Published: May 1st, 2024
As Spring swings into high gears, this month will see USD three billion in token unlocks across seven different crypto projects.
New data from analytics firm TokenUnlocks says the two biggest unlocks will come from the Pyth DeFi oracle network and the Aevo crypto derivatives platform.
Crypto projects typically release their full supply of tokens incrementally over weeks, months or years. Bitcoin, for example, currently has released 19.7 million into circulation from a total supply of 21 million. The ‘tokenomics timeline’ is usually documented in a white paper accompanying the project’s launch.
May 2024 will see the much-watched DeFi oracle network Pyth activate its first unlock, just six months after its original go-to-market date. Scheduled for 20th May, 2.13 billion in PYTH tokens will arrive in the market. Using prices at time of writing, the unlock will be worth about USD 1.24 billion.
Fifty per cent of the tokens will fund ecosystem growth, 25 per cent will go towards publisher rewards, while the remaining quarter will be auctioned off through private sales to support protocol development.
TokenUnlocks calls the Pyth plan a cliff unlock, meaning a mass of tokens will be released all at once rather than incrementally across days. Pyth plans another 2.13 billion unlock in May 2025.
Aevo plans to take a different route for it unlock, combining both a cliff unlock and a linear unlock, where specific number of tokens are released daily.
Some 827.6 million AEVO tokens worth ca. USD 1.24 billion will be unlocked on 15th May 2024. Another 6.13 million worth USD 9.20 million will be released into the wild each day for the subsequent nine days after.
The five other unlocks set for May are significantly smaller.
A number of liquid staking tokens enjoyed significant gains in the early days of 2023 as a deadline for un-staking Ethereum approached. According to data from Cryptotracker, Rocket Pool (RPL) and Lido Finance (LDO) both saw notable gains.
LDO was the governance token behind Lido Finance, Ethereum’s biggest liquid-staking protocol. It gained more than 17 per cent in 48 hours. Intense buying and selling of LDO pushed its daily volumes up across numerous exchanges to hit USD 275 million, a 434 per cent leap.
With a market cap just north of USD 1.5 billion, data from CoinGecko had LDO at 33th-place on its list of the largest cryptocurrencies.
Data from Coinglass showed that more than USD 1.6 million in LDO futures were liquidated between Sunday 8th January and Monday 9th January 2023. The majority (ca. 65 per cent) came from blow-off short trades.
The first week of January 2023 was a rewarding one for Lido Finance. LDO became the number one decentralized application when ranked by total value locked (TVL), knocking DAI creator MakerDAO out of the top spot.
After posting a tremendous 74.6 per cent gain over the previous seven days, LDO became crypto’s largest weekly gainer. Bitcoin, by comparison, posted just 3.7 per cent in gains over the same period.
Rocket Pool’s liquid staking token RPL also saw its price spike 14.1 per cent in the period.
Ethereum transitioned to a proof-of-stake (PoS) consensus mechanism in September of 2022.
The move to PoS eliminated the need for energy-intensive crypto mining almost overnight, replacing mining with a leaner and more network-responsive staking mechanism. In order to become a validator on the new Ethereum, users must first put up 32 ETH to demonstrate their ‘stake’ in the system.
Back in October 2022, when central bankers around the world were grappling with record inflation and its impact on their fiat currencies, Ethereum was dealing with an inverse dilemma.
Between the first and seventh of October 2022, the supply of Ether (ETH) fell by more than 4,000 tokens. Data from blockchain analytics firm ultrasound.money showed that the price boost one would expect from a sudden drop in supply hadn't happened, and in fact the opposite was occurring. The price of ETH had fallen by close to 3.7 per cent to around USD 1,300.
Since the Ethereum blockchain’s paradigm shift from proof-of-work (PoW) to proof-of-stake (PoS) in September, this was the first ever period of deflation, where more ETH was burned than generated.
Transactions on Ethereum incur ‘gas’ fees, a cost levied in the validation process that’s designed to make the network less vulnerable to being overloaded with malicious requests. It's pure demand pricing, with gas fees rising in tandem with traffic rises on the Ethereum network.
Before PoS, validators (called ‘Miners’ on PoW networks) who processed ETH transactions pocketed the fees. However, to keep fees from skyrocketing at peak periods, Ethereum made a change to the blockchain last August that sees a portion of every gas fee automatically destroyed. That limits the supply of ETH in circulation and helps keep gas fees from running out of control, a common Ethereum user complaint.
After the blockchain flipped modes and began burning more Ether than it created, the total amount of ETH in circulation fell by more than 4,00 ETH. In early October the burn rate was still outpacing the rate of ETH creation.
Average gas fees, meanwhile, shot up by more than 200 per cent and took more than a week to let up.