Token unlock and vesting explained: cliff vs monthly tranches

A token unlock is the date on which a project's locked tokens become tradable. Nothing is created in the process: the supply has existed all along, it was simply held in a contract that would not release it before a given date. What matters, then, is how that figure compares with circulating supply and the schedule under which it comes free, not the headline with the big number. Two patterns shape that schedule: the cliff, a single large release after a lock-up, and linear vesting, where the same supply trickles out in instalments over months.

The difference is not a technicality. With a cliff, the entire supply hits the order book on one day. With linear vesting, the same supply spreads across twelve or twenty-four dates, none of which stands out on its own. Tell the two patterns apart and a vesting schedule shows you when selling pressure builds and when it has already been priced in.

What a token unlock is, and why nothing new is created

When a token is issued, a project sets out how total supply is divided: to the team, to early investors, to a foundation, to reward programmes, to the open market. Only part of that is tradable on day one. The rest sits in a vesting contract, program code on the blockchain that will not hand the tokens over before a set point in time. An unlock is the moment that contract releases part of the supply.

That is why the phrase "new tokens are coming to market" misleads. Total supply does not change, only the tradable share does. Two terms keep the distinction clear. Circulating supply is the number of freely tradable tokens. Total supply covers every token in existence, locked ones included. Total supply times the price gives the fully diluted valuation, or FDV. When FDV sits far above market capitalisation, a lot of supply is still inside the contract. Why freshly listed tokens with that gap often collapse is worked through with examples in our analysis of FDV and circulating supply.

Cliff: a lock-up, then a single large release

A cliff is a lock-up at the end of which a large amount comes free in one step. Six or twelve months after trading starts is typical. The original purpose is a sound one: team and early investors should not be able to sell on day one. The price for that is a fixed date on which supply jumps.

How big that jump can get shows up in individual cases in our own coverage. At Kite a one-year lock ends in early November, and on our count of October 17, 2026 that frees 1.11 billion tokens, equal to 43 to 46 percent of circulating supply there — set out in our assessment of the Kite unlock in early November. A cliff on that scale is a different animal from a monthly tranche of two percent.

What counts is not the absolute figure but the share of circulating supply. A billion tokens sounds large, yet against a circulating supply of a hundred billion it is one percent. That same billion against a circulating supply of two billion is half. The number alone says nothing; the ratio says everything.

Linear vesting: the same supply, spread across many dates

Under linear vesting the contract releases equal portions at equal intervals, usually monthly, sometimes weekly or block by block. The total at the end is the same as under a cliff, but the effect on the price differs sharply: recurring small releases work like a steady stream of supply the market can adjust to, not like a single blow.

Many projects combine the two: a cliff first, then linear tranches. At Plasma, as we reported on October 15, 2026, a cliff became a schedule of 24 monthly tranches in which the first tranche amounts to around five percent of circulating supply — the details are in our piece on the XPL unlock on October 25. At Arbitrum, on our count of September 30, 2026, 92.6 million ARB leave the lock every month, a pattern we broke down under Arbitrum and the end of the lock-up.

For assessment purposes that means a single date in a linear schedule is rarely an event. The schedule as a whole is one, because it tells you how much supply is still to come over the next twelve months.

Who receives the tokens, and why that decides the effect

The same supply acts entirely differently depending on whose hands it lands in. Four recipient groups are typical, and each behaves in its own way.

Early investors and venture capital

These backers bought in an early round at a fraction of today's price. Even a sale well below the current level remains a profit for them, and many funds owe their own investors a duty to realise gains. This group generates the hardest selling pressure.

Team and founders

For team and founders the tokens are compensation. A partial sale is routine and no warning sign in itself. It becomes notable when the entire allocation starts moving shortly after the cliff, because that can be traced on the blockchain.

Foundation and project treasury

These tokens go into grants, partnerships and developer programmes, and reach the market with a delay, by many small routes. Effect on the price: real, but dispersed.

Rewards for users, staking and liquidity

Here tokens flow to many recipients in small amounts. Some are sold at once, some are left alone. Whether the supply can be sold at once at all hangs on a second lock that is often overlooked: the waiting period for unstaking. How long that runs at the large networks is set out in our piece on the staking lock-up period and the duration of unstaking.

Locked, incidentally, does not always mean nobody can sell. Anyone expecting locked tokens can hedge them in advance through futures or hand them on at a discount in the over-the-counter market. The selling pressure then builds before the date rather than on it. That a large locked amount shifts expectations on its own we described using the case of 700 million HYPE outside circulation.

Four numbers that make a vesting schedule readable

A vesting schedule consists of a handful of figures, and four of them are enough for an assessment.

First, the share of circulating supply. Divide the amount coming free by current circulating supply. Below two percent is a routine date, above ten percent an event, above thirty percent a doubling of supply within reach.

