The First Unlock After TGE: What Happens to Your Book

This article was written jointly by EchoTrade, a crypto market maker, and FinDaS, a tokenomics design firm. An unlock is designed months before it happens and absorbed on a single day, and the two halves are rarely discussed together. Here is the view from both.

Everyone knows the unlock date. That is exactly what makes it difficult.

The short version: the first unlock after TGE is the largest single supply event most tokens face in their first year, and it usually arrives when the order book is thinner than it was at launch. How much supply arrives, and when, was decided in the tokenomics months earlier. What happens when it lands is decided by what is sitting in the book on the day. Most unlocks that go badly were set up to go badly by the first of those, and very little done on the day fully compensates.

The first one is different from every unlock after it, for three reasons. Cliff structures mean the initial tranche is often the largest single release in the entire schedule. The token has no history of absorbing supply, so the market has no prior to price against and prices the uncertainty instead. And everyone holding from TGE reaches a decision point on the same day, which no later unlock repeats in the same concentrated way.

The schedule itself is public. It has been in the [tokenomics] since before launch, and the standard structure of a 6-12 month cliff followed by 2-4 years of vesting means the date was knowable from the day the vesting contracts were deployed. Which is worth sitting with, because it means nothing about the event is a surprise to anyone except, occasionally, the project.

Our side: what the book actually does

We manage order books across more than 90 exchanges, which means unlock days are routine for us and singular for the project having one. Here is the sequence as it runs.

Before the date

The market starts pricing an unlock before it happens, which surprises founders who expect the event itself to be the moment of impact.

Traders read vesting schedules as easily as anyone, and unlock calendars are aggregated publicly. So in the days before a known unlock, positioning begins: some holders reduce exposure ahead of the supply, and short interest can build on venues that support it. The visible effect on the book is usually asymmetric depth, with the bid side thinning while the ask side holds or grows.

This is the part that makes "priced in" a half-truth. Some of the move happens in advance. But pricing-in works on expectations, and expectations are frequently wrong about how much of the unlocked supply will actually be sold. When the tranche lands and the realized selling differs from what the market assumed, the correction happens then, on a book that has already been leaning one way for days.

On the day

Unlocked tokens do not arrive in the order book. They arrive in wallets, and only some of them move.

The first observable signal is transfers to exchange deposit addresses, which are visible on-chain and which traders watch in real time. That flow, rather than the unlock itself, is what the market reacts to. A large unlock where the tokens sit still can pass with little disturbance. A modest one where a high proportion moves immediately to exchanges will not.

What follows is a test of depth, not of price. Selling into a book consumes the resting bids nearest the mid price first, then reaches further out. If depth within 1-2% of mid is deep enough to absorb the flow that arrives, the price moves modestly and recovers as the book refills. If it is not, each level consumed exposes the next, and the price gaps down through the empty ones. This is what [market depth] means in practice, and an unlock is the day it stops being an abstraction.

Two other things happen at the same time and matter more than founders expect. Spread widens under one-sided flow unless something is holding it, and the widening itself deters the buyers who would otherwise be absorbing supply. And on multi-venue tokens, price consistency between exchanges comes under strain: supply rarely arrives evenly across venues, so one book can gap while another does not, and arbitrage flow closes the difference at the token's expense.

What decides how it goes

From the book side, four variables do most of the work.

Depth within 1-2% of mid on the day. Not on the day the market maker was engaged. Books thin out as launch attention fades, and an unlock frequently arrives into a book materially shallower than the one that existed at listing.

Tranche size relative to average daily volume. More useful than tranche size relative to supply, because volume tells you whether the market has the appetite to take the other side. A tranche worth several days of volume is a different event from one worth a few hours of it.

How many venues the supply can spread across. Flow arriving on one thin venue does far more damage than the same flow distributed across several deeper ones.

Whether the desk knew the date. This one is entirely within the project's control and is the one most often missed. A desk that has your vesting calendar prepares for it. A desk that does not have it finds out from the chart, like everyone else.

