Token Unlocks and Vesting

When a crypto project launches a token, only part of the total supply usually trades at first. Large amounts are allocated to the founding team, early investors, advisors and treasuries, and these tokens are locked and released over time under a vesting schedule. When a batch becomes free to trade, it is called a token unlock. Large unlocks can add significant selling pressure, especially for tokens with a small circulating supply and a high valuation. Tracking unlock schedules is a basic part of researching any altcoin.

Key terms#

A typical allocation#

Every project differs; whitepapers and token documentation give details.

How unlocks affect prices#

Studies by research firms analysing hundreds of unlocks have generally found negative average price performance around large unlocks, especially those going to investors and team members, though results vary widely.

Low float, high FDV#

Many tokens launched in 2023 and 2024 started with low floats (often 10% to 20% of supply) and high FDVs. As unlocks proceeded over the following years, steady new supply weighed on prices for many of them. Investors increasingly compare market cap with FDV and examine unlock calendars before buying.

Researching unlocks#

1. Read the token documentation for allocation and vesting.
2. Use unlock trackers such as Token Unlocks (Tokenomist) or project dashboards.
3. Check who receives the tokens: team and investors are more likely to sell than ecosystem funds.
4. Compare unlock size with daily trading volume and circulating supply.
5. Watch on chain flows: unlocked tokens moving to exchanges may signal selling. See Wallet and Exchange Flows.
6. Look at cost basis: investors who bought very cheaply have more incentive to sell.

Trading around unlocks#

• Avoid buying just before large unlocks without a reason to expect strong demand.
• Some traders short perpetuals ahead of big unlocks, accepting funding costs and squeeze risk. See Perpetual Futures.
• Post unlock rebounds sometimes occur if selling was anticipated and absorbed.

Comparison with stocks#

Token unlocks resemble lock up expirations after stock IPOs, when insiders become free to sell, and secondary offerings that add new shares. Research on IPO lock up expirations has found average price weakness around those dates too. See IPOs and Secondary Offerings and Rights Offerings.

Frequently asked questions#

What is a token unlock?#

The scheduled release of previously locked tokens, often allocated to teams and investors, into the tradable supply.

Do token unlocks lower prices?#

Large unlocks can add selling pressure, and studies have generally found weak average performance around them, but outcomes vary with demand and recipients' behaviour.

What is the difference between market cap and FDV?#

Market cap uses circulating supply; fully diluted valuation uses total supply, showing the value if all tokens were in circulation.

Next, learn how to judge a token's economics in Tokenomics and Protocol Revenue.