TVL stands for Total Value Locked, a metric that shows the total amount of cryptocurrency funds that users have deposited into a protocol.
It measures user confidence and platform growth in the decentralized finance (DeFi) space.
Why TVL Matters
TVL tells us how much money people trust with a specific protocol. Higher TVL numbers often indicate:
- More user trust
- Greater platform security
- Increased protocol adoption
- Better potential for long-term success
How TVL Works
When I deposit my Bitcoin or Ethereum into a lending platform or staking pool, that value gets added to the protocol's TVL.
The same happens when you deposit your assets.
For example, if you deposit $1,000 worth of Ethereum into a lending protocol through a crypto exchange, that $1,000 gets counted in the protocol's TVL.