Then the honest limit, which matters more than anything above it. A market maker does not hold a price through an unlock and should not claim to. What a prepared book does is absorb supply in an orderly way: it keeps the spread from blowing out, keeps depth present on both sides, keeps venues consistent with each other, and lets the market reprice without gapping through empty levels. The price may still fall. What changes is whether it falls in an orderly market or a disorderly one, and whether the token's [exchange obligations on depth, spread and uptime] are still being met the following week.

That last point is the one with lasting consequences. Exchanges monitor listed tokens continuously, and an unlock that leaves a book damaged for days can push a token below the thresholds that trigger review.

What a desk is actually doing in those hours is unglamorous and mostly invisible, and it is covered in full in our guide to [crypto market making].

What preparation looks like

Preparation for an unlock starts weeks out, not on the day, and most of it is unglamorous.

The desk needs the vesting calendar, ideally at onboarding rather than as an emergency the week before. Inventory is positioned across the venues where the flow is likely to arrive, which requires a view on which venues those are. Quoting parameters are set for a range of scenarios rather than the expected one, because the difference between a quiet unlock and a heavy one is mostly about what proportion of the tranche moves, and that is not knowable in advance. And on multi-venue tokens, cross-venue consistency is planned deliberately, because that is where the avoidable damage usually happens.

What cannot be fixed in the last 48 hours is depth. Building a book takes capital and time, and a project that arrives two days before its unlock asking for the book to be deepened is asking for something that cannot be conjured at that notice. The work that determines the outcome happened, or did not, weeks earlier.

The FinDaS side: designing an unlock the book can absorb

Hristo Piyankov, Lead Token Economist, FinDaS

Most first unlocks are not designed. They are inherited.

Cliff length and tranche size usually arrive as a SAFT term negotiated a year before anyone modeled the token, copied from the lead investor's last deal. Founders then argue about allocation percentages, which the market barely reacts to, and treat the [vesting and cliff schedule] as a legal given.

The mistake I see most often is not the length of the cliff. It is that every cohort measures its lockup from TGE, so team, investors, advisors and ecosystem all land on the same date. Four lockups on paper behave as one unlock in the market. It is also the cheapest to fix: stagger them a quarter apart and the same supply arrives as four absorbable events.

What makes an unlock absorbable. Three properties, in the order I check them.

Size against traded volume, not against total supply. The number I use is the tranche divided by thirty-day average daily volume, wash volume stripped out. Under roughly one day of volume the book takes it and nobody notices. Above five it is not absorbed by flow at all but by depth, which means somebody is paid to hold inventory, and that somebody is usually you. Almost nobody computes that ratio before signing the term sheet; it is the first thing out of a token economy simulation. Percentage of circulating supply is the better known metric and the weaker one. Same logic a step earlier, on [how much float to release at TGE].

Continuity. A cliff is a discontinuity, a stream is a rate, and a market can price a rate. Moving a quarterly tranche to a daily stream does not change annual dilution by a single token, and divides the largest single-day quantity by ninety. What you give up is the retention signal, a real cost and a separate argument.

Predictability that can be checked. Put the schedule on-chain, because one nobody can verify gets priced as though all of it hits day one.

What I have seen. A design that looked fine on the allocation sheet: modest first tranche, well spread linear tail, and the linear release starting on the cliff date. So the cliff was one tranche plus the start of a permanent daily flow, and the market summed the first ninety days while the team presented the day-one number.

The allocation nobody has in the model is the market maker's loan. Tokens lent to a desk at TGE are rarely in the vesting table, the option strike rarely modeled, and by the first unlock that inventory is part of the float and behaves like no other cohort.

Can tokenomics design prevent a difficult unlock? No. Design decides how much supply arrives and when. It does not decide whether anyone wants to buy it, and if demand is not there no schedule creates it. Supply can be spread, reshaped and moved. It cannot be removed, because it is somebody's property and they are entitled to it.

What design can do is keep the difficulty proportional to the size of the project instead of self-inflicted. Every failure above is avoidable at the design stage. The rest is demand, and demand is not a tokenomics deliverable.

