TVL
Indicator measuring the total value locked in a DeFi protocol.
Beginner-friendly explanation
TVL shows how much money is deposited in a DeFi app. A higher TVL usually means more users trust the protocol.
Example:
A DeFi lending protocol like Aave shows a TVL of $5 billion.
Intermediate-level insight
TVL is calculated by adding up the dollar value of all assets (cryptocurrencies) locked in a platform’s smart contracts. It helps assess the size and economic health of a DeFi project.
Example:
Curve Finance attracts $7 billion TVL, split across multiple stablecoin pools.
Advanced perspective
TVL is a key but imperfect metric: it can be inflated by double-counting (yield farming), crypto price variations, or looped borrowing strategies. Advanced analysis uses net real TVL, TVL/market cap ratios, and cross-protocol evolution.
Example:
An analyst compares TVL growth across platforms to anticipate liquidity rotations within the DeFi ecosystem.
NFT DeFi Web3
TVL, Total Value Locked, DeFi, liquidity, DeFi protocol, smart contract, locked value, valuation, yield farming