What Is a Lock-up Period and How Does It Affect Short-Term Liquidity?

A lock-up period is a contractual restriction that prevents early investors, founders, and team members from selling their tokens immediately after the token generation event (TGE) or public launch. By restricting the supply available for sale, lock-ups reduce immediate selling pressure, which is positive for short-term price stability.

Once the lock-up expires, the market must absorb the newly available supply.