The Avalanche blockchain ecosystem is bracing for a significant 1.2% increase in total supply as millions of AVAX tokens will be unlocked and distributed to key players this Sunday. With 9.3 million tokens entering circulation on May 27, their current worth stands at around $130 million. The recipients of these tokens will include the Avalanche Foundation, strategic partners, Ava Labs, and an airdrop, according to Patrick Sutton, Avalanche’s communications chief.
Sutton clarifies that unlocked tokens don’t necessarily mean they will be used automatically. Instead, it gives the Foundation the discretion to decide when and how to use them. AVAX plays a crucial role in this ecosystem, serving as the gas to Avalanche’s smart contracts and a means to secure the blockchain through staking. Its value has remained stable in the past 24 hours, sitting at $14.20, as per CoinDesk data.
Although token unlocks generally cause concerns among investors, the upcoming Avalanche unlock is no surprise. “Token unlocks freak people out in general, but the upcoming Avalanche unlock has been mapped out for a while now and most sophisticated actors have adjusted for it,” says Lindsey Winder, CEO of token infrastructure firm Hedgey Finance. Therefore, it is unlikely to have a sudden, significant impact on the AVAX market price.
However, the number of remaining locked tokens appears to be a point of contention. Data from crypto analytics firm Token Insights indicates that 358.55 million AVAX tokens are still locked, whereas Sutton claims it is only 96.06 million – approximately a quarter of Token Insights’ reported figure. This discrepancy could potentially raise questions and concerns among investors.
In conclusion, the unlocking of millions of AVAX tokens this week will present both opportunities and challenges for the Avalanche ecosystem. While it highlights the growing relevance of the blockchain, a 1.2% increase in total supply also serves as a reminder of ongoing volatility and uncertainty. As with any asset, an individual’s approach to AVAX should depend on their risk appetite, investment horizon and market outlook.
It’s important to note that despite the initial unease that might be felt in the market during the token unlock period, the Avalanche ecosystem has mapped out their plans in advance. This savvy foresight should provide some reassurance to investors and possibly solidify the market’s resilience in the face of this anticipated supply increase. So, while the upcoming Avalanche unlock may be causing a few ripples of skepticism, the overall impact on the market and the blockchain’s future potential remain to be seen.
Source: Coindesk
