The dYdX Foundation has issued 1 billion DYDX tokens. The initial allocation of DYDX tokens is reserved for past investors, founders, employees, advisors and advisors. So what would be the potential impact of unlocking tokens on altcoin price?
1 billion DYDX tokens to manage the protocol
The dYdX Foundation, a Swiss non-profit organization, has recently released new governance tokens for the Layer-2 protocol on the Blockchain. The purpose of the token is to allow the community to manage the protocol. In addition, it aims to harmonize incentives between traders, liquidity providers and partners. The DYDX token also builds an ecosystem around governance, rewards, and sharing, designed to enable the growth and decentralization of the Layer 2 protocol.
cryptocoin.comAs you follow, a total of 1 billion DYDX tokens have been minted starting August 3, 2021 and are scheduled to be available within five years. A portion of the initial allocation includes former investors (27.7%) of dYdX Trading Inc., founders, employees, advisors and advisors of dYdX Trading Inc., and the dYdX Foundation (15.3%) and the dYdX Trading Inc. (7.0%) was reserved for future employees and consultants.
The transfer restriction on tokens is enforced by the dYdX Foundation and dYdX Trading Inc. implemented by off-chain contract agreements with dYdX Foundation monitors wallet addresses to determine if any transfers that violate the restriction have been made. If so, the Foundation may express its willingness to take legal action against investors who do not comply.
dYdX Trading Inc. and the dYdX Foundation’s former investors, founders, employees, advisors are subject to the transfer restriction scheme set forth in the recently modified investor warrants. About 99.5% of locked tokens remain locked under the new transfer restriction scheme. The recent change to investor guarantees did not change the phased unlock program. Tokens will be released from the transfer restriction as follows:
- 30% on December 1, 2023 (new First Unlock Date)
- 40% in equal monthly installments from January 1, 2024 to June 1, 2024
- 20% from 1 July 2024 to 1 June 2025 in equal monthly installments
- 10% in equal monthly installments from 1 July 2025 to 1 June 2026
What will be the potential impact of altcoin price?
The potential impact of newly minted tokens on the market and the price action of this cryptocurrency is subject to change. The overall supply and demand of the governing token can depend on a variety of factors, including the purpose of the token issuance, market sentiment, and the regulatory environment.
In some cases, it is possible that a large influx of newly minted tokens will cause an increase in supply and a decrease in demand. Such dynamics potentially lead to a drop in altcoin price. On the other hand, if newly minted tokens are used to incentivize certain behaviors or drive growth for the underlying platform, it could also lead to increased demand for the token. This is also likely to potentially cause a price increase.
Finally, it is worth noting that the impact of newly minted tokens on an altcoin price action is complex and subject to market forces. The management token is a unique and innovative way for the community to manage the dYdX Layer-2 protocol. Therefore, it will be interesting to see how token distribution and unlock periods progress in the coming years.
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