Total Value Locked
The market value of the assets sitting in a protocol's smart contracts at a point in time.
The calculation reads contract balances and multiplies them by prices, which means the figure moves with prices even when no one deposits or withdraws a single unit. Double counting is routine rather than exceptional: a deposit that mints a receipt token which is then deposited elsewhere is counted twice, and liquid staking and restaking multiply the effect on the same underlying asset. It measures deposits, not usage, revenue, or safety, and a protocol can hold large deposits while generating almost no fees. Providers apply different inclusion rules for a protocol's own token, bridged assets, and staked balances, which is why the same protocol shows different figures on different dashboards.
In practice
A protocol whose deposits are mostly its own governance token will show a value locked figure that falls sharply when that token's price falls, with no withdrawal taking place.
The common misunderstanding
Total value locked is not money locked away or a measure of health; it is a price-times-balance snapshot that can count the same underlying asset several times, and users can normally withdraw at will.
The figure this maps to
The dollar value of assets currently deposited in a protocol's or a chain's smart contracts.
Limits: TVL rises and falls with the price of the deposited assets even when nobody deposits or withdraws anything, so a large part of any move is a price index rather than a flow. Double counting is routine: a deposit that mints a receipt token which is then deposited elsewhere is counted in both places,…