In the current market, high FDV (Full Diluted Valuation) and low circulating supply token issuance, which started gaining popularity with the FTX exchange, has become mainstream and is favored by VCs. Despite rapid price increases driven by market fluctuations this year, such gains are clearly unsustainable.
VCs hold substantial unrealized profits with high FDV and low circulation tokens. As these tokens unlock, they flood the market, driving prices down, while market cap remains stable or even increases. The influx of high-valuation tokens outpaces net inflow capital.
According to a Binance Research report, approximately $155 billion worth of tokens is expected to be unlocked from 2024 to 2030. Without corresponding increases in buyer demand and capital flow, a large influx of tokens will cause sell pressure.
Tokens with high FDV and low circulation are labeled as “dangerous” by the market.
Importance of Tokenomics Design
Contributors (including teams and early investors) typically receive a proportion of tokens as compensation, locked according to specific vesting schedules. While contributors deserve fair compensation as early developers, it's crucial to balance the interests of all stakeholders, especially post-TGE (Token Generation Event) public market investors.
The circulating ratio at TGE is critical. If too many tokens are locked, it affects liquidity, negatively impacting the token price and all holders. Conversely, inadequate compensation for contributors can diminish their motivation to continue developing, ultimately harming all holders.
Classic parameters for token locking include allocation ratio, lock-up period, unlocking duration, and delivery frequency, all functioning over time.
Tokens Facing High Selling Pressure
The higher the unrealized profit rate for VCs, the greater the potential sell pressure in the market. As VCs' tokens unlock, they may be sold, causing price drops.
By collecting financing information, we can identify the top eleven tokens with the highest unrealized profits for VCs:
Monitoring token unlock information can help avoid the risk of price declines when tokens are unlocked.