1. Theoretical Impact of Unlocks on Token Prices
1.1 Token Unlocks Typically Lead to Price Declines
When tokens unlock, circulating supply increases while market capitalization remains stable (absent major news events). This dilution effect generally causes token prices to drop.
Case Study: DYDX Token Unlock Path
- In January 2023, dYdX postponed a 150M token unlock (worth ~$200M) from February to December
- Price surged nearly 45% post-announcement
- After actual unlock on December 2, DYDX entered a downtrend despite BTC's bullish ETF rally
- Unlocked tokens represented 81.63% of circulating supply, with 55.5% going to investors
Key Insight: Large percentage unlocks relative to circulating supply create stronger downward pressure.
1.2 The Larger the Unlock Percentage, The Greater the Impact
When unlock volumes approach or exceed circulating supply, price dilution becomes more severe.
Case Study: SUI Token Unlock
- April 2024: 1.1B SUI unlocked (~92% of then-circulating supply)
- Despite strong fundamentals, SUI gave up most gains post-unlock
- Entered 4-month downtrend after the massive unlock event
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1.2.1 Airdrops as Special Unlock Events
Airdrops often represent the first major unlock post-TGE, sometimes matching entire circulating supply. These typically cause sharp, prolonged price declines.
Case Study: EIGEN Token
- EigenLayer (restaking leader) airdropped tokens in October
- Price peaked at $800M market cap before falling to $470M
- Nearly all selling pressure came from airdrop recipients
1.3 Investor/Team Unlocks Create Strongest Downward Pressure
Tokens allocated to early investors and teams often:
- Have long lockup periods (1+ years)
- Represent large portions of total supply
- Generate more selling pressure than community allocations
Case Study: AEVO Token
- May 2024: Rumored 7x circulating supply unlock (investors/team)
- Price dropped 44% before team clarified unlock schedule
- Market reaction demonstrated sensitivity to investor unlocks
2. Real-World Deviations From Theory
2.1 When Token Concentrations Distort Markets
Case Study: WLD Token Unlock
- July 2024: Began 4-year linear unlock (total 2.38B tokens)
- Despite 12x eventual supply increase, price rallied 80%
- Market maker Wintermute showed heavy accumulation activity
- Extended unlock schedule reduced immediate selling pressure
Key Insight: Concentrated holdings and market maker actions can temporarily override unlock effects.
3. Key Takeaways and Strategic Considerations
While token unlocks generally create downward price pressure, real-world outcomes depend on:
- Percentage of circulating supply unlocked
- Recipient composition (investors vs. community)
- Market conditions and overall sentiment
- Project fundamentals and token utility
- Market maker and whale activities
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FAQ Section
Q: How far in advance do prices typically react to token unlocks?
A: Most price movement occurs 1-4 weeks before the actual unlock date as traders preemptively position.
Q: Which token types are most vulnerable to unlock sell pressure?
A: Tokens with low utility (e.g., governance-only) and high investor allocations show strongest negative effects.
Q: Can projects mitigate negative unlock impacts?
A: Yes, through strategies like extended vesting schedules, staking incentives, or coordinated buybacks.
Q: How does unlock impact differ between bull/bear markets?
A: Bull markets often absorb unlocks better due to higher buying demand, while bear markets amplify negative effects.
Q: Are linear unlocks better than cliff unlocks?
A: Generally yes - smaller, frequent unlocks create less dramatic price impacts than large, infrequent ones.
Q: Where can I check upcoming token unlock schedules?
A: TokenUnlocks, TokenTerminal, and project whitepapers provide reliable unlock calendars.