Definition ∞ Token lockup is a mechanism where a certain quantity of digital tokens is intentionally restricted from being traded or transferred for a predetermined period. This is often implemented during initial coin offerings (ICOs), private sales, or for team and advisor allocations to align long-term incentives and prevent immediate price suppression. Lockups are a common feature in tokenomics design. They aim to demonstrate commitment and foster network stability.
Context ∞ News reports frequently analyze token lockup schedules and their expiration dates, as these events can significantly impact market supply and price volatility. Discussions often focus on the implications of large token releases on market liquidity and the overall sentiment around a project. Understanding token lockups is essential for assessing the supply dynamics and long-term viability of digital asset projects.
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