News and Analytics

What is a token unlock

May 3, 2023
What is a token unlock
0

In the context of cryptocurrency and blockchain technology, a token unlock refers to the release or removal of restrictions on a specific number of tokens or coins held by a project's team, developers, or investors.

Token unlocks typically occur after a predetermined period of time or upon reaching certain milestones, such as the completion of a project's development roadmap or the achievement of specific goals. Once the tokens are unlocked, they can be freely traded, sold, or transferred on the open market.

The token unlock process usually involves smart contracts that automatically release the tokens to the relevant parties based on the agreed-upon schedule or conditions. These contracts are programmed with specific rules that govern how the tokens are unlocked, such as the amount of tokens to be released and the timing of the release.

It's important to note that the release of a large number of tokens into the market through an unlock can potentially lead to a decrease in the token's value due to the increased supply. Therefore, investors and traders often keep a close eye on the token unlock schedule of projects they are interested in to assess the potential impact on the token's price.

Token unlocks can affect the supply and demand of tokens. Token unlocks increase the circulating supply of tokens, which creates selling pressure and can lead to a decline in price. The higher supply reduces demand, which reflects declining prices. However, the impact of token unlocks on supply and demand is not always straightforward. Unlocks on good, long-term projects do not affect the price by actual unlocked token sales but by the fear, uncertainty, and doubt (FUD) that occurs before an unlock.

Token analytics dashboards like TokenUnlock monitor vested tokens and notify users when they become unlocked. These dashboards provide an overview of general market supply and demand pressure. Upcoming new token releases allow early investors, developers or other holders to sell their assets while the price is still high. Since markets are speculative, the price before the token unlocks often moves upward.

Comments

Latest news

Crypto​.com joins ranks of licensed payment institutions in Singapore

Crypto​.com joins ranks of licensed payment institutions in Singapore

Singapore's Crypto.com expands its regulatory achievements by securing MPI license for DPT services from MAS.
Crypto.com Receives Digital Token License in Singapore

Crypto.com Receives Digital Token License in Singapore

The exchange received in-principle approval in Singapore last June.
Not All Of Cardano Community Is Happy About Memecoin Rally

Not All Of Cardano Community Is Happy About Memecoin Rally

While meme coins attract a lot of attention and liquidity, those rallies could be short-lived and destructive
Crypto Exchange Kraken’s Canada Customer Deposits Rose 25% After Binance Announced Departure

Crypto Exchange Kraken’s Canada Customer Deposits Rose 25% After Binance Announced Departure

Kraken also saw a fivefold increase in app downloads within a week of OKX saying it was leaving the country back in March.
Show more

Latest Dapp Articles

Show more

You may also like