Definition ∞ ETH supply lockup refers to the quantity of Ethereum tokens that are committed to a specific smart contract or protocol, rendering them temporarily removed from active circulation. This often occurs as part of staking mechanisms or participation in various decentralized finance applications. It reduces the liquid supply.
Context ∞ The dynamics of ETH supply lockup are a significant factor in understanding Ethereum’s market liquidity and scarcity characteristics. Large volumes of locked ETH, particularly due to staking for network validation, can influence market supply-demand balances and contribute to the token’s economic model.
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