Definition ∞ ETH supply liquidity refers to the ease with which Ethereum tokens can be bought or sold without significantly affecting their market price. High liquidity indicates a robust market with numerous buyers and sellers, allowing for efficient trade execution. Factors influencing this include the amount of ETH available on exchanges, within decentralized finance protocols, and locked in staking contracts. Understanding this metric helps assess market depth and stability.
Context ∞ The state of ETH supply liquidity is a continuous point of analysis, particularly following Ethereum’s transition to Proof of Stake and the introduction of liquid staking derivatives. A key discussion involves how the increasing amount of staked ETH impacts the circulating supply and its potential effects on market volatility. Future developments will likely center on the equilibrium between staking participation, withdrawal mechanisms, and the overall availability of ETH for trading and decentralized application usage.
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