Definition ∞ Supply Removal refers to the permanent reduction of a cryptocurrency’s circulating token supply. This process involves taking tokens out of circulation through mechanisms such as burning, locking them in staking contracts, or transferring them to unspendable addresses. A sustained supply removal strategy aims to increase the scarcity of an asset, potentially leading to upward price pressure if demand remains constant or increases. It is a deflationary mechanism designed to enhance token value over time.
Context ∞ Supply Removal is a significant topic in crypto news, particularly concerning protocols that implement token burning or extensive staking mechanisms, such as Ethereum post-Merge. Discussions often center on the long-term price implications and the effectiveness of these mechanisms in creating economic scarcity. Observing sustained supply removal provides crucial context for understanding an asset’s deflationary characteristics.
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