The denominator problem
Total value locked is denominated in dollars, but the locked things are volatile tokens — so TVL rises when prices rise with no new deposit anywhere. Half of every TVL boom is just the market marking itself up; comparing TVL across time without price-adjusting is comparing temperatures in two different units.
The double-counting problem
Deposits loop: a token is staked, its receipt is wrapped, the wrapper is posted as collateral, the borrowed asset is deposited again. Each hop counts as new value locked. Recursive positions mean headline TVL can exceed the capital that actually entered by multiples — leverage wearing a growth costume.
The rented problem
Incentive programs rent TVL the way emissions rent usage: capital arrives for the subsidy and leaves with it, having proven only that yield attracts money. Sticky TVL — deposits that survive incentive expiry — is the honest core, and no dashboard headline separates it for you.
Reading it
Use TVL in native units for real growth, watch flows around incentive cliffs for stickiness, and discount every recursive layer you can identify. As with on-chain volume, the metric is manufactured exactly as often as it is meaningful — the reading skill is telling which.