Dollar-denominated TVL can rise even when the number of deposited tokens does not.
A valuation of included assets
Total value locked generally values assets held in the contracts included by a data provider. DefiLlama publishes inclusion rules and explains how its adapters avoid counting the same assets twice within a protocol. Native staking, bridges and receipt tokens require particular treatment. TVL is therefore a calculation with a methodology, not an independently universal definition of adoption.
A price-only increase
Imagine a protocol holding 100 hypothetical tokens worth $10 each. Its simple dollar value is $1,000. If the price doubles while deposits remain unchanged, the value becomes $2,000 without a single additional token arriving. A report describing this as a doubling of deposits would be misleading. Compare the underlying units and net flows as well as the dollar headline.
Follow receipt tokens through the system
A deposit can create a claim token which is then used elsewhere. Adding every displayed balance without tracing the underlying asset may count related claims repeatedly. This does not mean receipt tokens are inherently invalid; it means the analyst must explain what is being counted. A total for one protocol is also not necessarily calculated the same way as a chain-wide total.
Questions worth asking
Which contracts are included? Which asset prices are used? Are borrowed or recursively deposited assets included? Has the methodology changed since the previous observation? Save the answers with the date. TVL can be useful for understanding scale, but it does not directly measure revenue, unique customers, available withdrawal liquidity or security. Those require separate evidence and should not be inferred from the total alone.
Sources & further reading
Sources checked 7 October 2026. Source-linked explanatory content; not personalised investment advice. Found an error? Request a correction.
