All About Token Unlocks

As the bear market grinds on, investors and speculators alike are scrutinizing metrics even further. One that has come to light is upcoming unlocks and increases in token supply. While serious thinking about tokenomics was often thrown out the window during the bull market, as prices have gone down, people are looking at these numbers in more detail.

What are token unlocks?

Token unlocks release a portion of a project’s tokens at the end of a vesting or lock-up period. These tokens are typically held by the project’s team and investors and are subject to certain restrictions on when they can be traded or transfered. Token unlocks usually mean that the tokens can be sold. These previous locked tokens enter the market, often leading to a significant increase in the supply of the cryptocurrency.

Token unlocks can also refer to the process of releasing new tokens, either through a token sale or airdrop, to the general public. In these cases, the tokens are made available for purchase or are given away for free to individuals who meet certain requirements, such as holding a certain amount of a different cryptocurrency.

Token unlocks can have a major impact on the supply, which in turn can affect the price. They are also important for the project’s investors and stakeholders, as they may be able to sell their tokens for a profit once they are unlocked.

In short, unlocks lead to an increase in the circulating supply of a token and are closely watched for the impact on price.

What is the difference between circulating supply and total supply?

In crypto, the total supply of a token refers to the maximum number of token units that will ever exist. This number is determined by a project’s tokenomics. Sometimes the supply is fixed while other protocols have continued inflation and printing of new tokens.

Circulating supply refers to the number of units of a token that are currently available on the market and can be traded.

The relationship between the total supply and the circulating supply can have a significant impact on the price of a token. For example, if the total supply of a cryptocurrency is very large but the circulating supply is relatively small, the price of the cryptocurrency may be driven up due to high demand and a limited supply. Conversely, if the total supply is small but the circulating supply is large, the price of the cryptocurrency may be driven down due to an excess supply.

It is important to consider both the total supply and the circulating supply when evaluating the value of a cryptocurrency. This information can help investors understand the potential supply and demand dynamics of the cryptocurrency and make more informed investment decisions.

Upcoming Token Unlocks in 2023

DYDX

The dYdX token is used to govern the protocol and give token holders the ability to participate in decision-making processes related to the development and maintenance of the protocol. The dYdX governance process involves various levels of voting with the dydx token in order to propose and implement governance actions.

The dydx token is also used to pay for incentives for traders and market makers.

With the upcoming token unlocks the dydx supply is going to more than double.

https://firebasestorage.googleapis.com/v0/b/firescript-577a2.appspot.com/o/imgs%2Fapp%2FRDUUBS%2Fxo-Y-NeXoC.png?alt=media&token=833b3942-079f-471c-a75b-02c3c2206062

OP

OP is the native token of Optimism, the Layer 2 optimistic rollup. The token is used in Optimism unique multi-chamber governance system. This lets OP holders propose and vote on governance actions like the distribution of further OP tokens.

Beyond governance, the OP token has been used to distribute huge amounts of rewards through a wide-ranging grant program. In order to boostrap the network with additional liquidity and reward early projects, OP token was given out based on proposals for each project.

The additional token unlocks will go partly to investors and partly to continue incentives and grants on the network.

What are Bullish Unlocks?

Many times token unlocks can play into volatile price action and create new narratives around why a token’s price is moving. When token prices rise after an unlock, this is considered a bullish unlock. It may be because there will be less future sell pressure, or the circulating supply is finally matching the max supply. Sometimes it is just plain speculation.

LDO

A good example of a bullish unlock is LDO. Their last investor unlock occurred just a month ago. With all of the token unlocks done, and a building narrative around liquid staking derivatives going into the Shanghai fork, LDO has mooned in the month after the unlock.

While the fundamentals and bear market backdrop haven’t changed, the token unlock gave additional fuel to the narrative fire that has grown along with the price.

There is still lots of alpha in paying close attention to a projects tokenomics. Watching token supply and unlocks has become a meta move for investors and speculators.

