At the end of January this year, Tokenomist released the (Tokenomist Annual Report 2024), covering key trends such as token unlocks, low circulation high FDV tokens, meme coins, and AI agents, and revealing their effects on market liquidity, investor sentiment, and long-term value capture.
The report indicates that 2024 begins with the issuance of some important projects with low circulation and high FDV (Fully Diluted Value), setting the tone for the industry's development trajectory. However, market sentiment shifted mid-year. From short-term, low-market-cap tokens with locked vesting plans to fully unlocked, community-driven meme coins, it reflects a diversification of investor preferences. By the end of the year, the 'super meme cycle' became the dominant narrative, attracting widespread attention.
Key Points:
It is expected that over $150 billion worth of tokens will be unlocked from 2024 to 2025, with approximately $82 billion occurring in 2024 alone.
By the end of 2024, the average circulation/FDV ratio at token issuance rose to 35%.
In 2024, meme track returns reached as high as 536%, far exceeding the performance of Bitcoin and Ethereum.
The long-term success rate of meme coins is very low, with 97% ultimately 'dying' and an average lifespan of about one year, with many tokens disappearing in a shorter time frame.
A new crypto trend is emerging that combines memes, AI, and social media autonomous entities, with frameworks like Virtuals and ai16z leading the innovation.
Top Five Unlock Events of 2024
Token unlock events are key milestones in the crypto market. The release of locked tokens into circulation according to a predetermined vesting schedule can affect prices and funding rates, especially in the short term. Therefore, this section analyzes the five largest unlock events of 2024, focusing on price impacts and funding rate trends within a 60-day window (-30 to +30 days). By analyzing the relationship between funding rates and price movements, we can assess whether market expectations (as reflected in positions of derivative financial products) are consistent with actual price trends. This provides valuable insights into market sentiment, particularly for key events like token unlocks.
1. Arbitrum ($ARB): Unlock value of $2.22 billion
Source: tokenomist
In March 2024, when Bitcoin reached a new all-time high of $74,000, Arbitrum ($ARB) initiated the largest token unlock event of the month, with a value of $2.22 billion. This marked the first unlock for Arbitrum's private investors and founders/team, introducing a significant amount of new token supply to the market.
In terms of price impact, $ARB's price steadily declined leading up to the unlock date, possibly reflecting cautious trading behavior regarding anticipated supply increases. Within 30 days post-unlock, $ARB's price further declined by 33.8%, which may be related to the market entering more supply.
Regarding funding rates, $ARB's funding rate closely aligned with Bitcoin's funding rate over 60 days, but was consistently higher than Bitcoin's, reflecting higher demand for leveraged positions during that period.
Source: Tokenomist
2. Sui ($SUI): Unlock value of $1.21 billion
Source: Alloctions
In May 2024, Sui ($SUI) was the second largest unlock event of the year, with an unlock value of $1.21 billion. This unlock released a substantial supply of tokens, most of which was allocated to private investors.
Analyzing price impacts, $SUI's price rose by 39.6% in the 30 days leading up to the unlock, but fell by 20.3% within 30 days post-unlock.
Source: Tokenomist
In terms of funding rates, $SUI's funding rate entered negative territory 20 days before the unlock, reaching -34.1% on the day of the unlock, indicating pessimism ahead of the unlock event. About 20 days post-unlock, $SUI's funding rate rebounded and aligned with Bitcoin's funding rate (around 11.0%).
3. Celestia ($TIA): Unlock value of $977.44 million
Source: Alloctions
In October 2024, Celestia ($TIA) initiated a significant unlock event worth $977.44 million. This marks the first major unlock for $TIA since the TGE event, becoming one of the largest token unlocks of the year, with the vast majority allocated to private investors and the founders/team.
Regarding price impact, $TIA's price continued to decline in the 30 days leading up to the unlock, dropping 25% within 20 days post-unlock. However, it quickly rebounded, surpassing Bitcoin by 19.2% 30 days after the unlock.
$TIA's funding rate chart is more volatile than that of other tokens. On the day of the unlock, $TIA's funding rate remained in negative territory (-61.1%), but within a few days post-unlock, it recovered to positive values, quickly aligning with Bitcoin's funding rate.
