How Does TVL Relate to a Protocol’s Security?
While not a direct security measure, a high Total Value Locked (TVL) often indicates that a protocol has a large and active community of users and a significant amount of capital at stake. This suggests a greater degree of trust and robustness.
Conversely, a low TVL can make a protocol more vulnerable to economic attacks or manipulation due to lower liquidity.
Glossar
Low TVL
Liquidity ⎊ Low Total Value Locked (TVL) within cryptocurrency protocols signifies a reduced amount of capital deposited as collateral or participating assets.
Tvl
Value ⎊ The total aggregate worth of all assets deposited into a specific decentralized finance protocol, typically denominated in a stable unit for consistent measurement.
Total Value Locked
Collateralization ⎊ Total Value Locked, within decentralized finance, represents the aggregate value of crypto assets deposited in smart contracts, functioning as collateral for various protocols.