In today’s briefing:
- The Impact of Token Unlock Events on Cryptocurrency Prices: An Empirical Analysis
- LayerZero Part 3: $ZRO Token
The Impact of Token Unlock Events on Cryptocurrency Prices: An Empirical Analysis
- Large unlocks (over 1% of circulating supply) significantly impact prices, mainly concentrated in the week before and after the unlock. A 1% token unlock triggers, on average, a 0.3% price drop over the week preceding the unlock and another 0.3% drop over the week following the unlock.
- The strongest price effects occur two days before the unlock and on the third and fourth days after the unlock. Interestingly, the actual unlock day and the day after show little price impact.
- The similar magnitude of price drops before and after the unlock suggests that market anticipation is just as influential as the actual selling pressure.
LayerZero Part 3: $ZRO Token
- The $ZRO token was introduced in June 2024, with planned utilities that include protocol governance, transaction fee payment, and staking for DVN security. All three utilities have strong implications for $ZRO’s value.
- We foresee that the next three years will be marked by a rapid increase in $ZRO’s circulating supply, alongside growing utilization within the protocol and its adoption as a common currency for cross-chain trades.
- We propose a valuation framework for $ZRO that leverages the Market Cap to Transaction Volume (MC-Tx) ratio, combined with projected transaction volume scenarios. This framework aims to provide readers with a perspective on the relationship between protocol growth and token value.
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