Source: Tokenomist
4. Jito ($JTO): Unlock value of $563.91 million
Source: Alloctions
In December 2024, $JTO concluded the year with a significant unlock event valued at $563.91 million, releasing 151,909,981 $JTO into circulation. The founding team led the unlock, accounting for 57.3%, followed by private investors at 37.9%.
Due to significant market volatility at the time, we saw $JTO's price impact shift from negative to positive twice before the unlock. After the unlock, the price impact continued to rise and then sharply dropped to about -15%. By the end of the 30 days, it shifted from positive back to negative again.
Funding rate trends also reflect this volatility. In the 30 days leading up to the unlock, $JTO's funding rate roughly matched that of Bitcoin, sometimes exceeding it and sometimes falling below it. However, within 30 days post-unlock, we can observe that $JTO's funding rate continued to fluctuate while Bitcoin remained relatively calm.
Source: Tokenomist
5. Aptos ($APT): Unlock value of $423.6 million
Source: Alloctions
The fifth largest unlock event this year occurred in April 2024, when Aptos ($APT) conducted a $423.6 million unlock activity. The founders/team and private investors held the largest market share in the unlock, but about 13% was allocated to the community.
$APT's price impact surged by about 51.7% within five days leading up to the unlock (from 20 days before the unlock to 15 days before), driven by heightened trading activity and speculative behavior. However, from 15 days before the unlock, the price impact began to steadily decline. In the post-unlock period, the price impact turned negative and remained so for the next 30 days. During this time, the overall crypto market also exhibited a downward trend.
$APT's funding rate trends are very similar to Bitcoin's, similar to $ARB's funding rate trends. This indicates that price impacts may be more due to macroeconomic factors affecting the entire market.
Source: Tokenomist
Analysis
Through analyzing these token unlock events, it is evident that market sentiment before and after an unlock can vary significantly depending on the scale of the unlock, market expectations, macroeconomic conditions, and other factors. Forecasting based on these factors is inherently complex, but they can provide insights to help us understand how key drivers influence market behavior during unlock events.
As these unlock events approach, analyzing market expectations becomes crucial, observable through price impacts and funding rates. A drop in prices before the unlock may reflect market concerns over increased supply, while price surges may indicate market optimism or speculative behavior. Before $SUI's unlock in May 2024 and $TIA's unlock in October 2024, we observed that both their price impacts and funding rates showed considerable pessimistic sentiment. This aligns with the view that unlock events are generally bearish, as they dilute supply and increase sell-off pressure. However, sometimes the opposite can occur; an unlock can signal bullishness by releasing more supply into the market for buyers to scoop up. We see from the case of $ARB that the funding rate before the unlock peaked at +115.8%, indicating increased leverage demand from bullish positions, reflecting optimistic market sentiment.
While these factors offer valuable insights, we must also consider the state of the overall market. During market downturns, larger factors may dominate the price trends of certain tokens, as illustrated by the cases of JITO and $APT. The funding rates of these two tokens are closely related to changes in Bitcoin, or they exhibit significant volatility when Bitcoin's funding rate remains relatively stable.
Low Circulation, High FDV Tokens
Circulation is defined as the ratio of circulating supply to maximum supply, which has become an increasingly important metric when considering supply data. Low circulation, high FDV (Fully Diluted Valuation) tokens, characterized by low circulating supply at issuance but high overall valuation, have become increasingly prominent in recent years. This model enables rapid price appreciation due to limited liquidity, yet faces criticism for long-term sustainability due to subsequent token unlocks often exerting downward pressure on the market. This section aims to examine the historical context, trends, and impacts of this tokenomics model, providing a data-driven perspective to evaluate its viability.
Despite the recent surge in popularity of low circulation, high FDV tokens, this model is not novel. It first gained significant attention during the 2020–2021 bull market. A notable example is Curve ($CRV), which launched in August 2020, with prominent crypto investor Jason Choi highlighting the risks of this model using $CRV. Within 7 hours of trading, $CRV's market cap surged from $2 million to $6 million. However, the FDV at issuance was nearly half that of Bitcoin's market cap, proving that such valuations are unsustainable. Early investors faced massive losses as the price dropped 50% shortly after issuance due to dilution from inflation and early sellers exiting their positions.
