October token unlocks to affect multiple notable blockchain projects, including Taiko, releasing 15.70% of its supply, and Celestia, which will release an immense 81.94% of its supply. If you think this doesn't affect you, here's a brief list of tokens with unlocks scheduled for this month: $SOL, $TIA, $WORLD, $ADA, $DOT, $NEAR, $ENA, $DOGE, $SUI, $IMX, $ZETA, $NEON, $DYDX, $MAV, $MODE, $AVAX, $SEI, $BEAM, and $FILE. So, these unlocks are likely to impact many of you.
Token unlocks are a natural and essential part of a cryptocurrency's lifecycle. They are planned to release locked tokens into circulation gradually. These unlocks are typically linked to project goals, investor agreements, or team rewards, helping manage token supply and support liquidity.
However, unlocks can potentially affect token prices and market sentiment. If poorly timed or executed, they may oversupply tokens. This can create market instability, often hurting smaller investors the most. Large investors might sell their newly unlocked tokens. This could trigger sell-offs, lower confidence in the project, and hinder its progress.
Any altcoin investor, apart from those solely in Ethereum, should take the time to understand the tokenomics and unlock schedule of their chosen cryptocurrency. CoinMarketCap.com provides this data under the token unlocks section for each asset. Additionally, the project's white paper can reveal details about token ownership distribution.
The last thing you need is to hold a carefully cherry-picked altcoin with hefty monthly unlocks scheduled for the next year or more.
Solana
Solana's unlock might deserve some special attention because it's a major token and widely recognized.
Solana's strong performance this cycle can be attributed to the team's solid decisions, particularly regarding token allocation. With less than 10% of its supply left to unlock, Solana is well-positioned in the current market. The upcoming October unlock represents only 0.11% of Solana's total supply. So, any claims of a "massive Solana unlock" are exaggerated.
Celestia to Expand TIA Circulating Supply by 82% on October 30
Celestia's unlock on October 30, expanding TIA circulating supply by 81.94%, is unprecedented. This will also result in a daily emission of nearly one million tokens for the following year.
Economically, such an immense supply increase typically leads to a sell-off. However, the market may have already started pricing this in, as evidenced by the downward trend in the chart preceding the unlock. While the exact impact of the October 30th event on $TIA is uncertain, the situation appears challenging.
Source: Celestia Docs
Insiders clearly had a strong advantage in how the supply was distributed. Executives typically use vesting periods to restrict most tokens, causing the limited circulating supply to rise in value even with low demand. This strategy involves a trade-off with a later large token release. Ideally, market growth would allow the current supply to absorb the newly released tokens. But for TIA, it's unclear if that's realistically possible.
The TIA token distribution is problematic as it limits access for general participants. With 80% allocated to insiders, "early supporters," and "core devs," it is clear enough who ends up bearing the cost of this structure.
While this topic is genuinely opaque to outsiders, it's important to consider. And it is worth noting that my goal here isn't to critique specific projects but to outline a way of thinking. This approach can be applied to any token, whether mentioned here or not.
MetaTalks disclaims responsibility for any investment advice that may be contained in this article. All judgments expressed are solely the personal opinions of the author and the respondents. Any actions related to investing and trading in crypto markets involve the risk of losing funds. Based on the data provided, you make investment decisions in a balanced, responsible manner and at your own risk.