What Is Total value locked (TVL)?
In decentralised finance, total value locked (TVL) refers to the amount of the assets locked in a protocol.
The calculation is the same: take amount of assets in a smart contract addresses. However the meaning of the metric may vary depending on what the related protocol is doing:
For wealth management and funds: In traditional finance, the term used is Assets under management (AUM). However, because DeFi protocols are non-custodial and assets are always under the management of the users themselves, AUM term cannot be used.
For trading, like AMM decentralised exchange: This means how many tokens there is sitting in a trading pool, an order book equivalent. Essentially, this is the lit market depth of a token. Based on the DEX pool TVL, and its shape, you can calculate the price impact of any trade, including hypothetical historical trades.
See also