Author: Keyrock; Compiler: Felix, PANews

Key Points:

More than $600 million in tokens are unlocked every week

90% of unlocks create negative price pressure regardless of size or type

The impact on token prices typically begins 30 days before the unlock event

Larger unlocks will result in a significant price drop (2.4x) and increased volatility

Team unlocks will trigger the most severe Severe crashes (-25%) and irrational selling

Investors in unlocking showed controllable price performance because they adopted smarter strategies that reduced the impact of unlocking on the market

Ecosystem development unlocks are one of the few factors with a positive impact (+1.18% on average)

Introduction

Over $600 million worth of locked tokens are unlocked every week (equivalent to Curve market capitalization). These tokens are usually released at predetermined intervals and flow into the hands of different participants. The size and spacing of these unlocks, the expectations and dates, and who obtains these tokens all have an impact on token values ​​and the market.

In a crypto space dominated by short-term decision-making and rampant profit-making, the rhythm and structure of token unlocking are crucial to ensuring long-term value capture and increasing holder satisfaction. It's important. Unlocking is not a novel concept. In traditional finance, mechanisms such as equity vesting have been used to motivate employees to stay consistent over the long term. However, the method, frequency and impact of token unlocking vary widely among blockchain projects.

Of the 16,000 unlock events analyzed in this article, a striking pattern emerged: unlocks of all types, sizes, and recipients almost always had a negative impact on price.

This article takes a trader-centric approach and examines some of the most prominent token unlocks of the past few years. We analyze how unlocking of different sizes and recipient types affects prices, identifying recurring patterns and key behavioral differences across the ecosystem.

Understanding Unlocked

As a trader, you have no insight into the overall retail buying or selling decisions, but you do have information about another group of holders, those on the vesting table. Unlocking schedules are key to the puzzle, not only do they hint at future supply shocks, but they are leading indicators of sentiment and volatility.

Most vesting tables look like the one above: a long-term calendar with "Cliffs" and "Linear or Bulk Unlocked Blocks" marked in the middle. These blocks are assigned to different recipients—categories like “Seed Investors,” “Core Contributors,” or “Community.”

Design unlocking is a tricky task for any project. You can't simply give away all your tokens up front because the recipient might walk away and sell them. But don’t make them wait too long, or they might decide the project isn’t worth it. Projects must strike a balance: incentivize recipients to stay in the early development phase of the project while alsoKeep them engaged for the long term. The solution is usually to gradually distribute the tokens over a specified vesting period.

A typical unlock might look like this: The vesting period begins with the relationship between the recipient and the organization and continues until full allocation. As with most crypto projects, these are outlined early in the white paper. There may be no allocations during the first ⅓ ± ¼ of the vesting period. A large number of tokens are then released at once and then unlocked linearly over the remaining time.

This approach works well because it ensures a minimum commitment from the recipient before receiving the reward. For example, developers are incentivized to continue participating, while investors face an initial lock-up period followed by partial cash-out, and a slow unlock can reduce market pressure.

Not all unlocks follow this structure. Some are called "batch unlocks" where all tokens are released at the end of Cliffs. Others are purely linear, starting with no Cliffs and distributing tokens periodically until fully distributed.

Unlocking Scale, a Key Element of Price Dynamics

This article first breaks down the vesting periods of 16,000 compound events and categorizes each event by size. For each event, the daily token price was tracked 30 days before and 30 days after the unlock. Additionally, “median” price and volatility metrics are tracked for the month leading up to each token’s 30-day pre-unlock period. This is crucial since many projects have monthly unlocking plans. This approach isn't perfect, but allows for better isolation of smaller-scale unlocks.

Finally, no asset can exist independently of the market. This is especially true for altcoins, which often exhibit extreme beta correlations with their protocol tokens. To account for this, this article normalizes the price changes in the data series for each unlock.

For simplicity, this article chooses ETH as the benchmark, and then weights the prices in the sample (before, during and after the unlocking event) with ETH to arrive at a more market-independent indicators.

Unlock size is not everything

After breaking down, classifying and quantifying unlock events, plot the average price impact for different time intervals after the unlock date. When visualizing, the data looks messy. You might expect a proportional relationship between unlock size and price impact, but beyond 7 days the correlation weakens.

When scaled to relative size, most unlocks look similar in the degree of price suppression they result in. Instead, frequency is the more telling factor. As mentioned previously, unlocking typically occurs in a single large batch after the initial cliff, or continuously until the end of the vesting period. Sustained downward price pressure for smaller, stable unlocks is also observed for any unlock other than large or mega unlocks. So it's hard to tell whether the unlock size is good or bad.

Cliffs and the linear gap

What is clearer in the data is that before the event, theBehavioral features for mass unlocking. It is common to see a sustained decline in prices in the 30 days leading up to the event, with the decline accelerating in the final week. After unlocking, prices tend to stabilize back to neutral levels within approximately 14 days.

This price behavior can be attributed to two main phenomena:

Sophisticated hedging: Large unlocks are typically allocated to hedging receivers using market makers. By locking in price or taking advantage of volatility before unlocking, these parties reduce token pressure and mitigate the immediate impact of the unlock. Most companies start hedging 1-2 weeks or even a month in advance depending on the size. If executed correctly, this strategy can effectively minimize the impact of unlocking on the market.

