What Is Token Unlock?
Also known as: Token Release, Token Vesting Unlock, Unlock Event
In short
A token unlock is when tokens previously held locked on a set schedule in a crypto project are released to team members, early investors or other holders, increasing the circulating supply.
When a new project launches its token, only part of the supply enters circulation. Shares allocated to founders, early-stage investors and the team are usually locked under a vesting schedule. This schedule often begins with an initial waiting period called a cliff; afterward, tokens are released either in one large tranche or in small monthly or daily portions. The lock can be enforced through a smart contract or a custody service.
Token unlocks are closely watched in the market because the supply-demand balance can shift if some of the released tokens are put up for sale. Dates when a large proportion relative to the circulating supply is unlocked at once can be periods of increased volatility. However, not every unlock turns into selling; recipients may also stake the tokens or hold them for the long term.
Investors typically follow unlock schedules through a project's documentation and the analytics platforms that compile this data. Announcing the schedule in advance provides transparency, while schedules that are undisclosed or changed later can cause trust problems.
Last updated: · This content is for information purposes only and is not investment advice.