Second, the ratio to daily turnover. Set the cash value of the amount coming free against average daily trading turnover. If the release equals twenty times daily turnover, the market cannot absorb it in a day even if everyone wanted to sell. If it equals a fraction of it, the figure is a headline without consequences.

Third, the recipient group. Does the schedule say what share goes to early investors, to the team, to the foundation and to rewards? Without that breakdown, half the information is missing.

Fourth, what remains in the contract. How much is still locked after this date, and until when? A project with 90 percent of total supply still inside the contract has an unlock ahead of it every month.

These four numbers sit in a project's tokenomics documentation and in the unlock calendars of the analytics providers. Which tools show such calendars, circulating supply and on-chain movements together is covered in our comparison of analytics platforms.

Why the price often falls before the date rather than on it

An unlock date is public, often years in advance. So it behaves differently from a piece of news: the market can price it in. In practice a decline often shows up in the days or weeks before the date, as traders cut positions or bet against it through futures, followed by calm afterwards when the expected wave of selling fails to arrive.

No trading recipe follows from that, only a reading aid: a decline before a large unlock is no proof of a problem at the project, and a quiet unlock day is no proof that nobody sold — the sales may have happened earlier. The assessment only becomes solid once you track the movement of the released addresses on the blockchain, and at most projects that can be done a few days after the date.

Tax in Germany: when a released token starts a holding period

This is where a market topic becomes a topic for your tax return, in two distinct cases.

If you already hold a token and are merely watching a project's unlock, nothing changes for you in tax terms. What governs is section 23 of the Income Tax Act: gains from private disposals stay tax-free when more than a year lies between purchase and sale. Within that period they are taxed at your personal rate as soon as total gains for the year exceed the exemption threshold. Sell out of worry about an unlock shortly before your year is up, then, and the tax can cost more than the price decline you are trying to avoid.

If you receive released tokens yourself — from a reward programme, from staking, from an airdrop or as compensation — the case is different. What then counts is the value at which the tokens arrive and when the holding period begins. That classification depends on the type of inflow and is a matter for tax advice in the individual case; the only certainty is that you have to document the time of the inflow and the price at that moment, because you cannot reconstruct them later. A tool from our comparison of crypto tax software records that data automatically.

Tradability in Germany: an unlock is no help without a venue

A practical point that unlock reports regularly leave out: a supply being technically released does not mean you can buy or sell it from Germany. Many of the projects with large vesting schedules are young tokens listed at only a few venues, and under Regulation (EU) 2023/1114 providers may only supply crypto services in the EU with authorisation. In practice that means checking first whether the token is tradable at an authorised provider, and only then what an unlock date means for it. An overview of venues and their costs is in our exchange comparison; anyone trading mainly in large names such as Bitcoin will rarely meet the unlock question anyway, because no vesting contracts are still running out there.

The second practical point is market depth. A token traded for a few million dollars a day cannot take a release in the tens of millions without individual sales moving the price. Sell into a market like that with a large market order and you pay the discount yourself.

Our assessment of how to handle unlock dates

From the newsroom's point of view, large unlock figures are regularly overvalued in coverage and the schedules behind them undervalued. The evidence comes from the cases in our own coverage: a cliff covering 43 to 46 percent of circulating supply, as at Kite on our count of October 17, 2026, is categorically different from the first of 24 monthly tranches at Plasma at around five percent on our report of October 15, 2026 — yet both appear in reports as an "unlock" with a big number in the title. What follows is this: the two figures that carry an assessment are the share of circulating supply and the ratio to daily turnover, and neither appears in the headline. Against that stands the fact that even a perfectly read schedule says nothing about recipients' intentions; whether a fund sells only shows on the blockchain after the date. No recommendation to buy or sell follows from any of it, and with young tokens carrying large locked amounts a total loss is possible.

Token unlock: the date sits in the vesting schedule, not in the chart

An unlock creates no new money and no new tokens; it only shifts the boundary between locked and tradable. Whether that step means selling pressure comes down to three figures you can gather in a few minutes:

1. Calculate the share and daily turnover. Divide the amount coming free by circulating supply and set its cash value against daily turnover. Both values come from the tools in our comparison of analytics platforms.
2. Look up the remainder in the contract. Check in the tokenomics documentation how much stays locked after this date and until when. A project with a schedule running for years has a date ahead of it every month; which exchanges list the token at all is shown by the exchange comparison.
3. Document your own inflows. If you receive released tokens yourself, record the date and price of the inflow, because valuation and holding period hang on them. A tool from the tax software comparison takes over the bookkeeping.

(As of October 18, 2026. This article is not investment advice. Prices and fee structures change; check the terms with the provider before you buy.)