Definition ∞ On-Chain Scarcity refers to the verifiable and immutable limitation of a digital asset’s supply, directly enforced and recorded by a blockchain protocol. This intrinsic property ensures that the total quantity of a particular digital asset cannot be arbitrarily increased or counterfeited. It is a fundamental characteristic that gives certain digital assets their value proposition. The transparent and auditable nature of the blockchain confirms this finite supply.
Context ∞ The concept of on-chain scarcity is a central tenet in the valuation and economic models of many cryptocurrencies, particularly those with fixed or deflationary supplies. Debates often concern the long-term effects of supply caps on price stability and network security, especially as transaction fees become the primary reward for validators. News regarding halving events or token burns directly relates to and impacts perceptions of on-chain scarcity.
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