Capital chasing yields across blockchains
Total Value Locked (TVL) measures the sum of assets deposited into a blockchain's smart contracts. TVL flows track capital migration between chains: when one chain offers superior yields, new chains launch, or sentiment shifts, liquidity moves. Capital flows from low-yield chains to high-yield ones, from mature chains to nascent opportunities, and from risk-on to risk-off depending on market conditions. Tracking these flows reveals where market participants are allocating fresh capital.
Flows as a leading indicator of narrative shifts
A sudden TVL inflow to Ethereum scaling solutions or Layer 2s can precede a broader market interest in efficiency and cost reduction. TVL exodus from a chain can signal loss of confidence or competitive displacement. Rising TVL on low-liquidity chains during risk-on periods reflects speculation seeking high yields. The speed and magnitude of flows often precede announcements and price moves, making TVL tracking a useful signal for narrative changes.