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Definition supply overhangoverhang

Unlock Overhang

The pool of still-locked tokens scheduled for future release, described as supply the market may later have to absorb.

Overhang is normally measured as locked tokens divided by circulating supply, or as the number of days of average trading volume the locked pool represents. A large overhang means today's tradable float is a small slice of eventual supply, which is the structural reason market capitalization and fully diluted valuation can differ by a wide margin. The measure describes scheduled supply only: recipients may hold, stake, distribute to their own investors, or be required to sell by fund redemption terms, and none of that is visible in the schedule. Overhang shrinks mechanically as tranches unlock, whether or not anything is sold.

In practice

An asset with most of its supply still locked can show a small circulating float and a large scheduled release stretching over several years.

The common misunderstanding

Overhang is a description of scheduled supply, not a forecast; it says how many tokens can become transferable, not what anyone will do with them.

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Related terms

Circulating Supply The number of units of an asset currently held by the public and able to move, excluding locked or…
Dilution The fall in each holder's share of total supply that happens when new units are created and given…
Fully Diluted Valuation The current price multiplied by the maximum or total eventual supply, showing what the asset would…
Unlock Schedule The calendar showing when locked tokens become transferable and enter circulating supply.
Vesting A rule that releases an allocation of tokens gradually over time instead of all at once, usually…
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