💰 #TVL101: What does Total Value Locked mean in DeFi?
If you want to assess the strength of a DeFi protocol, TVL (Total Value Locked) is one of the key indicators to watch.
📌 What is TVL?
🔹 It is the total value (in USD) of all assets locked in a DeFi protocol
🔹 Represents the trust and adoption of users in that ecosystem
🔹 Includes tokens used for staking, liquidity, loans, and collateral
💡 Why does TVL matter?
🔸 The higher the TVL, the greater the liquidity and utility of a protocol
🔸 Increasing TVL = users are allocating more capital
🔸 Can indicate migration trends between blockchains (e.g., Ethereum → Arbitrum)
📊 Examples:
🔸 Uniswap, Curve, Aave, PancakeSwap
🔸 Ethereum still leads, but other networks like BNB Chain, Arbitrum, and Solana are growing fast
⚠️ Notes:
❌ High TVL does not guarantee security — check the history and audits
❌ Can be inflated by short-term incentives
✅ Use alongside other data like volume, users, and yield
➡️ TVL is like the bank balance of a protocol. But what really matters is what it does with it.