Tags

Integral Insights

Updates

May 9th, 2024

Integral Insights April ‘24

The combined average daily volume across Ethereum and Arbitrum is now at 8.8 million USD, a remarkable 22% increase compared to last month.

Product

April 25th, 2024

Introducing New Pool Analytics: Elevate Your Liquidity Provision Experience

A standout feature in our latest update is the "LP vs Hold" tab, which provides a comparative analysis of various holding strategies against Integral's LP positions.

Business

April 1st, 2024

Integral Insights March ‘24

We achieved several important milestones, including a new all-time-high daily volume for Arbitrum and the addition of four new pools on the Ethereum mainnet.

Updates

March 4th, 2024

Integral Insights February ‘24

Another milestone was reached on February 21st when Integral processed over $2 billion in cumulative volume.

Updates

February 1st, 2024

Integral Insights: January ‘24

Our initial launch with the ETH-RPL pool was a success, quickly elevating us to the second most utilized liquidity pool for this pair’s trading.

Research

January 17th, 2024

Is Liquidity Fragmentation Really That Bad?

When the token evolves into a store of value, it attracts outside traders, focusing on trading costs and slippage. This is when concentrated liquidity truly shines.

Updates

January 2nd, 2024

2023 Review

At Integral, our focus remains on developing a sustainable product for on-chain trading, serving both traders and liquidity providers.

Updates

December 12th, 2023

Integral Now Rewards Liquidity Providers with Trading Fees on Ethereum Mainnet

This enhancement enables liquidity providers (LPs) to directly receive a portion or all trading fees from Integral pools.

Updates

December 6th, 2023

Integral Insights: November ‘23

During November, Integral processed an average of approximately 6 million in volume with around 1.5 million in TVL. The system’s overall capital utilization sits at around 350%. It is the 10th most used DEX on Ethereum.

Updates

November 28th, 2023

Integral Now Rewards Liquidity Providers with Trading Fees

This enhancement enables liquidity providers (LPs) to directly receive a portion or all trading fees from Integral pools.

Research

November 15th, 2023

How Do University Blockchain Societies Gain So Many Votes?

Explore how university blockchain societies like FranklinDAO and Michigan Blockchain have grown into influential players in DAO governance, utilizing delegated votes and strategic partnerships to shape the future of DeFi protocols like Uniswap, Compound, and Aave.

Updates

November 6th, 2023

Integral Insight: October ‘23

We give an update for our work in October and highlight a profitable LP position from a long-term user.

Research

October 26th, 2023

Understanding the Stakes in Lido’s Growing Share of Staked ETH

The community is arguing whether a protocol may have too much control over the Ethereum network. Lido controls a large percentage of staked ETH, which could have consequences for the network’s future security and neutrality.

News

October 14th, 2023

Changes to Staking and Farming

Looking back at our progress so far and to the future with new updates to staking and farming.

Updates

October 11th, 2023

Integral Insight: September ‘23

We give an update for our work in September with utilization going up on higher volume for our new pools.

Research

October 11th, 2023

The Hottest Narratives of the Summer

What were the hottest narratives of the summer? Our DeFi research team delves into the growth of trading bots, RFV traders and more in this overview.

Research

October 2nd, 2023

Uniswap Governance: A Deep Dive

Governance is considered a critical component for the decentralization and community-driven development of DeFi protocols. We take a look at one of the largest goverance ecostystems in DeFi, Uniswap. In this blog post, we'll discuss the landscape of Uniswap's governance, pulling data from empirical research to dissect the system's delegates and proposals, revealing some interesting findings.

Research

September 19th, 2023

What is the DAI Savings Rate (DSR)?

Our research team takes a look at the DAI Savings Rate and its influence on various yield dynamics in DeFi.

Updates

September 15th, 2023

Integral Insight: August ‘23

We give an update for our work in August with cheaper gas fees and the launch of the Integral Relayer on Arbitrum!

Product

September 7th, 2023

Integral Relayer Launches on Arbitrum

We are excited to announce the launch of the Atomic Relayer on Arbitrum. This will bring the efficient and tested system for atomic trades to the Arbitrum Layer 2 network!