How to Read DeFi TVL: What Total Value Locked Tells You (and Doesn't)

DeFi Total Value Locked is the most-cited metric in the space, but it can be misleading. This guide explains how to read TVL correctly and what really signals protocol health.

Total Value Locked (TVL) measures the USD value of assets deposited in DeFi protocols. In 2026, DeFi TVL exceeds $250B — but raw TVL is one of the most misunderstood metrics in crypto. It is a starting point, not a conclusion.

The Problem with Raw TVL

Better Metrics to Use Instead

What TVL Does Tell You

TVL remains useful for comparing relative protocol size, spotting rapid inflows or outflows (early warning of news), and tracking DeFi ecosystem growth over time. DefiLlama is the most accurate TVL tracker, with methodology notes explaining how double-counting is handled for each protocol.