Massive Token Unlock Sends $OP Down 10%

September 26, 2023

A big token unlock event is on the horizon.

Image version
Text version

GM 👋

This is the Smoothie Newsletter.

We heard your feedback!

You said you wanted better filtering in Smoothie’s Reviews Page.

So we just released a category filter so you can better find products to earn USDC with!

Optimism's OP Token Drops 10% Ahead of Massive Token Unlock

Optimism's native OP token is down 10% this week.

Why?

A big token unlock event is on the horizon.

TokenUnlocks data shows that 24.16 million OP tokens will flood the market on Sept. 30.

That's about 3% of the circulating supply, worth more than $30 million, split between core contributors and investors.

Market Reactions:

After a brief rally, OP is now trading flat at $1.26.

This comes after news that Optimism will sell $160 million worth of OP tokens to private sellers.

On Sept. 19, it also announced its third airdrop, with 19.4 million OP tokens allocated to more than 31,000 addresses participating in delegation activities relating to the network’s DAO, Optimism Collective.

I believe this airdrop was announced to offset the impact of the upcoming Token Unlock.

What Are Token Unlocks?

Token unlocks free up tokens that were previously 'locked' under smart contracts.

They're like a timed release, helping stabilize prices and keep the dev team focused and not sell their tokens before a certain time period - usually known as the “vesting period”.

Such tokens can’t be bought or sold by anyone, and hence are kept out of circulation.

This way, the team can focus on building the product rather than selling their tokens prematurely.

The risk?

When tokens unlock, they put selling pressure on prices as people usually perceive that the team would sell a significant portion of their tokens soon after the unlock.

Token unlocks are a double-edged sword.

They're common in crypto, usually aiming to prevent price manipulation.

But they can also put pressure on prices.

More tokens for sale often means a lower price.

Usually, these unlock events can affect short-term prices.

So, if you're holding or planning to buy, stay informed.

Check the project’s roadmap or dig into the whitepaper for more info.

The Takeaway:

Supply and demand rule the game.

More supply usually means lower prices.

But sometimes, if a token is hot, an unlock might not hurt much.

Either way, if you're in the game, be ready for some volatility.

Sources

Community Highlight

Join the Smoothie Newsletter

This is a special newsletter. Every week, we deconstruct the best crypto trends and share those insights with you.