Token unlocks: types, features, and market impact

What is a token unlock?

According to Tokenomist, in 2025 alone, tokens with a combined estimated value of more than $97 billion entered circulation. At the same time, around 20% of the total volume of unlocked tokens went to project teams and early investors.

Some project teams introduce special mechanisms designed to prevent the uncontrolled release of tokens into circulation. One such mechanism is a token unlock.

What is a token unlock?

A token unlock is the process of releasing a certain number of previously locked tokens — that is, tokens held under a vesting* arrangement — and bringing them into circulation. In the crypto industry, this process is also referred to simply as unlocking tokens.

* Vesting is a mechanism for gradually unlocking tokens over a predetermined period. Unlike a token unlock, which refers to a specific unlocking event, vesting defines the overall conditions, schedule, and volumes of such unlocks.

A token unlock means that the assets become freely available for trading on the market: holders can sell them to other investors without restrictions on any available platforms, including centralized and decentralized exchanges.

The main feature of token unlocking is that it is generally a predictable rather than sudden process, typically built into a cryptocurrency project's tokenomics* from the outset.

* Tokenomics refers to the economic rules and mechanisms that determine how a cryptocurrency project's tokens are created, distributed, released into circulation, and used within its ecosystem. It includes the total and circulating token supply, the way tokens are allocated among the team, investors, and community, vesting and unlock schedules, mechanisms for additional issuance or token burning, as well as the token's utility and incentives for holders.

Statistics show that virtually all cryptocurrency projects that conduct funding rounds using established formats such as ICOs* and their variations (IDOs*, IEOs*, and others) use token unlock mechanisms.

* ICO (Initial Coin Offering) is a method of raising funds for a cryptocurrency project through the initial sale of tokens issued by the project to investors.

* IDO (Initial DEX Offering) is a method of initially offering and selling a project's tokens through a decentralized exchange.

* IEO (Initial Exchange Offering) is a method of initially offering a project's tokens through a centralized cryptocurrency exchange.

As of September 2026, analytics platforms track more than 400 crypto projects with token unlocks built into their distribution schedules. More than $600 million in tokens unlock on the crypto market every week, and the monthly figure can exceed $1–2 billion.

Types of token unlocks

Several types of token unlocks are commonly distinguished in the cryptocurrency sector:

Cliff unlock (instant token unlock) — a one-time release of a large number of tokens. Major projects use this approach less often because it creates a significant risk of a rapid decline in the asset's price.
Linear unlock — tokens are released according to a predetermined schedule, for example once a week, month, or quarter. This is one of the most commonly used approaches due to its predictability and the fact that tokens enter circulation in relatively small batches;
TGE unlock (Token Generation Event unlock) — an approach in which part of the token supply becomes available immediately after the crypto asset is launched.
Mixed or hybrid types of token unlocks. Under this approach, projects can combine several token unlocking methods: for example, releasing part of the tokens immediately while unlocking the remaining assets in stages according to a predetermined schedule.

Why are token unlocks needed?

Token unlocks are used not only to regulate the volume of assets in circulation. They also allow a project to distribute issued tokens among different participants in the ecosystem according to predetermined conditions.

For example, part of the token supply may be reserved for the team and developers. The gradual unlocking of such tokens effectively serves as a long-term incentive mechanism: project participants gain access to their entire allocation not immediately, but as they continue working on the product or achieve specific development milestones.

Separate token allocations may be intended for ecosystem development — including user rewards, developer grants, liquidity programs, partnerships, or financing new products. In this case, the token unlock determines when the reserved assets can actually be used for these purposes.

The token unlock mechanism also helps gradually change the ownership structure of a cryptocurrency. Early on, a significant portion of the token supply is often concentrated among the project team, funds, and early investors. In contrast, over time, the tokens pass to other participants in the market and ecosystem. Therefore, the token unlock schedule shows not only the rate at which new assets enter circulation, but also how the distribution of tokens among different groups of holders may change over time.

What consequences can token unlocks have?

Token unlocks increase the overall circulating supply of a cryptocurrency. Although token unlocking can affect price dynamics in different ways, analysts have identified a certain pattern.

Experts analyzed more than 16,000 events related to token unlocks and found that unlocks can increase downward pressure on the price of a particular crypto asset. According to market maker Keyrock, around 90% of token unlocks were accompanied by negative price performance. The company also estimates that a token unlock can begin affecting a cryptocurrency's price as early as 30 days before the event. On average, the cryptocurrency's price falls about 15% in the month before the token unlock date.

Experts note that one of the main factors affecting a cryptocurrency's price is the size of the token unlock. Analysts found that a token unlock noticeably impacts an asset's price when the amount released exceeds 5% of the tokens already in circulation.

In practice, however, even a relatively small token unlock can significantly affect price dynamics. For example, after the unlocking of 25 million APT tokens, the cryptocurrency's price fell by 5% in just one day. Although this amount represented less than 3% of APT's total supply, the unlocked tokens were worth more than $2 billion at $84, creating substantial pressure on the asset's market price.

Moreover, the newer the project, the more pronounced the negative impact of a token unlock on the crypto asset's value tends to be. While at later stages of a project's development the average price decline associated with a token unlock is around 2.6%, at earlier stages the figure can exceed 15%.

On the other hand, delaying a token unlock can have the opposite effect. For example, the postponement of the token unlock of the well-known decentralized derivatives exchange dYdX from February to December in 2023 led to a substantial increase in the asset's price over two consecutive days: 25% on the first day and another 20% on the second.

At the same time, such a delay gives projects more time to attract new investors and increase market capitalization, meaning a token unlock postponed to a later date may have a smaller negative impact on the asset's price in the future.