Token Supply Schedules and Unlocks

A new token often launches with only 10–20% of its total supply actually circulating and tradable. The rest — reserved for the founding team, early investors, and a treasury — sits under a vesting schedule, released gradually over months or years. Unlike bitcoin's algorithmic halving, these schedules are set by each project's own choice, and unlike mining rewards, they're released to specific known parties, not distributed broadly to network participants.

Cliffs and linear vesting

Most schedules combine two mechanics. A cliff is a period where nothing unlocks at all, followed by a sudden release of a chunk of tokens on one date — common for team allocations, often a one-year cliff to keep early employees committed. After the cliff, remaining tokens typically unlock linearly, a fixed fraction released every month over the following two or three years.

Worked example

A project's team allocation is 200 million tokens, on a 12-month cliff followed by 36-month linear vesting, out of 1 billion total supply.

1. At the cliff (month 12), $200\text{m} / 36 \approx 5.56$ million tokens unlock immediately as the first monthly tranche, or in some designs a larger chunk (say 25%, or 50 million tokens) unlocks at the cliff itself before monthly releases begin — schedules vary, so this detail always needs checking per project.
2. Each month after, roughly $200\text{m}/36 \approx 5.6$ million more tokens unlock.
3. At a token price of $2, each month's unlock represents roughly $5.6 \times 2 = 11.2$ ($ millions), i.e. $11.2 million of tokens newly eligible to be sold — whether or not the holders actually sell, that supply is now liquid, and the market has to absorb it or the price has to adjust.

What this means in practice

Traders track unlock calendars the way equity traders track lockup expirations after an IPO: a large unlock date is a known, scheduled event, and prices often drift downward in the weeks leading up to a major unlock as the market prices in anticipated sell pressure, then can bounce if the unlock passes without heavy actual selling. Because unlock schedules are usually published at launch and enforced by smart contract, this is one of the few genuinely calendar-predictable dynamics in an otherwise noisy market.