Glossary
Token unlock
A token unlock is the scheduled release of tokens that were locked under a vesting plan, typically allocated to the team, early investors or a treasury. Once unlocked, the tokens can be sold, which increases the circulating supply.
Also called Token vesting, Vesting unlock, Cliff unlock, Token release schedule
See also
A token unlock is the moment when tokens that were locked become free to move and trade. When a crypto project launches a token, a large share of the supply is usually reserved for the founding team, early investors, advisers, an ecosystem fund or a treasury. To avoid these holders selling everything on day one, their tokens are locked and released over time according to a vesting schedule. Each release date is an unlock.
How a token unlock works
Vesting is usually enforced by a smart contract or by a custodian. Two mechanisms are common:
- Cliff: nothing is released for a period, often 6 to 12 months, then a block of tokens unlocks at once.
- Linear vesting: after the cliff, tokens are released in equal parts every day, week or month until the allocation is fully vested.
The schedule is normally published in the project’s documentation as part of its tokenomics. Specialized trackers list upcoming unlocks with their size and the share of the supply concerned.
A worked example
A project has a maximum supply of 1 billion tokens. At launch, 150 million circulate. Investors hold 200 million tokens with a 12-month cliff and 24 months of linear vesting after it. On the first anniversary, a cliff unlock of 50 million tokens occurs, then about 6.25 million tokens unlock each month (150 million ÷ 24).
On cliff day, the circulating supply jumps from 150 to 200 million: a 33% increase. If the price stays at $1, the market capitalization grows from $150 million to $200 million without any new buyer, so the market must absorb potential selling.
Why it matters
Unlocks change the balance between supply and demand. Large unlocks of tokens held by investors who bought at a low price can lead to selling pressure, especially when the unlocked amount is big compared with daily trading volume. Comparing circulating supply with the fully diluted valuation shows how much supply is still to come.
Risks and limits
- An unlock does not mean holders will sell; some stake or keep their tokens, and markets often price in a known event in advance.
- Schedules can change: teams sometimes extend lock-ups, and some unlocks are not clearly disclosed.
- Small-cap tokens with low liquidity are the most exposed to sharp moves.
- This information is not a trading signal; it is one factor among others when assessing a project.