Every cycle produces the same chart and I keep having the same conversation about it. A token lists with eight or ten percent of supply circulating, prints a fully diluted valuation in the billions on day one, and then grinds down for a year while the team ships exactly what they promised. Holders treat each case as a project-specific failure, wrong narrative, bad sector, unlucky macro. Most of the time it is the same structural setup playing out on schedule, and the whole thing was legible in the tokenomics page before the first candle printed.
What a ten percent float does to price discovery
At listing, the only people who can sell are airdrop recipients, whatever public sale existed, and the market makers who were loaned inventory. The team, the foundation, and the investors, who typically hold well over half of supply between them, are locked for one to four years. So the launch price is set by a thin sliver of tokens meeting a burst of launch-day demand, often on exchanges that listed the token specifically because it was hyped.
The FDV that comes out of this is a multiplication artifact. You take the last traded price, set by maybe a few percent of supply changing hands, and multiply it across the entire token count, including the ninety percent that legally cannot be sold and was mostly acquired at a small fraction of the current price. Nobody with size has validated that number, because the float is too thin for anyone to buy or sell enough to test it. On a majority-float launch, if the price is wrong, holders can express that view with real supply. On a ten percent float they cannot, so the price stays wrong for longer and corrects more violently.
There is also a selection effect in who holds the float. Airdrop recipients skew toward farmers who sell mechanically. Market makers manage inventory and will offload whatever they were loaned when it suits their book. So the unlocked supply has a structurally higher propensity to sell than the locked supply has ability to buy more, and the early price reflects the opinion of almost none of the real cap table.
Locked tokens still trade, just not where you can see them
The part people miss is that vesting restricts the tokens themselves while leaving the economic exposure fully tradable. The moment a perp market lists, which for a hyped launch is often the same day as the spot listing, every locked holder can short against their position. A fund that got in at a seed valuation dozens of multiples below the listing price does not need to wait two years to realize gains. It can short perps at launch, lock in the spread, and use the vested tokens to close out the hedge as they arrive.
You can often see this in the funding rate. Low float names frequently trade with persistently negative funding in their first weeks, meaning shorts are paying to stay short in size, and much of that flow is plausibly hedging rather than directional bearishness. Locked allocations also change hands over the counter at discounts to spot, which does the same thing through a different pipe. Either way, by the time a cliff actually arrives, a meaningful chunk of the selling has already happened economically, and the unlock date is closer to settlement than to a decision.
The arithmetic of cliffs
Then the supply physically shows up. The typical schedule runs a twelve month cliff for team and investors, followed by monthly or quarterly linear unlocks over another two or three years. Translate that into flow. If a token emits a few percent of its circulating supply every month, buy-side demand has to grow at that pace just for the price to hold flat, for a year or more, against sellers whose cost basis may be 95 percent below spot and for whom any price is a good exit.
This shows up in aggregate too. The research on launch cohorts has been fairly consistent: tokens that listed with a small minority of supply circulating have historically underperformed launches with majority float, and the underperformance tends to concentrate in the months around the first large unlock. There is nothing exotic in the explanation. One group has years of scheduled sell pressure ahead of it and the other does not.
A screen, and when these become buyable
Here is what I actually check before touching a new listing. Ten minutes with the tokenomics doc and a derivatives screen covers all of it.
- Float at listing: circulating divided by max supply. Under roughly 15 percent, I treat the FDV as fiction and price the token off flow instead.
- The unlock calendar: date and size of the first cliff, then monthly emissions afterward, both expressed as a percent of circulating supply rather than total supply.
- Insider cost basis: what the seed and private rounds paid relative to spot. If early investors are up 30x on paper, assume they are sellers at any price they can get.
- Funding rates: persistent negative funding on a young low float perp usually means locked supply is already hedging through the same screen you are trading on.
- Unlock size against real volume: an unlock worth three days of genuine turnover is absorbable, one worth three months of it is not.
As for when these become buyable, my honest answer is usually not for a long time, and the framework is about watching the supply picture invert rather than watching the chart. The setup improves when float gets above roughly half of total supply, when the largest cliffs are behind the token instead of ahead of it, when monthly emissions are small relative to organic volume, and when price has already gone through a major unlock without collapsing, because supply that gets absorbed tells you real demand exists at that level. Occasionally there is a decent window just after a big cliff clears, when the forced and hedged sellers are finished and shorts start covering into thin float in the other direction. That trade exists, but it is a trade, with a timer on it, and I size it accordingly.
The failure mode I see most often is anchoring. Someone buys at 70 percent below the listing price because it feels cheap, without noticing that circulating supply has tripled since listing, so the market cap, the number actual money has to support, has barely moved. Compare market cap to market cap at matching float levels, never price to price.
All of this is checkable with public data, unlock calendars, funding rates, and volume you trust. We pull that view together in Blockcircle scorecards because I got tired of assembling it by hand for every new listing, but the sources are open if you want to build it yourself. The useful habit is doing the ten minutes before the trade instead of the post-mortem after it.