TVL, or total value locked, is a key metric for assessing the health of a cryptocurrency project. It represents the value of all tokens or coins that are locked up in some way, such as being staked, locked in a smart contract, or held by a foundation.
Checkout this video:
Introduction
TVL, or total value locked, is a metric used to measure the value of digital assets locked into a particular protocol or smart contract at any given time. In the cryptocurrency world, TVL allows investors to get a quick snapshot of how popular a particular project is and how much money is being poured into it.
The term “total value locked” first came into use in the DeFi (decentralized finance) space, where it is used to track the amount of value locked in protocols such as MakerDAO and Compound. However, TVL is not just limited to DeFi; it can also be applied to other areas of the crypto industry, such as exchanges and wallets.
For example, when looking at an exchange’s TVL, you are able to see how much money is currently being traded on that platform. Similarly, a wallet’s TVL can give you an idea of how popular that wallet is and how much money is being stored in it.
TVL can be a helpful metric for both projects and investors alike. For projects, it can be used as a way to gauge interest and adoption. For investors, it can be used as a way to track the growth of a particular project or protocol.
What is TVL?
TVL, or total value locked, is a metric used to assess the value of digital assets locked in decentralized finance protocols. TVL provides a snapshot of the current value locked in DeFi protocols and can be used to track the growth of the DeFi ecosystem.
TVL is calculated by taking the total value of all assets locked in DeFi protocols and dividing it by the total supply of those assets. For example, if there are 100 ETH locked in a DeFi protocol with a total supply of 1,000 ETH, the TVL would be 10%.
The TVL metric is useful for comparing different DeFi protocols and for tracking the growth of the DeFi ecosystem as a whole. The total value locked in DeFi protocols has grown exponentially since 2019, reaching over $13 billion by December 2020.
How is TVL Used in Crypto?
TVL, or Total Value Locked, is a metric used to track the amount of value locked into a cryptocurrency smart contract. This metric is often used by analysts and investors to assess the health of a project, as well as its potential future growth.
The total value locked in a smart contract can be thought of as the amount of money that would be lost if the contract were to fail. For this reason, TVL is often seen as a good indicator of project confidence. A high TVL number indicates that users believe in the long-term success of a project and are willing to risk their money on it.
A project’s TVL can be found by looking at its blockchain explorer. The total value locked in a smart contract will typically be displayed as an amount in the native currency of the blockchain (e.g. ETH for Ethereum).
TVL is an important metric foranalyzing cryptocurrency projects, but it should not be used in isolation. Investors should also consider other factors such as team experience, code quality, and community engagement when making investment decisions.
Conclusion
TVL, or total value locked, is a metric that track the value of cryptocurrency locked into DeFi protocols. It is a good indicator of the growth of the DeFi ecosystem. The metric is often used by investors to track the growth of the sector and to make investment decisions.
