These terms are often used interchangeably — but they measure very different things.

• Liquidity refers to the ability to buy or sell an asset without materially moving price. It is a function of order book depth, spread tightness, and active capital on both sides of the market.
• TVL (Total Value Locked) measures the total capital deposited in a protocol or liquidity pool. It reflects capital commitment, not necessarily execution quality. High TVL does not guarantee tight spreads or low slippage.
• Usable depth is the most practical metric. It represents how much size can be executed within a defined price range (e.g., ±1-2%) without significant market impact. This determines real trade capacity.

A protocol can have high TVL but poor usable depth if liquidity is misallocated, inactive, or too widely distributed across price bands. Market quality depends on usable depth — not headline TVL.