Binance Research estimates token unlocks to reach $155 billion by 2030

The
crypto
market
has
recently
witnessed
a
trend
of
tokens
launching
with
high
fully
diluted
valuations
(FDVs)
but
low
initial
circulating
supplies.

This
structure,
often
driven
by
venture
capital
(VC)
funding
and
upbeat
market
sentiment,
can
lead
to
unsustainable
price
appreciation
post-token
generation
event
(TGE)
and
significant
selling
pressure
once
tokens
unlock.

According
to
a
recently
released

report
from
Binance
Research,
aggregated
data
from
Token
Unlocks
and
CoinMarketCap
indicate
that
approximately
$155
billion
worth
of
tokens
will
unlock
between
2024
and
2030.

Binance
Research
suggests
that
without
increased
buy-side
demand,
these
unlocks
could
exert
substantial
downward
pressure
on
token
prices.
Tokens
launched
in
2024
have
shown
the
lowest
market
capitalization
(MC)
to
FDV
ratios
in
recent
years,
highlighting
the
prevalence
of
low
circulating
supplies
at
launch.

The
MC/FDV
ratio
for
tokens
launched
in
2024
is
just
12.3%,
suggesting
that
a
significant
value
of
tokens
will
be
unlocked
in
the
future.

The
influx
of
private
market
capital
has
significantly
shaped
crypto
market
valuations.
Since
2017,
over
$91
billion
has
been
invested
in
crypto
projects,
driving
up
token
prices
even
before
public
market
launches.
In
Q1
2024,
crypto
deal-making
activity
rose
by
52.1%
QoQ,
indicating
a
strong
willingness
among
investors
to
fund
projects
at
elevated
valuations.

Notably,
the
crypto
market
capitalization
also
increased
by
61%
in
the
same
period,
fueling
positive
investor
sentiment
and
allowing
projects
to
raise
substantial
capital
with
less
dilution.

This
trend
poses
long-term
risks
associated
with
inflated
valuations,
the
research
report
claims.
Many
new
tokens
have
FDVs
comparable
to
established
layer-1
or
DeFi
tokens,
despite
lacking
similar
user
traction
and
market
presence.
This
discrepancy
suggests
a
misalignment
in
valuations
and
actual
market
demand.

On
this
end,
Binance
Research
advised
investors
to
emphasize
project
fundamentals
such
as
tokenomics,
valuation,
product
viability,
and
team
credentials.
By
extension,
a
basic
understanding
of
unlock
schedules
work,
paired
with
thorough
due
diligence
would
be
crucial
to
avoid
the
pitfalls
of
high
FDV
tokens,
the
paper
suggests.

“Tokenomics
is
undoubtedly
one
of
the
most
important
considerations
for
investors
and
project
teams.
Every
design
decision
comes
with
its
set
of
benefits
and
trade-offs.
While
launching
tokens
with
low
initial
circulating
supply
may
drive
initial
price
pumps,
the
steady
unlocking
and
emission
of
tokens
create
selling
pressure,
weighing
on
long-term
performance,”
the
report
states.

Projects,
on
the
other
hand,
should
adopt
long-term
thinking
in
tokenomics
design,
ensuring
equitable
token
distributions
and
considering
the
implications
of
high
FDVs
and
low
floats.
Strategies
such
as
token
burning,
milestone-based
vesting,
and
increasing
initial
circulating
supply
can
help
mitigate
future
selling
pressures.

The
trend
of
launching
tokens
with
low
floats
and
high
FDVs
poses
significant
challenges
for
sustainable
growth.
Both
investors
and
project
teams
need
to
be
mindful
of
the
long-term
implications
of
their
decisions,
Binance
Research
said.
VC-backed
projects
should
focus
on
equitable
supply
distributions
and
realistic
valuations
to
foster
a
healthier
market
environment.