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What is TVL in crypto? And why is it an important metric?

📊 Total Value Locked – the total value locked in DeFi protocols

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• What is TVL?

It stands for Total Value Locked
It means: the total assets locked within a DeFi protocol (deposited in smart contracts).

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• How is TVL calculated?

The value is gathered from:

The deposited assets for lending

The assets within profit strategies

The liquidity in the pools
Then the total value is converted to US dollars.

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• Why is TVL an important metric?

Measuring user confidence: Higher TVL = Higher confidence

Measuring the size of the protocol: TVL of a billion ≠ TVL of 5 million

A tool for token evaluation:
Example:
Market cap ÷ TVL = valuation ratio

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• Projects with high TVL

Lido (ETH staking)

AAVE (decentralized lending)

Uniswap (decentralized exchange)

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✅ Investor tip:

Do not rely solely on TVL

Make sure to:
• Is the value real or incentivized?
• Is the protocol secure and audited?
• Is the team transparent and is the plan clear?