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The coming days will bring a series of high-profile token unlocks. The past year saw multiple VC-backed projects unlock their tokens, with most losing market value due to selling.
A series of unlocks will further dilute the supply of several high-profile tokens. Among them will be Ethena (ENA), one of the fastest-growing DeFi protocols in 2024. ENA will be just one token among unlocks, releasing another 0.87% of its supply.
Ethena is just starting out on its journey of token unlocks. The currently available tokens are just 1.7B, out of a total supply of 15B. The token’s market cap is around 10% of the fully diluted market capitalization. The coming week will see unlocks valued between $269M and $347M.
The unlocks will be a fraction of the total inflows expected in August. Overall, the market will have to absorb $1.5B in tokens, some belonging to high-profile projects. Unlocks are also expected for Optimism and Arbitrum. Even Ripple’s XRP will have a 600M token unlock with an unknown placement. Gaming tokens ImmutableX and The Sandbox will also unlock.
Not all unlocks are entirely bearish, and may depend on factors like staking opportunities or the potential unrealized gains of early investors. However, the 2024 market has shown that most unlocks lead to selling and a slide in market prices. Projects with significant VC backing have gone through periods of bullish unlocks, when the newly released tokens rallied, but that activity was found to be artificially produced by whales.
In the coming years, unlocks for most VC-backed projects are expected to accelerate, with the potential to keep prices under pressure despite the overall success of projects.
🔓 Weekly Cliff Unlocks : 29-4 August 24 🔓
🔥 $ 347.28m 🔥
🌟 Unlock Highlights 🌟$W (33.33%) – $171.72m$OP (2.79%) – $54.53m$SUI (2.56%) – $48.98m$ZETA (18.92%) – $33.69m$GAL (3.52%) – 14.81m$DYDX (3.65%) – $10.58m$ENA (0.87%) – $6.58m
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( % of cir. supply) pic.twitter.com/IZe9lOUYaN— Token Unlocks (@Token_Unlocks) July 26, 2024
ENA moved to weekly unlocks
ENA token holders will also see changes due to the project’s updated tokenomics. Since June, airdrop recipients of ENA have weekly, instead of monthly unlocks. From H2, unlocks for early investors will accelerate, as well as a bigger part of the fund for ecosystem development.
The current ENA unlocks led to selling that depressed the price in Q2. More than 60% of ENA airdrop recipients sell the token. Currently, ENA tokens are still distributed in the Sats season 2 campaign, active for another 46 days. The next batch of airdrop tokens will go through another vesting period before entering the market.
The Ethena project benefits from bullish Ethereum (ETH) markets, as the ENA token reflects favorable funding rates. Ahead of the unlocks, ENA traded at $0.40, with trading volumes at $46M in 24 hours.
Ethena’s main focus now is to spread USDe to multiple protocols. USDe has been accepted in a growing number of lending protocols, offering yields of more than 25% in some of the programs. The USDe supply has been rebalanced to 3.26B, after peaking at 3.6B tokens. The USDe stablecoin has its most active pairs against FraxUSD, as well as DAI, GHO and crvUSD.
USDe collaterals bring in up to 20% annualized yield when used on Bybit. USDe has also spread to the Wintermute DEX.
Wormhole unlock to cause biggest supply dilution
Along with Ethena, Wormhole is among the most significant unlocks in the coming week. The native W token has been on a non-stop slide since its launch in April. W is down to $0.26, after starting its trading at $1.40.
The final supply of W will be 10B tokens, while only 1.8B are in circulation. Based on the unlocking schedule, 20% of all W can be moved from their vesting smart contracts. Additionally, W has unlocked 1.73M tokens per day for 365 days.
The next W unlock will add 600M tokens to the market, expanding the current circulating supply by 30%. The Wormhole (W) unlock surpasses Zeta (ZETA), which will add 18.92% to its circulating supply.
The W token price is still stagnant, and may continue to slide after the high-weight unlock. Wormhole is attempting to compensate with its main activity, bridging assets. The Wormhole bridge saw a spike in deposits in July, with insignificant outflows. The bridge now holds $37.89M in locked value.
Cryptopolitan reporting by Hristina Vasileva