Total Value Locked (TVL)
Total Value Locked measures the total value of all assets deposited in a DeFi protocol that are generating economic activity. Assets undergo a rigorous filtering process to ensure they represent real user deposits performing some kind of economic work.
When a protocol is first listed, DeFi Pulse uses a manual review process to determine which of the protocol’s addresses are used to hold assets generating economic activity. Any addresses that do not meet this criterion – such as those used to hold staked or locked assets that do not generate economic interest – are removed.
Subsequently, all assets held in qualifying addresses are tracked. When calculating TVL, DeFi Pulse automatically excludes:
- assets that were flagged as being minted by the protocol itself or by a closely related protocol during the manual review process
- assets that are highly illiquid (where liquidity / FDV < 0.0015)
DeFi Pulse continuously monitors protocols’ factory contracts. All new addresses created by a protocol’s factory contract become qualifying addresses for TVL calculation, meaning that assets deposited to them are also reflected in the protocol’s TVL.
For example, in the case of a DEX, the pool factory contract is monitored for the creation of new liquidity pools. New liquidity pools become qualifying addresses and any assets deposited to them are reflected in the DEX’s TVL.
To ensure global TVL is not inflated, DeFi Pulse must exclude derivative assets that count towards one protocol’s TVL if the underlying assets behind those derivatives also count towards another protocol’s TVL.
DeFi Pulse automatically identifies three types of derivative assets which that are excluded from global TVL calculations:
- Debt tokens, where the collateral assets count towards a lending platform’s TVL
- LP tokens, where the underlying assets count towards a DEX’s TVL
- Vault tokens, where the underlying assets count towards the vault platform’s TVL