Blast From the Past: Has the Token Unlock Playbook Changed?

Isn’t it funny how token unlocks generally seem to follow announcements that are favorable for the token in question? Well, it’s not always a coincidence.

In a report titled “The Curious Case of Token Unlocks” that I published last December, I went over a few exhibits where an announcement was made a few days prior to the unlock. But what’s the point of doing that, you might wonder. It is largely to create more liquidity and achieve a higher price to sell at. You see, the crypto market is a game of attention, and almost any half-decent announcement leads to price appreciation. Speculators see this and jump in on the trend, thereby boosting average volumes and bid-side liquidity.

Let’s revisit an example from the report:


”Oasis Network announced a $160M ecosystem fund two days before the supply was set to increase by 133% (1.471B ROSE). Investors accounted for ~51.6%, core contributors for ~20.3%, community and ecosystem for ~27.6%, and strategic partners/reserves for ~0.84%.

Several projects announced an ecosystem fund during that period, resulting in the price appreciation of their tokens. Some projects took advantage of the narrative to create “exit liquidity” for potential sellers to reduce the price impact. In the case of Oasis, unsurprisingly, the price more than doubled leading into the unlock, only to halve in the following days.”

Now, keeping this example in mind, let’s see what’s happening with dYdX prior to its ~$15M unlock in two days.


The last two unlocks of similar dollar values saw an average of 25% price appreciation prior to the unlock and an average of 15% decline post-unlock.

Something very similar is going on this time around as well. dYdX is up 25% leading into its unlock on the 29th of August. And if we were to use average drawdowns post-unlock as our guide, we can expect dYdX to hit ~$1.90 post-unlock.

Now, this is far from a certainty for obvious reasons. That said, the OI has close to doubled, and futures CVD is aggressively trending up, suggesting higher taker activity on the bid side of the order book. This signature was not observed during the previous two unlocks. How does this unfold? Well, that is something that remains to be seen.

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