Last week saw a flurry of activity in the world of cryptocurrency with several token unlocks set for this week. While many investors were eagerly anticipating these events, the crypto market as a whole retreated, leaving some feeling uncertain about the future of these tokens and the broader industry.
One of the most highly anticipated events was the release of 650 million ADX tokens on January 15th. AdEx is a decentralized advertising platform that allows advertisers to target audiences without relying on third-party intermediaries. The release of these tokens is expected to help the project expand and grow, but the initial response from the market was rather muted.
ADX’s token price initially surged on the news, rising from around $0.07 to $0.10 over the course of a few days. However, it has since dropped back down and is currently trading at around $0.076. The lack of sustained growth may be due to the broader crypto market downturn, but the release of such a large number of tokens could also have diluted the value of each individual unit.
Additionally, there were concerns about the potential for price manipulation. Some investors worried that the release of such a large number of tokens could be used to artificially inflate the price and then dump them on the market once prices surged. However, it should be noted that AdEx has a good reputation in the industry and has put measures in place to prevent such tactics.
Another project set to release tokens this week is Rarible, a marketplace for buying and selling digital assets. The company is releasing 25 million RARI tokens, which will be distributed to users of the platform. The tokens will be used to govern the platform and allow users to vote on key decisions.
The release of RARI tokens is expected to generate a lot of interest in the platform, as users try to accumulate as many tokens as possible. However, there are some concerns about the long-term viability of these tokens, given that they are tied to a single platform. If Rarible fails to gain traction or if the platform experiences technical difficulties, the value of RARI tokens could plummet.
Finally, there is the release of 250 million STORJ tokens, which is set to take place on January 13th. STORJ is a decentralized cloud storage platform that aims to provide a more secure and affordable alternative to traditional cloud storage providers. The release of these tokens will help the company continue to develop and improve its services.
Like the other tokens being released this week, STORJ’s price initially surged before settling back down. However, the company has a strong track record of gradually increasing in value, and the release of new tokens could help to further drive this growth.
Despite the excitement generated by these new token releases, the broader crypto market has been in retreat, with Bitcoin dropping below $32,000 at one point. It is unclear what is driving this downturn, but some analysts have pointed to concerns about regulatory crackdowns and rising interest rates.
There are also concerns about the impact of COVID-19 on the global economy, with many countries still struggling to contain the virus and distribute vaccines. As a result, some investors may be looking to move away from riskier assets like cryptocurrency in favor of traditional investments.
It’s worth noting that despite the recent downturn, many experts remain bullish on the long-term prospects of cryptocurrency. The increasing adoption of blockchain technology across a wide range of industries suggests that the crypto market will continue to grow and evolve over time.
Ultimately, the success of these new token releases will depend on a variety of factors, including the strength of the underlying projects, market conditions, and investor sentiment. But regardless of what happens in the short term, it is clear that the world of cryptocurrency is here to stay.
This week, seven crypto and decentralized finance (DeFi) platforms are set to perform token unlocks, a process where previously locked tokens are released into circulation. Token unlocks often result in supply dilution, and this can lead to downward pressure on token prices.
The first major token unlock this week will be by the popular 1inch exchange on May 1. However, with only 21,429 tokens being released, there is unlikely to be any major impact on token prices. Additionally, the tokenomics of this project heavily favor the team and investors, with 1.29 billion tokens vested for them in a release schedule that runs until December 2024.
On the same day, Polkadot-based web3 finance platform Acala will see the release of 27.4 million ACA tokens, representing 2.74% of the total supply. The tokenomics of Acala are more evenly spread out, with 34% allocation to crowd loan participants, 29% to strategic partners, and 12% to the reserve. The vesting and unlock schedule runs until March 2028. ACA is currently trading down 97% from its peak at $0.087.
Nym is set to unlock almost 7.4% of its total supply on May 3, releasing around $16.3 million worth of NYM tokens. Trader Joe DEX will release tokens every couple of days, with 108,000 JOE tokens set to be released on May 3. On May 5, Liquity (LQTY) and Galxe (GAL) will see token unlocks, while on May 7, Tornado Cash will unlock 175,000 TORN tokens worth around $1.3 million.
While the theory behind token unlocks is to align incentives for all DeFi project investors and stakeholders, it often results in short-term volatility and selling pressure. Moreover, tokenomics heavily weighted towards the team and investors can further discourage investors from holding onto the tokens.
Crypto markets, including Bitcoin and Ethereum, have turned red in the Asian trading session on May 3, with total capitalization shrinking by 1.7% on the day to $1.23 trillion. With the correction appearing to be resuming, those projects with token supply releases this week could suffer heavier losses.
In conclusion, token unlocks have become a common practice in the DeFi space, but they also bring short-term volatility and selling pressure, often leading to downward pressure on token prices. It is important for investors to consider tokenomics, as heavily weighted tokenomics toward the team and investors can discourage holding onto the tokens.