Retail investors anticipate in advance: The sharp decline in the last week may be due to retail investors lowering prices in advance. They know the unlock is coming, so they sell tokens to avoid dilution, often without realizing that the recipient of the unlock may have already completed the sell-off via hedging.

This pattern of behavior is also evident in the weighted trading volume of different categories, which typically peaks 28 or 14 days before unlocking.

Interestingly, the data shows that mega unlocks (>10% of supply) perform as well or better than mega unlocks (5%–10%). This may be because the unlock is too large to fully hedge and cannot be sold or unwinded within 30 days. As a result, their market effects tend to be more gradual and long-lasting.

The last chart highlights changes in volatility. Large unlocks can cause significant volatility on the first day. However, this volatility largely subsided within 14 days.

How to trade?

Most of the time, the key is to keep an eye on the calendar for the mega and big unlocks. These are usually the starting cliffs that transition into linear unlocking. For any given unlock, the percentage awarded by Cliffs can vary widely, from 10% to 50%. What really matters is how much is unlocked relative to the total supply.

Data shows that the best time to enter after a major unlock is 14 days later, when volatility has stabilized and hedging may have been lifted. For exits, the best time is 30 days before a major unlock, when hedging or market pre-reactions tend to begin.

For smaller unlocks, it's usually best to wait until they are complete.

Receiver type, a key predictor of price impact

The second and most important thing to consider when analyzing unlocking is receiver type. Who are the recipients of the tokens and what does this mean for price action? Recipients can vary widely, but generally fall into five main categories:

Investor Unlock: Tokens allocated to early investors as compensation for funding the project

Team Unlock: For Tokens retained to reward the core team, either through one-time payments or as wages

Ecosystem Development Unlocked: Injected into the ecosystem to fund activities such as liquidity, cybersecurity, or grants.

Public/community unlocking: through airdrops, user rewardsRewards or staking incentives to distribute tokens to the public.

Burn Unlock: Only tokens used for destruction, reducing supply. These are rare and therefore not included in this analysis

Opinions vary as to which recipient type has the greatest impact on downstream prices. Some believe that community airdrops were mostly conducted by Sybil attackers, and therefore the market was flooded with selling pressure. Others believe that pumping millions of tokens into the ecosystem will dilute value. Others believe that VCs and investors are the quickest to sell and will profit.

After analyzing thousands of unlocking events, the data shows:

Nearly all categories show a negative price impact, but there are subtle differences< /p>

Ecosystem development unlocks are the least disruptive, while team unlocks always result in the largest price drops

Investor and public/community unlocks have a moderate impact on price

< p>However, as with unlock size, these numbers alone don't tell the whole story. Different behavior emerges when you plot the price action by recipient type in the 30 days before and after the unlock event.

What drives the receiver's behavior?

At first glance team unlocks appear to be the most damaging, while ecosystem unlocks pose little threat. But these are only superficial insights. Why is there a difference? What drives the recipient's behavior? What lessons can protocols learn from this data?

Team Unlocking

Team Unlocking is one of the categories with the worst price stability. You should be cautious when the team is about to reach the Cliffs or is in the middle of an allocation.

When charted, Impact Token prices follow a roughly linear downward trend, starting 30 days before the unlock date and continuing to decline at a severe angle. Team unlocks tend to have two characteristics that impact price more than other receiving categories.

Uncoordinated selling by team members:

Teams often consist of multiple participants with different financial goals and no coordinated approach to Liquidating Their Tokens

Many team members view their tokens as compensation for long-term (sometimes years) labor before they are properly paid. When these tokens are unlocked, especially near Cliffs, the incentive to profit is understandably high

Even with linear unlocks, these tokens are usually part of their revenue and need to be sold

p>

Lack of hedging or mitigation strategies:

With large investors or Different institutions, teams rarely use sophisticated techniques to reduce market impact when selling

Experienced entities often recruit market makers to strategically manage large token allocations

In addition, pre-hedging strategies can reduce the immediate pressure on the market when unlocking over time.

So these explain why the price is so negative, but why in the first 30 days alsoObserved a price drop? Much of this is likely a combination of severe price implications and overlapping linear unlocks. Why try to control for the median price before looking at it, since many unlocks are consecutive and the data still shows that there is suppression. In this regard, if you try your best, not only skip bulk Cliffs unlocks, but also defer purchases for the linear period of unlocking.

Ecosystem Development Unlocking

In terms of ecosystem development, a unique trend is seen: a slight price drop in the 30 days before unlocking, followed by a positive price impact immediately after unlocking. Unlike other unlock types, ecosystem development unlocks typically direct tokens toward initiatives that create long-term value and strengthen the protocol.

