Total Value Locked (TVL) measures the U.S. dollar value of all crypto assets deposited into a DeFi protocol or blockchain at a given moment, covering everything from lending pools and liquidity pools to staking contracts and yield vaults.

Analysts calculate TVL by identifying every smart contract tied to a protocol, reading the exact token balances held inside it, and multiplying those balances by current market prices. Summing the results across all of a protocol's contracts produces its TVL, and summing every protocol on a network produces that chain's total. Ethereum has held the largest share of DeFi TVL since the sector emerged, though rival networks such as Solana and various Ethereum layer-2s have captured a growing slice over time.

Because TVL moves with both new deposits and token prices, a rising number can reflect genuine fresh capital or simply an asset appreciating in value, not necessarily more real usage. Analysts also watch for double-counting: wrapped tokens, liquid staking derivatives, and restaking products can inflate the figure when the same underlying asset is tallied inside more than one contract. Tracking sites try to net these overlaps out, but methodology still varies between providers, so the reported TVL for the same protocol can differ depending on the source.

Despite these caveats, TVL remains the most widely cited proxy for a protocol's scale and liquidity depth, and it heavily influences where liquidity providers and yield-seeking users choose to allocate funds.