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Total Value Locked (TVL)

Total Value Locked (TVL) is a metric used in decentralized finance (DeFi) to measure the total value of assets that are currently being staked, loaned, or locked into a DeFi protocol or platform. TVL is a key indicator of the health and popularity of a DeFi platform, reflecting the amount of capital users have committed to smart contracts. Higher TVL indicates greater trust and liquidity in the platform.

Example

A DeFi lending platform has a TVL of $1 billion, meaning that users have locked $1 billion worth of assets into the platform’s smart contracts to earn interest or participate in other DeFi activities.

Key points

• Measures the total value of assets locked into a DeFi platform or protocol.

• Reflects the liquidity and trust in a platform.

• Used as a key metric for assessing the popularity and success of DeFi platforms.

Quick Answers to Curious Questions

It shows the level of trust, liquidity, and user participation in the platform, serving as a key metric for success.

Higher TVL attracts more users and liquidity providers, which can improve platform stability and encourage more participation.

If the platform faces security breaches or smart contract issues, the value locked in the system could be at risk, leading to potential losses for users.