Supply Lock Down

Definition ∞ Supply lock down refers to a significant portion of a digital asset’s circulating supply becoming unavailable for immediate trading on exchanges. This can occur through staking, locking mechanisms in DeFi protocols, or long-term holding by investors. A supply lock down reduces the liquid supply, creating scarcity.
Context ∞ Crypto news frequently reports on supply lock down events, especially for assets with staking or yield farming mechanisms, as a key driver of potential price appreciation. A substantial reduction in available supply often leads to increased demand pressure on the remaining liquid tokens. This phenomenon provides important context for understanding an asset’s supply-side economics.