The case of $CRV reveals a key issue: the initial price trend of low circulation, high FDV tokens may mislead investors who overlook the future dilution's long-term effects. Despite $CRV's exaggerated inflation mechanism, it laid the groundwork for broader trends that followed.
Source: Tokenomist
Analysis of token issuance from 2020 to 2024 shows a clear pattern in the adoption of low circulation, high FDV models. These tokens were particularly prevalent at the end of 2020 and the beginning of 2024, coinciding with Bitcoin's halving and the subsequent bull market.
Over time, the crypto community is becoming increasingly aware of the risks posed by this model, prompting recent projects to make adaptive adjustments to their tokenomics. A noticeable trend is the change in the circulation/FDV ratio at issuance. By the end of 2024, the average ratio has risen to about 35%, reflecting greater investor caution. For instance, Binance has introduced listing standards that consider TGE (Token Generation Event) circulation, encouraging projects to prioritize sustainable tokenomics.
Source: Tokenomist
To further understand the impact of the low circulation, high FDV model, we analyzed the performance of altcoins issued in 2024. We summarized key metrics, including FDV, market cap, circulation at TGE, price performance, and price changes, focusing on the top 25 altcoins ranked by FDV on the TGE date.
Source: Tokenomist
After excluding outliers like Hyperliquid and Ondo Finance, the data shows no strong correlation between circulation at TGE and price performance this year, which can be visualized in the scatter plot below. There are many potential reasons for this. Notably, the increase in demand and liquidity, along with greater attention to hype-driven/emotion-related narratives during the recent bull market cycle, may have diminished the correlation between circulation and price performance. On the other hand, for some tokens, the evolution of tokenomics has included new dimensions, such as inflationary or deflationary tokenomics and staking mechanisms, which may also dilute the impact of circulation at TGE.
Scatter plot of 90-day price performance against circulation/FDV ratio at the time of initial pricing. Outliers like $HYPE and $ONDO have been excluded.
As mentioned above, there are also exceptions. Hyperliquid issued its tokens without VC unlocks, allocating 33% of its token supply to community airdrops. This approach promotes decentralization and community participation, setting a benchmark for fair token issuance.
The chart below shows the total value of token unlocks from 2020 to 2030, revealing significant patterns during the past two bull market cycles. The total unlock value peaked at $136.7 billion in 2021, more than eight times that of 2020 ($16.9 billion). Although the increase was not as pronounced, the total unlock value of 2024 ($82 billion) is about twice that of the previous year ($47 billion). This peak coincides with the previous bull market's peak when many projects locked up a large allocation of tokens for future release.
Source: Tokenomist
Looking ahead, the market will face significant unlocking pressure. From 2024 to 2025, it is expected that over $150 billion worth of tokens will be unlocked, with about $82 billion occurring in 2024 alone. This poses short-term risks to market stability. However, as locking plans conclude, the reduction in unlocking pressure may contribute to long-term market stability.
The low circulation, high FDV token model has proven to be a double-edged sword. While it can drive rapid price appreciation, it also brings significant risks due to future dilution and unsustainable valuations. As the crypto market matures, both investors and project teams must carefully assess tokenomics to ensure alignment with long-term goals. The evolution of token distribution mechanisms, like Hyperliquid, offers promising alternatives that emphasize fairness and sustainability.
It is important to note that these predictions are based on data from 378 tokens tracked by Tokenomist, representing a segment of the market. The emergence of new token issuances and changes in existing tokenomics, such as re-locking or burning mechanisms, may alter these dynamics.
Meme Coins and AI Agents
Throughout 2024, Bitcoin maintained its dominance in the cryptocurrency market, attracting increasing investments from the traditional finance sector. However, sentiments regarding the underperformance of altcoins were also growing. Despite significant growth at the end of the year, many altcoins failed to follow Bitcoin's lead.
