Hello fellow degens,
With the slowing down of the market and my inability to relax and let boredom take over my life, I thought I’d finally dig down the rabbit hole of the FDV meme and token unlocks.
I originally decided to do this work for fun and had no intentions of sharing my findings, however, after seeing how consistent and blatant these token unlocks affected prices I was swept with distaste. Quickly as I dug deeper my shock turned into anger, as not only does the public serve as exit liquidity for teams and VCs, but these ‘coincidental’ run-ups before large token unlocks were far too frequent for my liking. While teams and VCs are definitely smarter and more discrete these days in comparison to old-school boiler rooms. It’s just gross to think that insanely low seed prices are not enough for them and they still need some sort of marketing campaign to pump their bags in unison with their token unlocks.
The idea of Token Unlocks:
General Overview
While very much not unique and an idea widely talked about on CT, there wasn’t a great amount of data publicly out there for token unlocks (at least what I came across).
So I started off by scraping the top 500 coins off coingecko and calculated their market_cap / FDV ratio to see how bad the market was inflated:
and unsurprisingly I observed a right-skewed distribution. For people who may be unsure what this data means, there is clear evidence that a high number of coins’ prices are likely inflated by their low float - leading to a relatively small market cap in comparison to their fully diluted valuation. Or alternatively, the future is full of supply shocks for coins and the market in general.
For example:
Coin XYZ has a total supply of 100,000,000 XYZ, yet its current circulating supply is 17,000,000 XYZ (17% of the total supply). Let’s assume their token price is $6
→ Market cap = $102,000,000 (17,000,000 * 6) and a;
→ FDV = $600,000,000 (100,000,000 * 6)
While there may be actual demand to support this token’s price in the short run, how much of the $6 token price do you think is attributed to actual intrinsic value and how much is attributed to a low float * demand? Furthermore, ask yourself if you truly believe this level of demand can sustain ~$500m of supply pressure in the next 1-3 years throughout market cycles in conjunction with hundreds if not thousands of other coins?
My Thoughts
Please note that these are solely my own thoughts and not financial advice. I don’t claim to be right, this is just how I see things based on my prior experiences.
Anyone who tells you FDV is a meme is an idiot and thery’re just coping
90% - 95% of VCs are profit maximizers, it’s their sole purpose and they will dump on you. Crypto is as PVP as it gets
Price always moves in the path of least resistance
For me, using the graph above makes it easy to visualize the market as a rubber band; stretched by demand, yet slowly released by supply. Supply that is a result of continuous token emissions, large unlocks, and constant profit-taking. After some time in the market, I’ve come to realize how simple yet powerful the idea of supply and demand is on the price of a token and therefore how price trends towards the path of least resistance.
How does this relate to everything?
Well if you haven’t already noticed, the market has slowed down tremendously. Demand has subsided and the ‘hot ball of money’ has been starved of oxygen and subsequently turned into an obsidian fucking cube.
Unfortunately, retail will continue to bag hold alts down -99%, baited by every bounce with their high beta asset only to be scammed into a pseudo levered long position at the preying hands of VCs.
For most of these VCs their views have been anchored by their coins ATH’s, seeking any opportunity to offload their position as the distaste of a 5x (instead of their once upon a time 100x) chews them up.
Token Unlock:
The idea of Token Unlock is very simple. We will build out a continuous database to map out token unlocks and emissions schedules for coins based on certain metrics.
The beauty of this is it gives us:
An overview of general market supply > demand pressure
Obvs short-side alpha
A model that will never cease to exist unless tokenomics drastically improve or they cease to exist
Current Plans:
Increasing no. of coins based on a high probability of profit-taking
Internal Discord
Populating a calendar
Future Plans:
An automated telegram bot, pinging unlocks prior to distribution
500+ coins
Blocked and reported by every team and VC
Thank you