What is TVL?
TVL (Total Value Locked) measures the total value of cryptocurrency assets deposited into a DeFi protocol. It's a key metric for assessing protocol size and trust.
Why TVL Matters
- Indicates protocol adoption and trust
- Higher TVL often means better liquidity
- Used to compare protocols within categories
Limitations
TVL can be inflated through recursive deposits or low-quality incentives. Always consider TVL alongside other metrics.