How Does Staking Impact the Circulating Supply of a Coin?
Staking involves locking up a coin's tokens within a network protocol to secure it and earn rewards. This action effectively removes the staked tokens from the immediately tradable supply on exchanges.
By reducing the number of coins available for purchase and sale, staking decreases the circulating supply. This reduction can lead to increased scarcity and potentially put upward pressure on the coin's market price.
Glossar
Circulating Supply
Token ⎊ The circulating supply within cryptocurrency contexts represents the number of tokens currently available and actively traded on exchanges or held by investors, excluding those locked in smart contracts, staking agreements, or otherwise inaccessible.
Staking Impact
Supply ⎊ Staking impact refers to the effect of locking up a portion of a cryptocurrency's circulating supply within a proof-of-stake consensus mechanism or a decentralized finance (DeFi) protocol.