Locked Token Holders Face Brutal Losses as Vesting Cliffs Approach

Over the last year, holders of locked tokens in the crypto market have suffered greatly—from both falling prices and lost chances.

Presently, these same holders appear to be in for more of the same. Data from STIX and Tokenomist.ai indicate that over $40 billion worth of altcoins are set to unlock between now and the end of 2025. With so many unsold tokens afloat and so many of them destined to unlock soon, what happens to the price of the average unreleased token and, by extension, the price of the (currently) average locked token?

The average locked token holder has taken a hit of 50%. They’re sitting there with tokens that are only worth half of what they could have fetched a year ago. At that time, the tokens had over-the-counter values that were much healthier. If an investor had sold last year at those levels, they would have made double the amount that the tokens are currently bringing in, in terms of spot price.

And it gets worse. Factoring in opportunity cost, the story grows more painful. For the same 12-month stretch, Bitcoin surged around 45%. While locked altcoin holders saw their portfolios deflate, Bitcoin holders watched the value of their assets remain relatively steady and grow over the same period. The compounding effect favors BTC over the long term.

Let us assume a hypothetical dollar. Let us suppose you had in your possession $1 worth of locked altcoins last year. If you had sold then, you would have that dollar now in hand. If you had exchanged it for BTC, that $1 would now be worth $1.45.

Rather, since you held firm, your now locked token is worth roughly $0.50 on average. To make matters worse, even that $0.50 isn’t a sure thing. To get out now through OTC—in this current market that’s both illiquid and deeply discounted—most sellers are taking a real hit, parting with their tokens for about 50% less than what you’d think they’re worth. That’s right: assuming you can even find a buyer, your effective realized value is just $0.25.

That $1 you could have traded for $1.45 worth of BTC? It’s now basically worth $0.25. That amounts to an 82.8% loss compared to BTC, or a 75% loss when measured against the U.S. dollar. The confluence of token price declines, unrealized opportunity cost, and liquidation haircut has generated a perfect storm for early investors holding locked positions.

Several of these investors took part in private sales or seed rounds, obtaining tokens at reduced prices under strict vesting terms. These terms usually specify a cliff followed by months or years of linear vesting. These schedules, once viewed as a fair trade-off for early access, are now seen as value traps that are painful to exit with any liquidity.

As 2025 unfolds, the situation may become more intense. Our forecast shows more than $40 billion worth of altcoins scheduled for unlock this year. That means a massive supply of previously locked tokens hitting the market—either gradually or all at once, depending on each project’s vesting structure.

For many of these tokens, the good news, if there is any, is that cliff lockups are finally ending. By 2025, vesting durations are generally getting shorter, and the schedules for tokens to unlock have become more transparent. So now, when sellers try to exit, the discounts they have to offer over-the-counter to get their tokens sold are tightening, and the selling conditions are slightly better than they were earlier in the bear market.

The industry has a broader lesson to learn from this, though. Token vesting and liquidity planning need to be reformed. Cliff lockups serve a useful function, but they are too rigid, especially during downturns when they could be designed to be more flexible. This rigidity creates tension between the token structure and the people or organizations that hold tokens. And creating that tension, I don’t think, serves the best interests of token ecosystems.

With more unlocks on the horizon and market conditions starting to look up, they’re faced with some tough decisions. Should they sell at a deep discount, hold for another uncertain period of time, or get their liquidity back by trading into BTC or ETH? Whatever choice they make, I’m pretty sure the clear lesson from all this is: when you lock your tokens, you’re taking on an opportunity cost that may be hard to quantify but is all too easy to see in hindsight.

Currently, the vesting cliff of 2025 is very close. And for lots of token holders whose tokens are locked, the question is not how much they will earn but how much more they are ready to lose.

Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.

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