Key Takeaways: 

• Total value locked (TVL) measures the money deposited in a DeFi protocol by its users.
• A high TVL indicates a popular and trusted project, while a decline in TVL could indicate a troubled company.
• For a comprehensive investor analysis of DeFi projects, combine TVL with other key metrics, such as daily active users, revenues/fees, market cap, and token price. (Read our guide.)

One of the best ways to find great crypto companies is to measure Total Value Locked, or TVL. 

Not all projects have Total Value Locked: only those with the ability for users to store money in the crypto protocol in return for some reward. For example, a lending protocol where users can “lock” their crypto to be lent out to other users and receive a reward token in return.

Think of Total Value Locked as the money held by a bank or the Assets Under Management of an investment company. Generally speaking, more TVL = a more trustworthy project, especially if that amount has grown over time.

Conversely, a weak or declining TVL is like a bank without much cash on hand: it’s best to stay away.

In today’s feature, we’re unpacking the top crypto companies by TVL.

What is Total Value Locked (TVL)?

TVL refers to all assets secured in a crypto company’s decentralized finance (DeFi) protocol. These assets can include cryptocurrencies or funds deposited or staked in the protocol by users. TVL can consist of all of the following things:

• Any assets are locked away in staking pools or nodes to secure the network.
• Any assets deposited in liquidity pools for lending, trading, or other similar purposes.
• Any assets used as collateral to secure loans in lending protocols.
• Cryptos invested in ongoing income sources like yield farming projects.

TVL is usually expressed in US Dollars. Investors typically use it to measure the popularity of a DeFi project.

Top Blockchain Projects Ranked by TVL

This section has compiled a list of the top five blockchain projects with the highest TVL as of Q2 2024. The projects are arranged in ascending order of magnitude.

*based on data from Token Terminal. Layer-1 protocols are not included in their TVL list.

Lido Finance

TVL: $36.21b

Launch Year: 2020

Segment: Liquid staking

Launched in December 2020, Lido Finance is a DeFi platform that provides liquid staking solutions to crypto users. It connects individual stakers with Proof-of-Stake (PoS) blockchains like Ethereum, Solana, Polygon, Polkadot, and Kusama.

Over the years, Lido has emerged as the clear industry leader in ETH staking, accounting for nearly 29% of all staked ETH. The vast majority of the TVL on this project comes from the 9.4 million ETH tokens staked by users (worth approximately $35 billion).

In December 2023, Lido’s market share in ETH staking was even higher at 32%, raising concerns about the future security of the Ethereum blockchain. However, increased competition from other protocols in 2024 has helped reduce Lido’s potential threat to the network.

Meanwhile, the significant increase in the price of ETH since 2023 has had a direct impact on the TVL of Lido in the last 12 months. From $13 billion in June 2023, it more than tripled to $40 billion in March 2024.

EigenLayer

TVL: $19.23b

Launch Year: 2023

Segment: ETH restaking

EigenLayer is an innovative new project launched in 2023 with an intriguing premise – create a marketplace where ETH stakers can restake their assets to additional income streams.

The restaked assets (liquid staking ETH tokens) are then deployed to provide network security to other applications and projects being built on Ethereum. Developers can “rent pooled security” aggregated on the platform in exchange for fees.

Since it allows stakers to unlock additional passive rewards, EigenLayer has attracted considerable interest from ETH holders. In less than six months, it has emerged as the second-largest protocol in the market in terms of TVL, indicating a clear case of investor frenzy.

As ETH staking gains new users, EigenLayer could also see further growth in the coming years. Although other restaking avenues exist, the risk element is much higher in these protocols than in EigenLayer.

Aave

TVL: $12.84b

Launch Year: 2017

Segment: DeFi lending

Aave is a DeFi platform that focuses on peer-to-peer lending on the blockchain. Users can add funds to its liquidity pools and earn interest income. They can also borrow funds from the platform by depositing various crypto tokens as collateral.

These two types of transactions add assets that contribute to the TVL of the protocol. Aave has been around since 2017 and has become the largest DeFi lending platform in the blockchain market.

The protocol is based on Ethereum and accepts ETH, popular stablecoins like Tether and USDC, and other liquid staking tokens and wrapped tokens. The value of net deposits on the platform has doubled from $8 billion in June 2023 to $20 billion as of Q2 2024.

Arbitrum Bridge

TVL: $11.92b

Launch Year: 2021

Segment: ETH Layer 2 scaling

Due to network limitations, the Ethereum blockchain has suffered from high gas fees and low transaction speeds over time. Layer 2 scaling solutions like Arbitrum Bridge allow users to securely and quickly transfer their assets from Ethereum at affordable rates.

Apart from Ethereum and ERC20 tokens, Arbitrum Bridge supports Avalanche, Polygon, and over a dozen other blockchain networks. Due to its significantly low transaction costs and excellent security, Arbitrum Bridge’s popularity has soared since its launch in 2021.

The scaling solution also has a rich array of DeFi apps and protocols that offer yield farming and other lucrative passive income opportunities. Over the years, many of the ETH and other assets locked on the Bridge are usually secured on these projects.

After staying relatively stagnant for most of 2023, the TVL on the platform has doubled in 2024 due to the broader positive sentiment in the cryptocurrency markets. As Ethereum grows in popularity, L2 scaling solutions like Arbitrum could also witness an influx of users.

Maker DAO

TVL: $6.48b

Launch Year: 2014

Segment: Crypto lending

Maker DAO is a unique protocol that combines a lending platform with a native stablecoin called the DAI token. The protocol allows borrowers to deposit ETH and other ERC20 tokens as security and get loans from the DAI token.

Overcollateralized crypto loans like the one given out by MakerDAO are helpful if you want to invest in other (potentially high-risk) tokens without directly exposing your ETH. Instead of selling your ETH, you can lock it as collateral and get DAI.

Borrowers’ security deposits constitute most TVL on the MakerDAO protocol. Users can also invest in the MKR governance tokens to gain voting rights on the protocol.

Although crypto lending projects often crash and burn during significant market downturns, Maker DAO has been a remarkable exception. The project’s position in the top 5 in terms of TVL is a testament to its popularity and long-term stability.

Investor Takeaway

Careful historical analysis of the TVL metric can help you gain important insights into the reliability, popularity, and potential long-term viability of a DeFi project. However, for a complete picture, it is essential to look at the other important metrics—daily active users, revenues/fees, market cap, and price. See our guide to Valuing Digital Assets, as well as these great pieces:

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• Source: https://www.bitcoinmarketjournal.com/defi-projects-by-tvl/