TVL, or Total Value Locked, is a metric that represents the US dollar value of digital assets deposited in DeFi (Decentralized Finance) platforms or dApps on a blockchain network.
TVL is calculated by summing the value of all assets, such as cryptocurrencies, locked in DeFi protocols, earning rewards, interest, or tokens.
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TVL is an essential metric for assessing the overall health and growth of the DeFi ecosystem, as it indicates user interest and trust in DeFi projects.
Curve, Lido, Anchor, and MakerDAO are the top blockchain platforms ranked by TVL, with Curve currently leading with a TVL of $17 billion.
Ethereum is a significant player in the DeFi space, accounting for over half of the total DeFi volume worldwide.
TVL helps investors gauge the value of DeFi tokens, avoid scams, and understand the overall market trend in the crypto space.
While TVL is an essential metric for DeFi projects, it may not always represent the actual valuation of a project, as it can be influenced by large investors or "whales."
TVL differs from market capitalization (market cap), as it measures only the value of assets deposited in DeFi protocols, while market cap reflects the overall value of a cryptocurrency.
TVL is calculated by multiplying the number of assets staked in a DeFi protocol by their current market price.
TVL is dynamic and changes over time, reflecting the fluctuations in the crypto market and user behavior.
TVL ratio is another metric used to measure the health of a DeFi project, calculated by dividing TVL by the total supply of a cryptocurrency.
TVL ratio helps investors identify overvalued or undervalued DeFi projects, as a high TVL ratio may indicate that a project is overvalued, while a low TVL ratio may suggest that it is undervalued.