Total Value Locked (TVL) refers to the combined value of all assets staked, deposited, or locked in a DeFi protocol. TVL is frequently utilized when evaluating the scale of capital deployed on DeFi platforms such as decentralized exchanges (DEXs), as well as lending and staking services.
For instance, a decentralized exchange where users have deposited $100 million of crypto assets has a TVL of about $100 million. The TVL will increase as more assets are deposited or if their market value increases while they are on the platform. In contrast, TVL will drop if assets leave the platform or their value decreases.
Even though a high TVL is often interpreted to indicate a well-managed platform, protocol, or service, that might not always be the case, as TVL is a variable metric that fluctuates depending on market movements and user activity.
