TVL, short for total value locked, is an estimate of what the assets sitting in a DeFi protocol's smart contracts are worth, usually expressed in US dollars. It is a snapshot of a balance, taken at one moment and priced at that moment's token prices.
The word "locked" is misleading. In most lending markets and liquidity pools, depositors can withdraw whenever the contract allows it, so TVL doesn't describe money that is frozen. It doesn't describe money that is safe either. What it does describe, and what it leaves out, depends on who calculates it. Most of the examples below use DefiLlama, because its methodology is public and detailed.
What does DeFi TVL measure?
Deposits and contract balances
Picture a decentralized exchange where users add token pairs to a liquidity pool, or a lending market where they deposit coins that others can borrow against collateral. The tokens held by those contracts are the raw material of TVL. Add up their dollar value and you have the protocol's figure.
DefiLlama's own definition is short: for a protocol, TVL is the value of all coins held in its smart contracts (DefiLlama: Data Definitions). Treat that as one provider's methodology rather than an industry standard, since other dashboards draw their lines elsewhere.
TVL is a stock, not a flow. It tells you how much value sits in the contracts. It doesn't tell you how much came in this week, how much was traded, or whether the protocol earned anything. DefiLlama tracks fees, revenue, trading volume and yields as separate metrics next to TVL (DefiLlama: All Metrics We Track), which is a good hint that one number can't stand in for the others. How pools and yields work in practice is covered in the DeFi yield farming guide.
Protocol TVL versus chain TVL
The same word is used at two levels. Protocol TVL belongs to a single application. Chain TVL, in DefiLlama's definition, is the sum of the TVL of the protocols running on that chain. It isn't the value of every token that exists there.
That difference matters for what's excluded. DefiLlama never counts native staking, such as ETH staked to secure Ethereum, as chain TVL, and it doesn't attribute bridge TVL to any chain. Its argument is that staked native tokens would dwarf the DeFi activity the figure is meant to track and turn chain TVL into a proxy for the token's market cap. Another provider may decide differently, so check the scope before you put two chain figures side by side.
How does a deposit become a USD number?
Balance times price
DefiLlama collects TVL with small pieces of code called adapters. According to its developer docs, an adapter returns the balances of assets locked in a protocol at a given timestamp, and the SDK then converts those raw balances into US dollars and adds them up (DefiLlama: How to write an SDK adapter).
So every TVL figure has two inputs: how many tokens are deposited and what each token is worth. A hypothetical example shows why that matters. A pool holds 10 units of a token priced at 100 USD, so its TVL is 1,000 USD. Nobody deposits or withdraws anything, but the token's price falls to 80 USD. The pool's TVL is now 800 USD, a 20% drop, without a single unit leaving the contract.
The reverse works the same way. A rising token price can lift TVL while the number of depositors stays flat or even shrinks. A chart on its own doesn't tell you which of the two inputs moved. DefiLlama publishes a separate metric for that, USD inflows, which values each day's change in token balances at the asset's price, so price moves drop out (DefiLlama: USD Inflows).
Timing, prices and coverage
Because TVL is a snapshot, the time it was taken is part of the number. DefiLlama states that its TVL data updates hourly (DefiLlama: FAQ); other sites may refresh more or less often. The price source matters as well, especially for thinly traded tokens, where two price feeds can disagree.
Coverage is the third variable. A protocol only shows up in a provider's totals if someone has written code to read its contracts, and each adapter decides which contracts and which assets count. Two dashboards can report different TVL for the same protocol without either making an error. They are measuring slightly different things.
How can the same capital appear twice?
A receipt-token example
Many DeFi deposits hand you something back. A lending market may issue a receipt token that represents your deposit plus accrued interest. A liquidity pool issues LP tokens that represent your share of the pool. These tokens can usually be moved and deposited somewhere else, and that's where counting gets tricky.
Take a hypothetical sequence. You deposit coins worth 1,000 USD into lending market A and receive receipt tokens worth 1,000 USD. You then deposit those receipt tokens into vault B. Market A reports 1,000 USD of TVL, because the original coins are still in its contracts. Vault B also reports 1,000 USD, because it holds the receipt tokens. Add the two protocol figures and you get 2,000 USD.
No new money was created in this sequence. The receipt token is a claim on the deposit in market A. The extra 1,000 USD exists only in the arithmetic, because the same underlying capital appears in two places when protocol numbers are summed without adjustment.
