric that describes the value of the entirety of deposited assets within a decentralized finance (DeFi) protocol, called a dApp. TVL can describe a variety of different assets through the eyes of a smart contract, such as staking, lending, and liquidity pools.
Total value locked is a metric that fluctuates often depending on deposits and withdrawals on the protocol, this gives a good measurement of the health of the DeFi market.[1]CoinMarketCap – What Is Total Value Locked (TVL)? As TVL increases so do liquidity, popularity, and usability of the protocol as funds are deposited as collateral or liquidity in trading pools. On the other hand, as TVL decreases so do the correlated metrics.[2]CoinTelegraph – What is total value locked (TVL) in crypto and why does it matter?
The TVL of all DeFi protocols has grown exponentially over the past years. In June of 2019, the combined TVL of all protocols sat at around $480M whereas in June 2022 that number sits at $108B, dropping from $250B in December 2021, according to analytics platform DeFi Llama.
Different protocols can operate on different blockchains at the same time, but the most popular by far is Ethereum, currently with nearly 70% of the entire TVL.
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