Chainfeeds Summary:
The current structure not only exacerbates token volatility at certain points, but also systematically turns the most critical 1–3 years of a project's life into the least worthwhile period to hold its tokens.
Article source:
https://x.com/DougieDeLuca/status/1998796845510988140
Article Author:
Dougie
Opinion:
Dougie: In the current crypto market, the investment logic regarding token unlocking has gradually solidified: buy the story early, avoid the unlocking period, and consider returning after the calendar ends. This model stems from the market structure shaped by the current vesting mechanism. Typical projects raise funds in private sales, allocating most tokens to the team, investors, and ecosystem funds, while releasing only a very small circulating supply at TGE. The remaining portion is usually released over two to three years according to a "cliff period + linear unlocking." On the surface, this structure seems reasonable, but in reality, the unlocking calendar is public, each release is seen as a selling pressure event, and market participants tend to be defensive—avoiding being the ones buying. As the unlock approaches, especially with VC unlocking, the market no longer views the token as a sustainable asset allocation, but rather as a supply to be avoided. Hyperliquid is seen as a typical example of the anti-VC narrative in this context: no private sale, no pre-investment valuation, no VC unlocking cliff, thus being considered to naturally avoid selling pressure premiums. The market has even constructed a myth of a team like Satoshi Nakamoto, a token that doesn't move, believing that this structure can shield the token from the gravity of unlocking. However, when some wallets sold after the initial team unlock, the narrative broke down, and the market immediately discussed the team's selling pressure in the traditional way, interpreting the unlock risks in the following years within the same framework. Although the team alleviated short-term liquidity pressure through re-staking and buybacks, the real problem was not the initial unlock size, but the uncertainty itself in the coming years. Unlocking is no longer a mathematical problem, but a structural pricing problem. The Hyperliquid case reveals a key fact: even without VC, tokens cannot escape the structural pricing methods of the unlocking era. What the market truly rejects is not capital itself, but the expectation of selling pressure that lasts for years. For any project with insider unlocking, the token goes through three stages: first, before unlocking, when circulation is scarce, the narrative is strong, and future supply is abstract, it is the easiest period to attract buyers; second, the unlocking period, which usually occurs 1–3 or 1–4 years after TGE, when insider supply enters the market, the calendar is public and transparent, and the rational assumption is that these tokens will be sold, causing new buyers to be cautious or wait and see; third, after unlocking, if the project can survive the selling pressure period, the token may return to its fundamentals. The core problem lies in the second stage: it is inherently hostile to new buyers. Insiders have legitimate motivations to sell, including risk mitigation, diversification, and operational costs, while the public has legitimate motivations not to buy because supply is clear and predictable. Market behavior thus becomes a collective risk-averse game: everyone knows supply will come, so everyone chooses to wait, letting others become the first to buy. The consequence is that the most crucial years of a token's growth—the critical stages of product development, user accumulation, and ecosystem expansion—become the periods with the least natural buying pressure. Hyperliquid, despite possessing an optimal structure—no VC, a strong product, a deep user base, and a founder myth—still couldn't escape the gravity well of its unlocking logic, indicating a structural problem rather than investor behavior bias. Some argue the problem stems from an excessively high FDV at token issuance: if the initial valuation were more reasonable, the unlocking pressure wouldn't have been so amplified by the market. However, even in a more restrained valuation structure, as long as the unlocking mechanism exists, participants are human, and incentives are clear and public, selling pressure expectations will naturally form. The problem in the unlocking era isn't valuation premiums, but rather that the unlocking expectation itself transforms the token's investment attributes into a supply game. In this structure, the rational behavior of short-term buyers is to wait for the selling pressure to subside, while the rational behavior of insiders is to gradually realize profits and mitigate risk. The result is that all projects, regardless of quality, are forced to experience a structurally unfavorable trading environment during their critical formation period. Hyperliquid's performance further reinforces this: despite never having undergone VC pre-mining, possessing extremely strong fundamentals, and having a steadfast community, once it entered the unlocking phase, the market pricing logic immediately reverted to the familiar formula—supply, selling pressure, cliff, and expectations. HYPE is not a failure, but rather the strongest control group, proving that the structural problems of the unlocking era can even suppress the most ideal narrative. In this respect, it is not an exception, but rather clarifies the problem: the current unlocking mechanism in the industry itself has become a structural flaw hindering long-term investment behavior and has a profound impact on the formation process of tokens as capital assets. The author does not propose a solution, but emphasizes the core diagnosis: it is not a problem with VCs, but rather the institutional design of the entire unlocking era, which makes the market default to viewing unlocked tokens as uninvestable assets.
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