Total Value Locked (TVL) represents the total dollar value of all assets deposited in a DeFi protocol or across the entire DeFi ecosystem. It's calculated by multiplying the amount of each token locked by its current market price. Importance:
Protocol Health: Higher TVL indicates trust and adoption
Liquidity Measure: More TVL usually means better liquidity and lower slippage
Market Indicator: Growth metric for the DeFi space
Security Proxy: Higher TVL protocols are generally more tested and secure
Yield Calculation: Used to determine APY and returns Example: If Uniswap has $10B TVL, it means $10B worth of assets are locked in its liquidity pools.
Rewriting in plainer words…
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