Impact of Token Unlocks on Market Price: A Breakdown of Recent Release Events for LDO, AVAX and YGG

A futuristic cityscape at sunset, awash with the warm hues of gold and orange. The city is abuzz with anticipation, an air of uncertainty sweeping through. Sky-high monoliths represent diverse cryptocurrencies, varying in heights to denote their market trends. The largest symbolizes Lido (LDO) with a faint, cool blue frost just thawing on the top, indicating token unlocks. Adjacent, a structure glowing with a definite frost symbolizes AVAX, expected to unfreeze soon. Farther out, the crumbling tower of YGG looms ominously under somber clouds, reflecting its troubled trends. A throng of onlookers represent savvy investors, showcasing a spectrum of emotions - anxious, contemplative, hopeful. They stand at the water's edge, where paper boats (tokens) are set afloat, depicting a market flood of new tokens. The placid waters suggest they're stilled by relief, hinting at a delay in sell-offs. The style is abstract and futuristic, portraying the complex, dynamic world of cryptocurrency.

The liquid staking protocol Lido (LDO), the Avalanche Blockchain native token (AVAX), and the Yield Guild Games DAO token (YGG) have all marked their calendars for substantial token unlock events this week. This implies a surge in the token supply in the market, magnifying the trends set by token unlocks – staggered disbursement of coins that were initially frozen to avert massive liquidations by early project participants or investors.

We’ll glimpse first at Lido (LDO), which is poised to unfreeze 8.5 million LDO tokens this Aug. 26, tallying to approximately 0.97% of the supply, staggeringly worth $14.2 million. Already, investors possess more than 300 million tokens in their hand, as per data from TokenUnlocks. Despite recording a decline of 8.5% in the last week, LDO managed to maintain a steady trading range in the previous 24 hours.

In similar fashion, Avalanche Blockchain’s native crypto AVAX has slated to release 9.54 million AVAX tokens on Saturday, Aug. 26, valuing roughly $102.86 million and amounting to 2.77% of the total circulating supply. Despite the ostensible panic spurred by token unlocks, Lindsey Winder, CEO of Hedgey Finance, asserts that informed market players have already accommodated the imminent unlocks. AVAX saw a plunge of 13% over the last week but exhibited slim volatility in the recent 24 hours.

Blockchain-established gaming, however, is grappling to hook mainstream audiences, and this has clearly shown in the market movements of Yield Guild Games’ DAO token YGG. In the past year, YGG’s value has plummeted by 59%, despite a fleeting rise last month. This week alone, it recorded a further drop of 30% in its value. In the pipeline for this Sunday is an unlock of 12.2 million YGG tokens ($2.87 million), making up 6.6% of the cryptocurrency’s circulating supply.

But how significantly do these unlocks affect market prices? This question elicits a complex answer. Conventional wisdom suggests bearish outcomes, but coincidentally, the relationship between token unlocks and market trends is a nuanced one. As a study by analytics firm The Tie surveyed over 350,000 unlock events and found that coins usually declined prior to the unlocks, but turned the corner swiftly especially if the liquidity unfrozen exceeded 100% of the average daily volume. This peculiarity could indicate that holders might exercise patience before selling off their tokens, presumably due to relieved anticipation of a potential market flood with new tokens.

Source: Coindesk

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