Source: Glassnode Glassnode x Fasanara_Digital Assets Report Q4 2024
Analysis data shows that among the top 250 altcoins by market cap, only 28.1% outperformed Bitcoin, while 45.5% outperformed Ethereum.
Source: Tokenomist
In contrast to the broader altcoin market, one industry significantly outperformed its peers: meme coins. This sector showed extraordinary growth in 2024, achieving a 536% return year-to-date—outperforming Bitcoin and Ethereum by 177% and 300%, respectively. Notably, among the top 54 tokens by market cap issued this year, 19 were meme coins.
Source: Tokenomist
The Appeal of Meme Coins
The astonishing success of meme coins raises important questions about their appeal and ongoing popularity. This section explores the data and motivations behind this unique phenomenon.
Fair Distribution Model
One of the main factors driving the appeal of meme coins is their fair launch model, which provides their entire token supply to the community from day one. This approach ensures 100% circulation, aligning with the core principles of cryptocurrency: fairness, transparency, and decentralization. Unlike many other projects, meme coins avoid excessive team allocations or early investor privileges, fostering equitable participation.
This fair launch model resonates strongly with investors, especially as dissatisfaction with VC-backed projects grows. Such projects are sometimes criticized for having complex tokenomics and distribution structures that may seem biased toward early stakeholders.
Additionally, meme coins offer simpler and more understandable narratives compared to other altcoins, which often require substantial technical expertise to evaluate. Meme coins focus on community engagement and cultural relevance, making them effective tools for attracting new users to cryptocurrency.
Long-term community incentives alignment
Traditional methods of community building in Web3 primarily rely on token airdrops to incentivize early contributors. These rewards typically target individuals who create content, participate in Discord, or engage in protocol-specific activities.
Of course, this is the modified content you requested:
While this model effectively sparks initial interest, our analysis reveals significant flaws in long-term community retention. Studies show that airdrop hunters often sell immediately after receiving tokens, especially when allocations do not meet expectations, leading to decreased community engagement and potentially negative sentiment toward the protocol.
Our research indicates that meme coin projects show significant success in building sustainable communities through an innovative incentive alignment approach. These projects effectively merge the interests of teams and communities, creating a scenario described by market participants as 'the best marketing is price appreciation.' Drawing from Murad's framework, successful crypto communities often exhibit characteristics similar to fervent followers, with loyal supporters and unique shared beliefs. This phenomenon generates strong collective enthusiasm among participants, enhancing retention and driving organic growth through community-driven initiatives. This approach creates a gamified environment in which users feel their success is directly tied to the project's success, motivating them to remain engaged long-term.
Community Takeover: A New Paradigm
An emerging trend in protocol governance is community takeover (CTO). When a project's original developers abandon the project, community users and token holders take over the future direction and management of the project, resulting in a community takeover. When projects shift to community ownership, token holders become both owners and operators. This dual role fundamentally changes their relationship with the project. Community members must actively participate in governance, development, and marketing to maintain and enhance the value of their held tokens.
Growth Catalysts
In 2024, a major catalyst for the meme coin phenomenon was pump.fun, aimed at allowing more people to easily create and trade their own tokens, significantly lowering the barrier to entry. Since its launch in January 2024, over 5,581,665 tokens have been created on pump.fun as of January 6, 2025. As shown below, most Solana-based tokens are now issued through pump.fun rather than traditional methods. The success of pump.fun has also sparked competition, with other blockchain ecosystems exploring similar platforms to capitalize on the growing interest in fair launch tokens.
Source: Tokenomist
Risks and Limitations
Despite the popularity of meme coins in 2024, they still carry inherent risks. Like unissued tokens, meme coins are essentially trends that often experience rapid rises and equally swift declines. Similarly, repeated oversaturation of meme coins may dilute their impact, as illustrated by Murad's 'Meme Coin Pyramid,' where successful meme coins constitute a small proportion compared to those gradually disappearing.
