Steemit Crypto Academy Contest / S11W6 - Token Unlock

in SteemitCryptoAcademy10 months ago (edited)
Once again, I am glad to be part of Steemit Crypto Academy Contest Season 11 Week 6 - "Token Unlock


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"You have a wide ask in form of "What is Token Unlock?"

And as you said "Tokenomics of a cryptocurrency, an unlock token represents when a certain amount of a project's tokens are released after a lockout period.

I agree with you when you say :-

This key milestone is attracting the attention of investors, as it can lead to a sudden increase in the number of tokens in circulation and influence the price of the crypto. Discover in detail the concept of unlock tokens.

We all know that awareness about cryptocurrencies is spreading at a rapid rate and everyone worth his salt is trying to invest in cryptocurrencies or at least trying to understand the basics of investment and its fundamentals. I am one of them and lately trying my best to learn the dynamics of investing, the vesting the period which are all crucial.

Today I will try to explain what is token lockups and why should we know the value of the same to be a successful investor with my limited knowledge of this complicated subject.

𝕎𝕙𝕪 𝕕𝕠 𝕤𝕠𝕞𝕖 𝕡𝕣𝕠𝕛𝕖𝕔𝕥𝕤 𝕔𝕙𝕠𝕠𝕤𝕖 𝕥𝕠 𝕝𝕠𝕔𝕜 𝕒 𝕢𝕦𝕒𝕟𝕥𝕚𝕥𝕪 𝕠𝕗 𝕥𝕙𝕖𝕤𝕖 𝕥𝕠𝕜𝕖𝕟𝕤?

What I understand about "Token Lockup" is that it refers to a certain amount of assets that were previously locked or restricted from circulation in the crypto market. Most of these tokens are held back by project developers or maybe the ones who invested in an early stage I have 200 million tokens of DOS BEP20 which I received as an airdrop but they are out of circulation right now.

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There are many other tokens in different airdrops but once they start selling them the rates go down and in that case a portion of tokens is locked for trading. I also received 54 Ampleforth when it was priced at $39 because I had a few AMPLE in my wallet. But as soon as they started distributing it its; price rose to $73 and ultimately touched rock bottom at $2.3 because people started selling it.

The methods by which these tokens are locked and then how they are released

An early investor can significantly impact market liquidity. As we know when the previously locked tokens enter into the open market can increase the liquidity of that particular cryptocurrency. Once the token is unlocked it immediately leads to higher trading and influences markets as the price shows unpredictable volatility.

Lockups serve to maintain the stability of the asset’s price, prevent massive sell-offs, and ensure the commitment of the team and early investors to the project. So, what happens when these tokens are unlocked?

At the same time, if the developers create an atmosphere of confidence towards their project and unlock it as per the anticipation of investors, it may increase liquidity and work in favor of the token's stability, longevity. So it all depends on what are the potential impacts of the locking/vesting period which plays a major role in the market.

Unlocks and Their Market Impact

You know, we can talk any amount on paper but the real impact or reaction is always beyond any theoretical analysis. The real impact of unlocking takes a lot of planning and clever insights by the project developers.

What is the impact of an unlock token on the price of a crypto and how is it monitored? Give an example.

How many of you remember when BCH unlock happened at the end of 2020? There was a BCH unlock, which caused a slight price drop which was natural due to increased supply. However, the price recovered as the market absorbed the new crypto assets, demonstrating the resilience of a mature project.

Do you think that all cryptocurrency ecosystems have developed this kind of lock? Steem.Inc Inc. among them? If yes or no, do you think it is or will be beneficial if used or added to its ecosystem? For what?

I don't think every cryptocurrency ecosystem has developed this system of locking, but yes various systems adapt different methods and experiment with them. Actually there are very few methods to predict the future with any firm understanding about the impact of lockups or when you unlock your tokens because in either case the chances are the crypto market might react sharply and go volatile.

I am sure if Steem.Inc. does the same and locks a certain amount, then unlocks it after a certain amount of time with vesting. It can bring opportunities for better liquidity and high gains but it always carries high risks of unexpected volatility and market uncertainty. Unlocking a token can disturb the stability of that particular token and send a wave of uncertainty through the market.

So before unlocking a token the developers should study the impact or they should make more balanced decision and better understand the complexities that might stir the mood of their stockholders. Remember, as they say forewarned is always forearmed especially in the world of crypto, it can cause profit, as well as bring disaster.

List the risks and benefits of unlock tokens in a simple and understandable way.

As far as I know, vesting periods often result in price fluctuations. The result of a large volume of cryptocurrencies entering the market is obviously oversupply shown in its price, and the pressure of selling pushes the market downward. But we can't say that as a general rule, in some cases it boosts up the international market or the impact is not negative, but it all depends on how the unlock works on investors' portfolios. It can even attract more investors and push the price up. Overall, an unlock can work both ways in market dynamics.


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This lock-up period could be crucial either way.

The summary of - Token locks unlocks and their market impacts

However, lockup of any token creates doubts in the minds of investors, so the developers of Blockchain keep in mind and plan a lockup and also the size of unlock to keep their project’s reputation so they have to face a sharp decline in the markets or the reaction doesn't affect their reputation. If an unlock of tokens can send positive signs among the investors it can also trigger distress selling, because larger number of tokens available in the market the larger the chances of selling resulting in a sharp price drop.

