DeFi · Beginner

What is TVL (total value locked)?

DeFi's favorite headline number is also one of the easiest to misread. Here is what goes into it and what it leaves out.

By Protocol Insights editorial teamChecked against 3 sources5 min read

Rows of numbered safe deposit boxes in a bank vault — Photo: “Safe deposit boxes in the San Diego Courtyard Marriot” by bousinka, CC BY-SA 2.0, via flickr.com. Converted to black and white.

On this page

What does TVL measure?
How is TVL calculated?
Why does TVL rise and fall with crypto prices?
How can TVL count the same money twice?
How does TVL compare with other DeFi metrics?
What mistakes do people make when reading TVL?
Questions readers ask
Sources

The short version

Total value locked (TVL) is the dollar value of crypto-assets deposited in a DeFi protocol, blockchain or the whole DeFi ecosystem.
IOSCO describes it as tokens deposited multiplied by their market price, so TVL moves with token prices even when nobody deposits or withdraws.
The same tokens can be counted more than once when they pass through several protocols, which regulators say inflates totals.
IOSCO reports DeFi TVL peaked at about $180 billion in November 2021 and stood near $47 billion at the end of November 2023.
TVL measures size, not safety, profitability or how much the protocol is actually used.

TVL, or total value locked, is the dollar value of all crypto-assets deposited in a DeFi protocol or ecosystem. It multiplies the number of tokens deposited by their market price, so it rises and falls with crypto prices — and the same tokens can be counted more than once.

What does TVL measure?

Total value locked is DeFi's headline size figure. The Financial Stability Board defines it as the total dollar amount of assets deposited in DeFi protocols, and stresses what it is not: TVL is neither trading volume nor the market capitalization of crypto-assets, but the value of reserves locked in smart contracts.

You will see TVL quoted at three levels: for a single protocol such as a lending market or a decentralized exchange, for a whole blockchain, and for DeFi as a whole. It is useful for one job — comparing how much has been deposited, relative to something else — and IOSCO, the global body of securities regulators, notes it can be looked to in that relative sense.

How is TVL calculated?

IOSCO describes TVL as an industry-reported measure that multiplies the market value of each token by the number of those tokens deposited in a protocol, blockchain or ecosystem. In practice the calculation follows four steps:

Find the contracts. Identify the smart contracts that hold the protocol's deposits.
Read the balances. Count how many of each token those contracts hold.
Price each token. Multiply each balance by a current market price.
Add it up. Sum across tokens, then across protocols or chains for larger totals.

Each step involves choices. A 2025 BIS working paper found that TVL calculations are not standardized and sometimes rely on self-reported, off-chain data, which opens the door to manipulation. Its authors propose a "verifiable TVL" that uses only on-chain data and standard balance queries.

A conference table inside a vault lined with safe deposit boxes — Photo: “Safe deposit box room in the San Diego Courtyard Marriot” by bousinka, CC BY-SA 2.0, via flickr.com. Converted to black and white.

Why does TVL rise and fall with crypto prices?

Because price is half of the formula. IOSCO warns that TVL will change with the market value of the tokens it counts. A rising market lifts TVL even if no new money arrives; a falling market shrinks it even if every depositor stays put.

The swings can be large. IOSCO reports that DeFi's combined TVL reached about $180 billion in November 2021 and stood at about $47 billion at the end of November 2023 — roughly 26% of the peak. That fall reflects both lower token prices and money that left, and TVL on its own cannot tell you the split between the two.

How can TVL count the same money twice?

DeFi protocols can accept each other's tokens. A deposit receipt from one protocol can be posted as collateral in a second, and the money borrowed there can be deposited in a third. Each protocol reports the tokens it holds, so when the figures are added up, the same original money shows up several times. The FSB says reported TVL is prone to double counting, and IOSCO notes it may double-count tokens.

Figure — How one deposit can be counted in several protocols' TVL

How does TVL compare with other DeFi metrics?

TVL answers "how much is deposited?" It does not answer "how much is used?" or "is it safe?". Other measures fill some of the gaps.

Metric	What it tells you	What it misses
TVL	Dollar value of deposits at current prices	Activity, safety, double counting
Trading volume	How much is actually traded or borrowed	Whether deposits are sticky
Fees paid by users	Whether people pay to use the service	Costs, incentives paid out
Market cap of a protocol's token	What the market values the token at	Whether the token captures any of the fees

Concentration matters too. The FSB found that, as of 13 October 2022, the four largest DeFi applications held more than 75% of DeFi's TVL, and the same report put about 60% of DeFi TVL on Ethereum. A big total can depend on a handful of protocols.

A hand holding the lock mechanism of a safe deposit box — Photo: “Guts of my safe-deposit box lock, TD-Canada Trust, Bay and Bloor, Toronto, Canada 2.JPG” by gruntzooki, CC BY-SA 2.0, via flickr.com. Converted to black and white.

What mistakes do people make when reading TVL?

Treating TVL as a safety score. A large pool of deposits is also a large target; see the main risks of DeFi.
Treating TVL as revenue or profit. Deposits are not income for the protocol or its token holders.
Comparing figures from different trackers. The FSB notes reported TVL varies by source; methods for what to include differ.
Reading a rising TVL as new users. It may be a price rally, temporary reward programs, or the same money looped through several protocols.
Using TVL to value a token. Comparing TVL with a token's market cap ignores debt, double counting and whether token holders have any claim on fees.

Questions readers ask

Is a higher TVL better?

Not necessarily. A deeper pool can mean less price impact for traders, but TVL says nothing about code security, governance or whether the deposits are double-counted.

Why do different websites show different TVL for the same protocol?

They make different choices about which contracts and tokens to include, which prices to use and how to treat tokens counted elsewhere. The FSB notes that reported TVL varies by source.

Does TVL include borrowed money?

It depends on the tracker. Borrowed tokens that are re-deposited elsewhere can end up counted again, which is one source of double counting.

What was DeFi's TVL at its peak?

IOSCO reports a reported all-time high of about $180 billion in November 2021. Figures change daily with prices, so check the date of any number you see.

Bottom line

TVL is a quick way to see how much money sits in DeFi contracts, but it mixes deposits with price moves and can count the same tokens more than once. Use it to compare relative size, and pair it with activity, fees and a look at the protocol's risks before drawing any conclusion.

Sources

International Organization of Securities Commissions (IOSCO), Final Report with Policy Recommendations for Decentralized Finance (DeFi) (2023)Primary source
Financial Stability Board, The Financial Stability Risks of Decentralised Finance (2023)Primary source
Bank for International Settlements, Towards verifiability of total value locked (TVL) in decentralized finance (Working Paper 1268) (2025)

Educational content only — not financial, investment, legal or tax advice. Crypto-assets are high-risk and you could lose all the money you put in. Rules differ by country; check with your national regulator. See our risk disclosure and editorial policy.