What is TVL? (Ethereum is the King of TVL in the crypto world)

Understanding TVL (Total Value Locked) is essential for navigating the universe of cryptocurrencies. I will explain in a simple way what this important indicator is:

What the hell is TVL?

TVL represents all the money locked in DeFi protocols (Decentralized Finance). It’s like measuring how much cash is tied up in each protocol. And the higher this number, the more trust that platform inspires... or that’s what they want us to believe.

How does this move work?

Basically, TVL tracks the total value of assets ( cryptocurrencies ) that are locked in smart contracts. People lock their assets for various reasons:

• Staking: They lock their coins to validate transactions and earn some rewards.
• Loans: Lock assets to lend them out and earn interest.
• Yield farming: They put their cryptos in various protocols to generate yields, often artificially inflated.

Why does it matter so much?

The TVL indicates the popularity and supposed health of a protocol. If it has a high TVL, it means that many users trust it... or that they are simply desperate for yields. It can also indicate liquidity, although this does not always translate into ease of buying or selling without extreme volatility.

How is it calculated?

It's quite simple. You sum all the locked assets and express it in dollars. Although, of course, this has its pitfalls because many platforms inflate these numbers with questionable tactics.

Where can I see this information?

There are several websites that track the TVL of different DeFi protocols:

• DeFi Pulse
• TVL Tracker
• DefiLlama

Understanding TVL is important for exploring DeFi, but don't be fooled by big numbers without context. In the end, many projects play with these data to seem more important than they really are.