In decentralized finance (DeFi), the total value locked (TVL) is a crucial metric. It reflects how much money users have locked into smart contracts for lending, staking, and liquidity purposes. This guide will explain how to calculate TVL, list the top DeFi protocols based on TVL, and discuss why this metric is important.
What is TVL?
Total value locked quantifies the dollar value of digital assets—cryptocurrencies, stablecoins, tokens—secured within a DeFi protocol's smart contracts at a given moment. By aggregating live market prices, TVL reflects user participation and the liquidity depth underpinning smooth on-chain operations.
Why is TVL Important?
TVL helps investors evaluate the popularity of a DeFi project. A higher TVL indicates greater user trust and engagement, meaning more investors are willing to lock their assets into the platform. A lower TVL may raise concerns about the platform's viability or attractiveness.
TVL also serves as a valuable metric for comparing the size and influence of different DeFi projects. With TVL, you can identify which platforms are leading regarding asset utilization and user participation.
How to calculate a protocol's TVL
1. Identify locked assets
Begin by listing every asset held in the protocol's on-chain contracts (e.g., an automated market maker might hold ETH, USDC, DAI)
2. Retrieve live prices
Fetch real-time USD prices for each asset via reliable or market APIs—CoinGecko, Binance, or oracles like Chainlink.
3. Multiply balances by prices
For each asset, multiply its contract balance by its current USD price. For example, Suppose Protocol XYZ holds 5,000 ETH, 2,000 DAI, and 1,000 USDC. At ETH=$2,000, DAI=$1, USDC=$1:
ETH value: 5,000 × $2,000 = $10,000,000
DAI value: 2,000 × $1 = $2,000
USDC value: 1,000 × $1 = $1,000
Total TVL: $10,003,000
4. Aggregate and publish
Sum the USD values to obtain the protocol's TVL. Dashboards refresh these calculations in real-time, offering an up-to-the-second snapshot of DeFi's economic activity.
Most investors rely on third-party DeFi analytics platforms, such as DefiLlama, to obtain the necessary data. These platforms collect data from decentralized finance apps using application programming interfaces (APIs) and other computational techniques.
Top DeFi protocols by TVL in May 2025
Here are the leading DeFi protocols by total value locked (TVL) as of May 2025, showcasing where the most capital is deployed in decentralized finance.
Rank
Name
Number of blockchains
TVL
30 Days Change
1
AAVE
13
$17.936 billion
+2.89%
2
Lido
5
$14.586 billion
-19.81%
3
EigenLayer
1
$6.909 billion
-20.53%
4
Sky
1
$5.855 billion
+55.59%
5
Ethena
1
$4.856 billion
-26.38%
6
Spark
3
$4.392 billion
+95.54%
7
ether.fi
1
$4.252 billion
-14.75%
8
Uniswap
30
$3.817 billion
-4.60%
9
JustLend
1
$3.571 billion
+2.39%
10
Pendle
10
$2.872 billion
-38.36%
The information for this table is sourced from defillama.com.
What is Bridged TVL?
Bridged TVL refers represents the value of assets locked in bridging contracts, providing an essential metric for understanding the liquidity transferred across networks.
Bridged TVL (“bridged total value locked”) measures the dollar‑value of crypto assets that are locked up in cross‑chain bridges—smart contracts that escrow tokens on one blockchain so that an equivalent amount can be minted or released on another. In other words, it’s the sum of all funds users have locked into bridge contracts to move value between chains.
For example, if billions are bridged from Ethereum to Layer 2 networks, this would be captured in the bridged TVL. This metric is important for understanding the liquidity that flows across networks.
What counts as “bridged”?
Canonical bridges:the protocol’s own or a closely affiliated bridge)
External/custodial bridges (third‑party bridges like Wormhole, Axelar, etc.)
Top 10 blockchains by TVL
As of May 2025, the leading blockchains by total value locked highlight the ecosystems where the bulk of DeFi capital is concentrated.
The increase in total value locked (TVL) usually indicates a positive trend as new investors put their money into successful projects. A decrease in the total value locked (TVL) can lead to negative market sentiment.
When users start withdrawing their assets from a protocol, it may indicate underlying issues such as security concerns or decreasing returns. This can trigger a sell-off in related tokens as investors react to perceived risks, further exacerbating the decline in TVL.
The potential dangers of a high TVL protocol
While a high total value locked (TVL) can indicate user confidence, it also poses risks. For instance, a large concentration of assets in a single protocol makes it a more attractive target for hackers. If a protocol with a high TVL suffers a security breach, users will suffer significant losses, and the TVL will decline sharply.
Drawbacks of TVL
TVL only offers a brief overview of the total value of assets locked within a platform; it fails to showcase the activity levels. A platform might have a high TVL alongside minimal user activity, suggesting a limited number of investors contribute to the TVL.
TVL figures can be artificially boosted by malicious actors looking to draw attention to their platform or project. This can complicate users' efforts to assess a project's value accurately. Still, it shouldn't present a problem when evaluating DeFi platforms or dApps with a solid reputation.
Lending platforms aim to attract investors by offering attractive annual percentage rates (APR). Any digital assets locked on the network to earn this yield will increase the network's TVL.
Final
TVL helps investors to make informed choices and navigate the crypto market more proficiently. By knowing TVL trends and their consequences, you can better evaluate the stability and potential of DeFi projects and make strategic investment decisions.
This content is provided for informational purposes only and should not be construed as investment advice. Investing in Web3 and cryptocurrencies involves risks. It is essential to conduct your own research before engaging with any Web3 apps or cryptocurrencies.
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