TVL (Total Value Locked)
In DeFi (Decentralized Finance)
Plain English
The total dollar value of all assets deposited in a DeFi protocol. Like measuring bank deposits. Higher TVL generally means more trust and liquidity. If a DEX has $1B TVL, users have deposited $1B worth of crypto into its pools and contracts.
Technical
Aggregate value of assets deposited in DeFi protocol smart contracts. Key metric for protocol adoption, liquidity depth, and security (more at stake). Calculated by: (token quantity × price) summed across all pools/vaults. Limitations: doesn’t account for leveraged positions, can be manipulated via recursive depositing, fluctuates with price movements independent of user action.