TVL explained: how one of the key metrics in DeFi works

What is TVL (Total Value Locked)?

According to DeFi Llama, the combined TVL of all crypto protocols in the DeFi market exceeds $91 billion. Over the past quarter alone, TVL has increased by more than a third amid an overall positive trend in the cryptocurrency market.

However, an increase in DeFi TVL may result not only from new inflows but also from an appreciation in the value of cryptocurrencies already deposited in protocols. Therefore, to properly assess the state of the market, it is important to understand how TVL in crypto is calculated, what drives its fluctuations, and how it differs from the market capitalization of digital assets.

What is TVL (Total Value Locked) in cryptocurrency?

With the growing adoption of DeFi applications, crypto investors have gained the ability to deposit their digital assets into specialized liquidity pools — shared pools of cryptocurrencies used to facilitate financial transactions within DeFi applications.

To measure the value of cryptocurrencies held in liquidity pools, a dedicated metric called TVL (Total Value Locked) was introduced.

TVL (Total Value Locked) is a metric that represents the total value of cryptocurrencies locked in the smart contracts of a particular DeFi protocol, blockchain, or group of applications.

TVL in crypto is tracked through analytics platforms such as DeFi Llama, CoinMarketCap, and CoinGecko. This metric makes it possible to assess the value of locked assets at different levels, from the entire DeFi market to individual protocols:

Total DeFi TVL — the combined value of assets locked across all decentralized protocols in the cryptocurrency market;
TVL by crypto market segment, including decentralized exchanges, lending platforms, RWA* protocols, and liquid staking* protocols;
TVL of individual DeFi protocols.

* RWA (Real World Assets) refers to real-world assets such as real estate, gold, bonds, and other financial instruments represented on a blockchain as digital tokens. These tokens may represent ownership rights to an underlying asset, a share of that asset, or related financial claims.

* Liquid Staking is a method of participating in cryptocurrency staking in which users deposit their coins through a specialized protocol and receive liquid tokens representing their share of the staked assets. These tokens can be used in other DeFi applications, such as lending or liquidity provision, while users continue earning staking rewards on the underlying cryptocurrency.

In the second quarter of 2020, the combined TVL of all existing DeFi protocols was still below $1 billion. In the following years, the market expanded rapidly, reaching an all-time high of approximately $178 billion in November 2021. A significant decline followed. As of October 2026, the total crypto TVL stands at approximately $90–95 billion, nearly half its historical peak.

How does TVL in crypto differ from the market capitalization of digital assets?

Cryptocurrency market capitalization is the total market value of all coins or tokens of a particular cryptocurrency currently in circulation. It is calculated by multiplying the current price of a coin or token by its circulating supply. This is how the market capitalization of Bitcoin (BTC), Ethereum (ETH), Tether (USDT), and other cryptocurrencies is determined.

Unlike market capitalization, TVL in DeFi measures the total value of cryptocurrencies deposited in the smart contracts of DeFi protocols. A single protocol may hold dozens or even hundreds of different cryptocurrencies, while the same cryptocurrency may be used across multiple protocols at the same time. Therefore, TVL does not represent the total market value of a cryptocurrency but rather the value of assets deposited in a particular protocol or across the entire DeFi ecosystem.

In other words, TVL in crypto can be viewed as a form of capitalization for a protocol or the decentralized finance market. However, TVL does not account for other protocol metrics, such as revenue or the protocol's own reserves.

While investors use market capitalization to evaluate individual digital assets, TVL in DeFi allows them to track the performance and development of individual decentralized protocols, cryptocurrency market segments, blockchain networks, or the DeFi market as a whole.

Thus, TVL (Total Value Locked) indicates investor confidence in specific crypto projects and the level of interest they attract.

How is TVL (Total Value Locked) calculated?

TVL in crypto represents the total value of all cryptocurrencies locked in the smart contracts of a decentralized protocol. The calculation of TVL may include:

Bitcoin and altcoins, including stablecoins;
Wrapped tokens*;
LP tokens*;
Staked assets and LST tokens*.

* Wrapped tokens are digital tokens that represent other cryptocurrencies on a particular blockchain network. Their value is typically pegged to the underlying asset at a 1:1 ratio, and their issuance is backed by corresponding reserves or another mechanism that locks the original assets. For example, Wrapped Bitcoin (WBTC) allows Bitcoin to be used on the Ethereum network.