That's all dear Steemians, I would like to invite @abdullahw2, @josepha, and @weisser-rabe to tell us more about their own views on this crucial topic.

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Normally I am quite happy to share my opinion - but here I have to pass. I don't understand enough about the crypto ecosystem to be able to give an informed opinion. However, I see no reason to believe that the crypto system should work any differently than any other monetary system. We have analogies between stock exchanges, price movements, account forms... A Ponzi scheme does not work offline or online (at least not for everyone involved and not in the long run). And speculation is a matter of luck. Here as there.

I hundred percent agree with you but you know disagreeing for any reason is not taken well in the crypto-world so I agree even if I don't agree. You know what I mean, "the boss is always right." and no argument or reasoning is taken reasonably.

Any thoughts on the B-Love Network? I know this might be off-topic, but I'm curious to know your opinion. It's gaining popularity in Pakistan and especially in India.

I have no idea since I don't use my phone for any other activity but talking to my friends, family and coworkers. Sometimes I use it for a couple of social media networks but that's only when I am off my laptop and that is also rare these days. I heard about B-Love just now, searched and reached Googleplay.

Wuaooo. Pedazo de post. de verdad muy muy muy interesante. Pienso igual, siento que un token se debe bloquear y desbloquear con mucha asertividad, se bien es cierto, que muchos de ellos no tienen mucha fuerza, hay mini inversores detrás de ellos y pues grandes perdidas. El mundo de las cryptos definitivamente se las trae.

Exactly, everyone who cares for their own financial interests knows or should know their interest before jumping into the fray.

Hey @dove11 just had to drop a comment on your post about token unlock for the Steemit Crypto Academy contest! 🚀 Your breakdown was super clear and I'm seriously feeling like a token unlock pro now haha! 🤓🙌 Thanks for making This topic so easy to understand. Keep rockin' and rollin' with your awesome content! Looking forward to your next posts. 🎉🔥

Thanks, bro, I did read your post and felt mesmerized. 👍

Al estudiar el desbloqueo de tokens me di cuenta de la importancia que tienen en el ecosistema, tratando de contener la alta volatibilidad, pero que tarde o temprano cuando los token son liberados, es el momento de la prueba de fuego para los proyectos, donde los inversores demostrarán su compromiso o interés en continuar o por el contrario de abandonar el barco.

Aquí es donde cobra especial relevancia el análisis del proyecto, sus objetivos, quienes son los desarrolladores, quienes los respaldan, etc., en pocas palabras la viabilidad y la rentabilidad son esenciales para incentivar la inversión a largo plazo.

Gracias por compartir, te deseo un gran éxito en el desafío.

¡Un fuerte abrazo!

So very true! You have analyzed the unlocking of token as an expert and I learned a few new things from you. Thank you so much for your feedback.

¡Feliz día!

That token indeed unlocks and increases supply hence it is expected by many that it will affect the price of a token based on the idea of the law of demand and supply, however, you have shown us an example in Bitcoin Cash that shows it's beyond just being theoretical and it takes a lot of planning and when utilized right, it can still improve the price of a token rather than cause a dip as you have explained. All the best in the contest.

Thanks, you have hit the nail right on its head. Thanks for the support.

 10 months ago 

Saludos cordiales estimado amigo dove11.

Estoy de acuerdo contigo en que cualquier proyecto debe tener más cuidado al momento de decidir bloquear un token, deben estudiar bien el mercado y el impacto que causará al momento de bloquear y al momento de desbloquear, todos los inversionistas de ese token merecen respeto y ganar, ese el el principal motivo de uno invertir o trabajar en este mundo.

Te deseo el mayor de los éxitos, feliz y bendecido inicio de semana.

So true, you have nailed your point like a pro. I am not much on this topic so I talk in terms of the share market and how the other financial services work but then they have nothing like the "burning token" term.

We have had some token unlock thee past few days, and we have seen its impact on the market. It really brings about volatility just as you stated in your write-up.

Thank you for putting up this article.

And you know what? I had bought 500 Steem at 0.1585 thinking it was an opportunity, but it backfired. Kinda boomerangs as if caught unaware.

CONGRATULATION...

This comment has been upvoted through steemcurator08

Team 5: Curation Guidelines & Basics for September
Curated by - @chant

Thank you so much for your support @chant, highly appreciated 👍

Hi my dear friend. How are you? Yeah ! We all are in learning stage. This posts shows your interest for crypto. And let me know where you are busy ? You didn't contact me even. Thanks . Wish you good luck for the contest.

Hehe, I am scared of busy admins so I don't want to waste their time. Seriously, I knew almost nothing a year ago apart from trading but I am trying to learn the finer points. See yah soon.

Hahhaha . Yeah you can understand hahaha how much we are busy in season 11. But now it's going to end...hahaha

See, I wrote two contest posts in SCC11 2nd and 6th for hindwhale and reviewed almost 60 posts so yeah I was busy too. Thanks for your support.

Haha still you are busy ?

Yeah I can understand !

Now I am free and ready to go back to work in 2 to 3 weeks. Maybe I will have more time for my young friend in the coming days 👍

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