How DefiLlama handles it
DefiLlama addresses this in its aggregates. When receipt or LP tokens from one protocol are deposited into another, the second protocol is flagged as double-counted, so the same capital isn't summed twice into chain and global TVL (DefiLlama: Data Definitions). Its website has a toggle called "doublecount" that lets users include or exclude such positions (DefiLlama: FAQ).
Borrowing gets similar treatment. Coins borrowed from a lending protocol don't count toward its TVL, partly so that a loop of depositing, borrowing and re-depositing the same coins can't inflate the figure. Borrows appear as a separate metric instead. None of this means TVL figures are wrong. It means a total is only as clean as its rules for overlap, and when you add up numbers from different sources yourself, those rules no longer apply.
What is left out of core TVL?
DefiLlama keeps several kinds of value out of its default TVL and shows them as optional categories instead (DefiLlama: What to include as TVL):
- Staking: a protocol's own governance tokens staked in its staking contracts.
- Pool2: staked LP tokens where one side of the pair is the protocol's own token.
- Borrows: funds borrowed from the platform.
- Vesting: tokens that aren't circulating or haven't been issued yet.
- Offers: funds approved for spending on a non-custodial platform but never actually deposited.
A team can mint its own token at little cost, so a pile of that token in its own contracts doesn't show that outside capital trusts the protocol. On top of that, DefiLlama states it removes what it calls unproductive or artificial liquidity, such as deposits made only to farm rewards or inflate the metric.
These rules are DefiLlama's. A site that includes governance-token staking will show a higher figure for the same protocol, and neither number is the "real" one without the methodology attached.
What does TVL not prove?
Not a safety or yield score
A large TVL is not an audit. It says nothing reliable about whether the contracts are free of bugs, whether the protocol could pay out every depositor at once, or whether withdrawals would go through smoothly under stress. Concentration is another blind spot. A big figure can rest on a handful of large wallets, and DefiLlama notes that the artificial positions it filters out often come from exactly that kind of small group.
TVL isn't a return either. A protocol can hold a lot of value and earn very little, or the reverse, which is why fees and yields are tracked separately. A rising TVL also doesn't prove new users arrived; the deposited tokens may simply have gotten more expensive. Smart-contract risk, price risk, liquidity risk and data risk all remain, whatever the headline figure says.
TVL is not market cap
The two get compared often, and they measure different things. A token's market cap is its circulating supply multiplied by its price. TVL is the value of assets deposited in a protocol, counted according to a provider's rules. A protocol's TVL usually consists of many tokens that have nothing to do with its own token. The guide to market cap, FDV and tokenomics explains the market cap side.
Where CoinVett fits
This guide explains TVL using DefiLlama's published methodology, and its example figures are hypothetical. On CoinVett, a TVL figure can appear in the AI analysis on some coin pages, for example those of DeFi protocols. The data sources behind the analysis and the date it was generated are listed right below it. Read that figure like any other TVL number: it follows its source's method and date, so it can differ from DefiLlama's. CoinVett's other learning pages cover the surrounding ground. The introduction to DeFi explains lending, exchanges and smart contracts from the start. The guide to crypto categories explains what a DeFi label on a coin means, which is a classification of the coin, not a measure of deposits.
Before comparing two TVL figures, put three things next to each number: whose methodology produced it, at what time and prices it was valued, and which contracts and categories it covers. If those don't match, the gap between the figures may say more about the rules than about the protocols.
Notice: All figures in the examples are hypothetical; the sources are linked in the text. For information only, not financial advice.
Frequently asked questions
Can TVL rise without new deposits?
Yes. TVL is the token balance multiplied by the token price, so if the price rises while the balance stays the same, the reported value goes up. A higher TVL therefore doesn't prove that new money or new users arrived.
Does DefiLlama count the same LP tokens twice?
When receipt or LP tokens from one protocol are deposited into another, the underlying value can appear in both protocols' figures. DefiLlama flags the second protocol as double-counted and leaves it out of chain and global totals by default, and its doublecount toggle lets users change that view. Individual protocol figures aren't wrong because of this; the question is how they are added up.
Is a higher TVL safer or more profitable?
No. TVL measures how much value sits in a protocol's contracts at one moment. It says nothing reliable about contract risk, whether withdrawals would work under stress, what the protocol earns or where any token price is heading.