* LP Tokens (Liquidity Provider Tokens) are special tokens issued by certain DeFi protocols to users who provide cryptocurrencies to liquidity pools. They represent a user's share of a pool and entitle the holder to withdraw the corresponding portion of assets when removing liquidity.

* LST Tokens (Liquid Staking Tokens) are liquid tokens issued by liquid staking protocols in exchange for cryptocurrencies deposited by users into staking. They represent claims on the corresponding staked assets and their associated rewards.

When calculating crypto TVL, crypto assets associated with a protocol but not held in its pools are excluded. For example, TVL does not include assets borrowed through lending protocols, whereas collateral deposited to secure those loans is included because it is locked in a smart contract.

For instance, if a protocol holds 10 WBTC at $80,000 each, 100 ETH at $2,500 each, and 500,000 USDT, its TVL would amount to $1,550,000.

TVL in cryptocurrency is a dynamic metric directly influenced by crypto asset prices. Thus, if the prices of BTC and ETH in the example above decline by $20,000 and $500, respectively, the protocol's TVL would decrease by $250,000 to $1,300,000.

What is the TVL of leading DeFi protocols and popular crypto market segments?

As of October 2026, cross-chain bridges (bridges)* are the leading segment of the DeFi market, with a combined TVL exceeding $59 billion. Liquid staking and lending follow, with TVL figures of $56.7 billion and $52.9 billion, respectively.

* Cross-chain bridges (bridges) are protocols that enable the transfer of digital assets or messages between different blockchain networks. For example, a bridge allows users to transfer the value of their tokens from Ethereum to another network. Depending on the technology used, a bridge may lock the original assets and issue their representation on another network or facilitate transfers through liquidity pools.

Rounding out the top five segments by crypto TVL are staking pools and decentralized exchanges (DEXs), with $14.9 billion and $14.2 billion, respectively.

Meanwhile, the fastest-growing segments by TVL in crypto over the past month were:

Oracles*, with growth exceeding 1,900,000%;
Treasury Managers*, up 322,000%;
Options*, up 299%.

* Oracles are services that provide smart contracts with external data that is not directly available on the blockchain they operate on. For example, oracles supply information about cryptocurrency market prices, interest rates, or event outcomes. DeFi protocols use this information to calculate collateral values, execute liquidations, and perform other automated financial operations.

* Treasury Managers are DeFi protocols and tools designed to manage the cryptocurrency reserves of projects, organizations, or decentralized autonomous organizations (DAOs).

* Options are derivative financial instruments that give buyers the right, but not the obligation, to buy or sell a particular asset at a predetermined price on or before a specified date.

Beyond individual DeFi protocols, crypto TVL helps show how locked assets are distributed across blockchain networks.

More than half of all locked assets are concentrated on the Ethereum network, which accounts for over 55% of total TVL. Ethereum is followed by Solana (6.7%), Base (6.7%), TRON (6.2%), and BNB Chain (6%).

The ten largest protocols by TVL are:

Lido, a liquid staking platform — $24.2 billion;
Aave, a lending protocol — $18.39 billion;
Morpho, a lending protocol — $11.4 billion;
Binance Staked ETH, a liquid staking platform — $9.3 billion;
JustLend, a lending protocol — $7 billion;
Spark, a multichain aggregator — $6.8 billion;
EigenCloud, an AI agent platform — $6.5 billion;
Sky, a decentralized protocol — $6.1 billion;
Ethena, a platform for issuing synthetic assets* — $5.2 billion;
Ether.fi, a neobank* — $5.1 billion.

* Synthetic Assets are digital financial instruments whose value or payouts depend on the price of another asset, such as a cryptocurrency, gold, a stock, or a stock market index. They allow investors to gain exposure to changes in the value of an underlying asset without directly owning it.

* Neobank is a financial service provider that offers banking services primarily online, without a traditional network of physical branches.

Among protocols with a TVL exceeding $100 million, the largest monthly increases were recorded by LiNEAR Protocol (+94%), Meta Pool (+75%), and Rhea Finance (+75%).