Total value locked, or TVL, is the dollar value of crypto assets sitting inside a DeFi protocol’s smart contracts, and DefiLlama is the tracker most people mean when they cite the number, according to DL News. It is not a standardised or audited figure: the same underlying tokens can be counted more than once as they move between linked protocols, and DefiLlama has changed its own calculation rules at least once, per DL News and CoinDesk.
What TVL is supposed to signal
DL News describes TVL as a proxy for a DeFi protocol’s growth and sustainability. A rising TVL is meant to signal growing liquidity and use. For a decentralised exchange, more TVL means larger swaps can happen with less slippage; for a lending market, it means larger loans are possible, per DL News. Some analysts treat a protocol as undervalued if its TVL runs well above its token’s market capitalisation, though DL News notes this logic applies unevenly — Curve’s CRV token has a revenue-share model that ties directly to Curve’s TVL, while Uniswap’s UNI and Aave’s AAVE are not structured the same way.
The double-counting problem, with real numbers
DL News describes double-counting as the sharpest problem in calculating TVL: when the value of the same tokens on a chain gets counted multiple times, for instance when a user deposits ether into a protocol, receives a placeholder token for it, and then deposits that placeholder token into a second protocol. Most in the industry argue that ether should not be counted twice, per DL News.
CoinDesk’s reporting, published 5 August 2022, gives a concrete case. A CoinDesk investigation exposed a developer’s effort to double count billions of dollars across interlocking protocols in the Saber ecosystem on Solana, inflating Solana’s TVL during that chain’s 2021 bull run. On 4 August 2022, DefiLlama switched off its default display of double-counted assets in response. Solana’s peak TVL from November 2021 had displayed as $15 billion under the old default; under the new one, it displayed as $12 billion, per CoinDesk. DefiLlama’s pseudonymous developer, known as 0xngmi, told CoinDesk the site would “spend the next few days reviewing all protocols again” to check for further double counting. DL News, describing the same episode in its own methodology explainer published 26 October 2023, says separately that when DefiLlama stopped double-counting tokens in 2022, the TVL of some blockchains dropped by over a billion dollars. DL News does not specify which blockchains or attach a figure to Solana, so this is a distinct, general claim rather than confirmation of CoinDesk’s specific Solana numbers.
What DefiLlama includes and excludes
According to DL News, DefiLlama prices locked tokens using CoinGecko’s API data and lets users filter TVL into three categories: Staking (assets locked in smart contracts), Pool2 (liquidity pools that reward users for depositing a protocol’s own native token instead of selling it), and Borrows (assets borrowed from lending protocols). DL News notes that some older projects, such as Alchemix, have Pool2 TVL grandfathered into their totals for reputational reasons, dating to a period before the industry had agreed on a better method.
DL News also lists what DefiLlama and the wider DeFi community have agreed to exclude: governance tokens staked within their own protocol, such as CRV locked inside Curve; assets staked at the blockchain level rather than in a DeFi protocol, though DefiLlama does still track deposits into liquid staking protocols like Lido; receipt tokens from liquidity pools paired with governance tokens, such as Convex’s pool for locked Curve DAO tokens; the TVL of a protocol whose tokens are locked inside a second protocol, which counts toward the second protocol’s total rather than the first, as when Yearn tokens locked in Compound count as Compound’s TVL; and rewards or liquidity generated by staked assets.
The common misreading
Readers often treat TVL as an audited, standardised figure that can be compared one-to-one across protocols and chains. It is neither. DL News is explicit that the method for calculating TVL is not standardised across the industry, and the Saber episode shows the number can be deliberately inflated. A rising dollar-denominated TVL can also simply reflect a rising token price rather than new deposits — DL News points to comparing a protocol’s TVL in native-token terms against its dollar terms as a way to check which is driving the change.
What this page does not tell you
This page describes DefiLlama’s methodology specifically, as reported by DL News in an article published 26 October 2023 and by CoinDesk in an article published 5 August 2022. Neither source confirms whether these exact rules are still in effect at the time a reader consults this page; DefiLlama has changed its default calculation at least once already, in August 2022. Neither source describes an independent audit of the smart-contract balances underlying TVL figures — the numbers are self-reported into DefiLlama’s system and priced via CoinGecko’s API, per DL News, which is a different thing from a verified reserve figure. Neither source addresses whether other TVL trackers, such as protocol-native dashboards, apply the same inclusion and exclusion rules as DefiLlama; a reader comparing TVL figures across trackers should not assume they do. Finally, DL News itself points readers to DefiLlama’s own published documentation for the current, up-to-date rules rather than treating any single article as final.
Sources
Every fact above is attributed to one of these reports. Where they disagree, the article says so.
