What is TVL?
Total Value Locked (TVL) measures the USD value of all assets currently deposited in a protocol's smart contracts. It is the most widely used proxy for protocol scale and user trust in DeFi.
How TVL is calculated
Aggregators sum each deposited token balance and multiply by its current USD price. This means TVL moves for two distinct reasons: capital flows (deposits/withdrawals) and price changes of the deposited assets themselves. A 10% TVL drop on a day where ETH dropped 10% is mostly mark-to-market — not user flight.
Reading TVL changes by timeframe
- 24h — dominated by price moves and short-term flows. Use for tactical alerts.
- 7d — smooths daily noise; a sustained 7d decline often signals real outflows.
- 30d — strategic view; useful for spotting structural growth or decline.
- 90d — quarterly trend; the cleanest signal for protocol momentum.
Common pitfalls
Double-counting (asset deposited as collateral in protocol A and re-borrowed into protocol B), token-emission inflation, and stablecoin de-pegs all distort TVL. Always cross-check large moves with fee and revenue trends before drawing conclusions.