Definition ∞ Asset lockup refers to digital assets held in an inaccessible state for a set period. This mechanism typically involves smart contracts or protocol rules restricting transfer or use. It serves various purposes, including securing networks, facilitating governance, or enabling liquidity provision in decentralized finance. Such restrictions aim to stabilize token economics or support specific protocol functions.
Context ∞ Its situation often relates to staking periods, vesting schedules for token distributions, or collateral requirements within lending protocols. Discussions frequently center on the trade-offs between liquidity and network security or the impact on market supply dynamics. Observing asset lockup trends helps in assessing long-term holder conviction and potential future selling pressure.
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