Bank for International Settlements working paper introduces verifiable TVL metric and finds gaps in DeFi TVL transparency

The Bank for International Settlements has published a working paper assessing how “total value locked” (TVL) is computed in decentralized finance and introducing “verifiable Total Value Locked” (vTVL) as a metric that can be independently reconstructed from on-chain data using standard balance queries. The paper argues that despite public blockchain data, TVL figures are often difficult to verify because methodologies vary across protocols and aggregators and can depend on self-reported, non-standard, or off-chain inputs. Using a measurement instrument applied to 939 DeFi protocols on Ethereum via DeFiLlama’s adapter code, the study finds that 10.5% of protocols rely partially or entirely on external servers, limiting reproducibility. While 78.6% use standard balance queries, the authors identify 68 non-standard balance-related methods used by 14.2% of protocols, though use of such alternative queries declined from 28.2% in January 2023 to 8.9% in January 2024. The analysis also identifies 240 duplicated balance queries appearing across multiple protocols, signalling potential infrastructure-level double counting, with the associated value peaking at almost USD 16 billion at end-2021. In a case study reconstructing TVL for 400 protocols, vTVL estimates align with published figures for 46.5% of protocols, with near-zero discrepancies for 23.5%. Based on these findings, the paper sets out design guidelines to improve standardisation and verifiability, including computing TVL from on-chain sources, publishing protocol-specific contract and token lists, preferring standard balance methods, disclosing token categorisations used, and defining common standards for protocol selection and version management.