UTXO distribution refers to how unspent transaction outputs are dispersed across different addresses within a UTXO-based blockchain network. Unspent transaction outputs, or UTXOs, represent discrete units of cryptocurrency available to be spent, functioning similarly to physical bills or coins. Their distribution provides insights into wealth concentration, user activity, and the liquidity available on the network. A healthy distribution typically shows a balance between many small UTXOs and fewer large ones, indicating broad participation rather than extreme centralization.
Context
Analysts frequently examine UTXO distribution to assess the economic health and decentralization of UTXO-based blockchains like Bitcoin. Significant shifts in distribution can signal large transfers, accumulation by institutional entities, or changes in spending patterns. Understanding this metric is crucial for interpreting market sentiment and evaluating the fundamental structure of an asset’s ownership and liquidity.
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