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Total Value Locked (TVL) – A metric commonly used in deregulated finance (DeFi) and yield farming. TVL refers to the total amount of assets that are locked/staked in a DeFi platform’s smart contracts.
This metric can refer to the liquidity staked in a dApp such as a yield farm or vault; to an entire protocol such as BSC or Ethereum; or the DeFi ecosystem as a whole.
The TVL metric was created by Defi Pulse, which remains the standard source for coverage of the subject. There are flaws in the metric such as double counting (because staked assets can be used to borrow more assets which can themselves be staked) which Defi Pulse seeks to remove from its measurements – this explains the large differences often seen between the numbers it reports and those claimed by individual dApps or protocols. The effect of price action in underlying assets should also be considered when assessing TVL data because of the massive influence it can have. Due to this, many argue against using TVL as a metric for adoption.
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