Paper: arXiv 2505.14565

Authors: Pietro Saggese, Michael Fröwis, Stefan Kitzler, Bernhard Haslhofer, Raphael Auer

Abstract

Total Value Locked (TVL) aims to measure the aggregate value of cryptoassets deposited in Decentralized Finance (DeFi) protocols. Although blockchain data is public, the way TVL is computed is not well understood. In practice, its calculation on major TVL aggregators relies on self-reports from community members and lacks standardization, making it difficult to verify published figures independently. We thus conduct a systematic study on 939 DeFi projects deployed in Ethereum. We study the methodologies used to compute TVL, examine factors hindering verifiability, and ultimately propose standardization attempts in the field. We find that 10.5% of the protocols rely on external servers; 68 methods alternative to standard balance queries exist, although their use decreased over time; and 240 equal balance queries are repeated on multiple protocols. These findings indicate limits to verifiability and transparency. We thus introduce ``verifiable Total Value Locked’’ (vTVL), a metric measuring the TVL that can be verified relying solely on on-chain data and standard balance queries. A case study on 400 protocols shows that our estimations align with published figures for 46.5% of protocols. Informed by these findings, we discuss design guidelines that could facilitate a more verifiable, standardized, and explainable TVL computation.

Complexity vs Empirical Score

  • Math Complexity: 3.0/10
  • Empirical Rigor: 7.5/10
  • Quadrant: Street Traders — practical and empirical, lighter on theory

Why this score: The paper addresses a critical gap in DeFi infrastructure by providing a rigorous empirical assessment of TVL verifiability across 939 Ethereum protocols. While mathematically lightweight, it introduces a novel framework (vTVL) and metric (Discrepancy Ratio), supported by open-source code and clear standardization guidelines.

Research Flowchart

  flowchart TD
    A["Research Goal: Assess TVL Verifiability & Standardization in DeFi"] --> B["Data Collection: 939 Ethereum DeFi Protocols & Aggregator Methodologies"]
    B --> C["Systematic Analysis: Evaluate Off-chain Dependencies & Calculation Methods"]
    C --> D["Key Findings: 10.5% use external servers, 68 non-standard methods, 240 repeated queries"]
    D --> E["Propose Metric: Verifiable TVL (vTVL) using only standard on-chain queries"]
    E --> F["Validation & Outcome: Case study on 400 protocols aligns with published TVL for 46.5%"]

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and 69 more
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2 of 77 cited works are in the corpus; resolved via arXiv source bundles, Semantic Scholar and OpenAlex. Corpus-wide: 2518 linked papers.