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  • The prevalence of tokens with high valuations and low initial circulating supply has been a topic of discussion among the crypto community in recent months. This stems from concerns that such a market structure leaves little sustainable upside for traders after the token generation event (“TGE”).

  • Data from CoinMarketCap and Token Unlocks confirm the growing trend of tokens launching with low circulating supply and high valuations. Notably, it is estimated that approximately US$155B worth of tokens will be unlocked from 2024 to 2030. Without a corresponding increase in buy-side demand and capital flows, the substantial amount of tokens coming onto the market poses selling pressure.

  • Factors such as an influx of private market capital, aggressive valuations, and upbeat market sentiment have contributed to the trend of tokens launching with high fully diluted valuations (“FDVs”).

  • The current market set-up makes it important for investors to be selective and discerning by considering fundamental aspects of a project, such as tokenomics, valuation, and product. Project teams may also need to consider the long-term implications of decisions made relating to tokenomics design. 

  • VCs continue to play an important role in our industry and can work together with project teams to ensure equitable supply distributions and reasonable valuations.


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