Source: The Meme Coin Supercycle - TOKEN2049 Murad's Meme Coin Pyramid
Meme coins have a significantly low long-term success rate. According to Chainplay's (2024 Status of Meme Coins) report, the average lifespan of meme coins is one year, with 97% ultimately deemed 'dead' (defined as having a 24-hour trading volume below $1,000, liquidity below $50,000, and no updates on Twitter for three months). Currently, only one meme coin on pump.fun has a market cap exceeding $1 billion, and eight have a market cap over $100 million.
Another key risk is the potential for malicious activities. Despite being a fair launch, insiders or developers may still control the majority of the tokens, undermining the principle of decentralization and allowing for pump and dump schemes. Although pump.fun counters this situation with its bonding curve mechanism and the 'graduation' of tokens to Raydium, scams may still go undetected. Even in the case of fairly launched meme coins, there are instances where teams or insiders exploit virtual wallets to target meme coins. It is advisable to consult websites like gmgn.ai for indicators to analyze risks, such as top 10 token holders, blacklists, developer activity, and bubble charts.
Artificial Intelligence
Another prominent sector in 2024 is AI agents. AI agents are essentially autonomous entities capable of performing tasks and interacting with other users/agents, utilizing blockchain technology for on-chain operations. They are likened to enhanced meme coins, as they combine elements of memes, AI, and social media to create autonomous entities that can interact with users and self-propagate. In 2024, we saw the emergence of major players like Virtuals and ai16z, providing frameworks for the development and deployment of AI agents.
In an article regarding crypto predictions for 2025, Dragonfly Capital Managing Partner Haseeb Qureshi predicts that tokens related to AI agents will surpass meme coins in the coming years. He believes that unlike KOLs and influencers, AI agents never rest, follow the majority opinion, and are less driven by self-interest. They also excel at aggregating and amplifying real-time information. Current agents like aixbt demonstrate potential incremental improvements within the next year or two by creating alpha information streams through scraping social media data.
Nonetheless, Qureshi predicts that over time, the novelty of these agents may wane. An oversupply of AI agents could lead to a reversal in sentiment, with the crypto community potentially returning to a preference for human support. Of course, this is also a natural fluctuation of trends. However, Qureshi suggests that the truly transformative impact in this industry will come from software engineering agents, which have the potential to fundamentally change the development and security of blockchain projects.
Broader Implications
Additionally, it is worth noting that the DeFi sector has continued to innovate over the past year. OG projects like Aave have maintained strong performance, achieving record high deposit amounts this year. Meanwhile, new projects like Ethena have also attracted increasing attention from the traditional finance sector. RWA projects like Ondo Finance have exceeded expectations this year, possibly driven by the growing demand for tokenization of financial products.
The success of meme coins and their community-driven tokenomics model has incentivized other sectors to adopt similar fair launch practices. For example, DeSci tokens. Another noticeable trend is that an increasing number of projects are allocating a larger proportion to the community during the token issuance process.
Another potential trend to watch is the fusion of meme coins and utility. User @hmalivya9 on X proposed the concept of 'community clusters.' This model suggests collaboration between meme coin projects and utility token projects through a staking system, allowing meme coin holders to stake their tokens to earn rewards from multiple utility token projects. The system would enhance effectiveness by requiring active social media participation, essentially gamifying brand awareness for utility tokens.
hmalivya9 envisions this symbiotic relationship as a blueprint for the future structure of crypto communities, intertwining entertainment and utility. This concept is not entirely new. For instance, in Hyperliquid, holders of its native spot token $PURR can receive airdrops of other spot tokens within the Hyperliquid ecosystem and earn Hyperliquid points. $PURR can only be traded within Hyperliquid, significantly expanding its user base.
In the coming year, AI agents will also see continued development. ai16z proposed a tokenomics model where token staking acts as a verification system, providing platform access, enabling governance participation, and establishing accountability through potential penalty conditions. In this evolved staking model, stakeholders' economic interests are directly tied to their contributions to ecosystem quality and growth.
2025 Outlook
2025 will undoubtedly be an exciting year, whether in the evolution of existing trends or the emergence of new ones.
This article is reprinted with permission from: (PANews)
Original text: Tokenomist Annual Report 2024
Translation: Nancy, PANews
'$82 billion token unlock in 2024! Meme coins have high returns, but 97% have died' was first published in 'Crypto City'