Why prices rebound (and often rise) after unlocking:

Liquidity supply: Tokens are often allocated to lending platforms or liquidity pools, thereby increasing Market depth, reduced slippage and increased overall token usability. By enhancing "market availability," these unlocks not only stabilize trading conditions but also increase participant confidence

Participation incentives: Ecosystem funds often drive user participation through incentive programs. These initiatives, such as liquidity mining or staking rewards, create a flywheel effect of participation that boosts network activity. As players recognize the potential for continued growth, they are less likely to sell immediately, choosing instead to continue investing in the ecosystem

Grants and Infrastructure Funding: Developer Grants and Infrastructure Project Funding Support dApp creation and network scalability. While returns from these investments typically take 6-12 months to materialize, they demonstrate a long-term commitment to ecosystem growth, mitigating short-term selling pressure

How to explain the pre-unlock price drops? There are two reasons for this behavior.

Anticipated Sell-Off: As mentioned previously, many investors sold ahead of the unlock, believing that increasing the token supply would dilute the value, regardless of the purpose of the unlock. This is especially common among retail players, where misunderstandings about unlock types drive short-term decisions.

Liquidity preparation: Large recipients of grants or allocations often need to prepare liquidity in advance. For example, to build a liquidity pool on a DEX, recipients might sell existing assets to secure stablecoins or other matching assets. This preparatory selling creates downward price pressure even before the token is deployed.

Investor Unlocking

Investor Unlocking is one of the most predictable events in the token market. Unlike other categories, these unlocks typically exhibit controlled price performance, with data from 106 unlock events showing a consistent trend: slow, minimal price drops. This stability is no accident. Early stage investors (whether angel or Series C) often have a VC background and expertise in managing positions.

These investors are not just transferring risk; they are optimizing returns while actively avoiding potential market disruptions. By understanding the complexities of their adoptionStrategies allow traders to predict how these events will unfold and adjust their positions accordingly.

OTC backend: Investors often hire liquidity providers or OTC desks to sell large amounts of tokens directly to interested buyers. This method completely bypasses the public order book, avoiding immediate seller pressure and signaling to the market.

T/VWAP and Hedging: Time-weighted average price (TWAP) execution or volume-weighted average price (VWAP) strategies help spread token sales over time, thereby reducing price impact. Many investors also use futures to pre-hedge their positions to “lock in” the price ahead of the unlocking event. These positions are then gradually unwound after unlocking to further reduce volatility.

"Locking" or "hedging" is essentially using derivatives to open a short position before the unlock date, which helps secure the price early when the short position is unwound when the token is sold.

Since 2021, the use of advanced option strategies has expanded beyond investors, with an increasing number of project teams adopting them to generate recurring revenue or manage funds more efficiently. For traders, this evolution reflects the increasing complexity of the crypto market, unlocking opportunities to predict and align with the strategies of major players. Options, whether sold privately or used as collateral for loans, play a key role in shaping market dynamics, providing informed traders with a clearer lens into interpreting token activity.

Community and public unlocking

Community and public unlocking, such as airdrops and points-based reward programs, behaviorally reflect investor unlocking, with prices gradually decreasing before and after the event. This dynamic is shaped by two different behaviors among recipients:

Immediate dumping: Many retail participants liquidate their rewards as soon as they are received, prioritizing liquidity .

Long-term holders: Most public airdrops are held rather than sold, reflecting a pool of participating users or less active traders.

While the overall price impact is modest, these results highlight the importance of a well-designed rewards program. Thoughtful design can prevent unnecessary market disruption while achieving the desired goal of promoting community development and engagement.

Summary

Token unlocking is an essential mechanism in the crypto ecosystem to fund development, incentivize participation, and reward contributors. However, their spacing, size and recipient category are key factors in determining their price impact. Understanding what these effects are and why they occur helps make better transactions and helps protocols better structure their unlocks.

This article’s analysis of more than 16,000 unlocking events across 40 tokens highlights key trends:

Linear unlocking outperforms initial Cliffs unlocking in reducing short-term disruption to price , although larger Cliffs generally recover better after 30 days.

The most importantPrice movements often come not from token recipients, but from retail investors reacting to narratives and broader sentiment.

Recipient Category Dynamics

Ecosystem Unlocked: Sustained positive results, driving growth through liquidity provision, user incentives and infrastructure financing.

Investor Unlocked: Minimal disruption thanks to sophisticated strategies such as OTC sales, TWAP/VWAP execution and options hedging.

Team Unlocked: The most destructive category, where poor coordination and immature selling methods lead to sharp price drops. Teams can mitigate the impact by working with market makers.

Community Unlocking: Limited long-term impact as many recipients hold tokens, but short-term "miners" typically sell tokens for immediate gain.

Conclusion

Be sure to check the unlocking calendar using tools like CryptoRank, Tokonomist or CoinGecko before making long-term trades. Unlock events are often misunderstood, but they play a crucial role in a coin's performance.

Contrary to popular belief, VC and investor unlocking are not the main factors behind the price decline. These participants are typically aligned with the long-term goals of the protocol, employing strategies that limit market disruption and maximize returns. Conversely, team unlocks require closer attention, as poorly managed allocations can often lead to downward pressure on the token price. Ecosystem unlocking provides a unique opportunity that, when aligned with clear growth goals, often serves as a catalyst for adoption and liquidity, making it a favorable time to enter the market.