What is Supply Unlock?

A supply unlock is the moment when tokens locked by vesting schedules or lockup contracts become available for circulation. Large unlocks especially of founder or investor allocations can flood the market with sellers and create downward price pressure.

How does Supply Unlock work?

Tokens are locked in a smart contract with a time-based or milestone-based release schedule.
When the unlock date arrives, holders can claim their tokens.
Newly circulating tokens increase total supply, diluting existing holders.
Projects often announce unlocks in advance to let the market price in the impact gradually.

Why does Supply Unlock matter?

It reveals who holds tokens and when they can sell. A large founder unlock shortly after launch signals potential selling pressure and misaligned incentives.

Key features of Supply Unlock

Defined in vesting contracts, publicly auditable
Magnitude and timing determine market impact
Concentrated unlocks cause sharper price reactions than gradual ones
4-year vesting schedules signal long-term founder alignment

Examples of Supply Unlock

Optimism's large OP token unlocks created significant selling pressure from early backers. Projects with 1-year lockups followed by a single cliff unlock often see sharp price drops the day tokens become available.