TVL (Total Value Locked) measures the total value of cryptocurrency assets deposited in a DeFi protocol. It is a key metric for assessing the size and adoption of DeFi platforms.
What TVL indicates: Protocol adoption and trust, available liquidity for users, comparison metric between protocols, and ecosystem health.
TVL limitations: Can be inflated by token price increases, does not indicate actual usage, recursive deposits can inflate numbers, and different calculation methods exist.
Tracking TVL: DefiLlama is the leading TVL aggregator, tracking thousands of protocols across multiple chains with historical data and comparisons.