On "priced in". The market prices the schedule, which is public, and usually gets that right. What it cannot price is the intent of the receiving wallets. A holder who meant to sell can wait; one who never meant to sell cannot un-sell, so positioning ahead of the date is skewed toward the sell case by construction. I have seen unlocks where nothing moved on-chain and the price fell into the date anyway.

What founders should do

The two halves of this article describe the same event from opposite ends, and the conclusion each of us reaches is the same one: the outcome is decided before the day, by two sets of decisions usually made by two groups who never speak to each other.

The same tranche is survivable or not depending on the book it lands in. The same book copes or fails depending on the size of the tranche. Neither discipline rescues a bad decision by the other, which is why the useful work is making sure both decisions are taken with the other one in view.

Practically, for a project between TGE and its first unlock:

Know the date, precisely. Not the month. The date, the tranche size, and the recipient split. If you cannot produce that from memory, that is the first task.

Give your market maker the full vesting calendar at onboarding. Not the week of. This costs nothing and is the highest-return item on this list.

Check depth against tranche size well before the date. Compare what is unlocking against the depth actually sitting within 1-2% of mid, on every venue. Our guide to [market depth] covers how, and it takes about five minutes.

Communicate the unlock in advance. Silence around a known date reads as something to hide, and the market prices ambiguity worse than it prices supply.

If you are still pre-launch, spend the effort on the design. It is the cheapest point of intervention by a wide margin, and the only stage at which the size of the problem itself can still be changed. [Tokenomics consulting] at that stage is worth more than anything either of us can do afterwards.

Questions about your own order book?

[Message us on Telegram]. We look at these every day across 90+ exchanges and are happy to give you a straight read.

Designing a token economy, or fixing one before launch?

FinDaS models token economies before they meet the market, including the unlock schedules that decide how much supply arrives and when. [Talk to FinDaS] if your first unlock is still a design decision rather than a date.

FAQ

What is a token unlock and why does it move the price?

A token unlock is a scheduled date on which previously locked tokens, usually team, investor or community allocations, become transferable. It moves the price because it increases the supply available to sell while doing nothing to demand. The size of the move depends less on the size of the unlock than on how much of it actually reaches exchanges and how much depth is waiting there when it does.

Does the price always fall at an unlock?

No. Unlocked tokens have to be sold to affect price, and a large share of most tranches does not move immediately. Unlocks going to long-term holders or to treasuries behave differently from unlocks going to early investors with a low cost basis. What is consistent is that the market positions in advance of the date, so some of the effect appears before the unlock rather than at it.

Can a market maker prevent an unlock from moving the price?

No, and any desk that says otherwise is describing something other than market making. A market maker absorbs supply in an orderly way: it keeps the spread from blowing out, keeps depth present on both sides of the book, and keeps pricing consistent across venues so the market can reprice without gapping through empty levels. The price may still fall. What preparation changes is whether the market stays functional while it does, and whether the token still meets its exchange obligations the following week.

Can tokenomics design prevent a difficult unlock?

No. Design decides how much supply arrives and when, not whether anyone wants to buy it, and if the demand is not there no schedule creates it. Supply can be spread, reshaped and moved, but it cannot be removed, because it belongs to somebody who is entitled to it. What design can do is keep the difficulty proportional to the size of the project rather than self-inflicted: staggering cohorts so four lockups do not land as one event, sizing tranches against traded volume rather than total supply, and converting cliffs into streams the market can price as a rate.

What happens if the unlock is larger than the book can absorb?

Selling consumes the resting bids nearest the mid price, then reaches into levels with little or nothing in them, and the price gaps rather than slides. The visible result is a sharp drawdown on a chart that becomes the token's reference point afterwards. The less visible result is a book left thin and wide for days, which is what draws exchange attention: depth, spread and uptime are monitored continuously, and a token that fails those thresholds after an unlock can find itself in a review process.

How far in advance should a project prepare for its first unlock?

Weeks, not days. Depth cannot be built at 48 hours' notice, since it requires capital and positioning across venues. The market maker should have the vesting calendar at onboarding, and the specific preparation for a given unlock should begin several weeks before the date, at the same time as the public communication around it.