Market Impact of Token Unlocks
The impending token unlock of Axie Infinity (AXS), a prominent blockchain gaming platform, has drawn significant attention from investors. Historically, such events have resulted in significant dilution for existing token holders due to increased token supply in the market. As a result, the AXS token has experienced a notable depreciation in recent days, dipping below its year-to-date high of $13.25.
Upcoming AXS Token Unlock
According to Token Unlocks, Axie Infinity will release approximately 11 million AXS tokens, translating to over $61 million in value. These tokens constitute roughly 11% of the project’s current market capitalization. The token allocation will be distributed among various stakeholders, including the Axie Infinity team, staking reward participants, advisors, the play-to-earn reward system, and the ecosystem fund. Notably, a significant proportion of the unlocked tokens will be allocated to insiders.
Current Token Distribution
Data indicates that approximately 67% of all AXS tokens have already been unlocked. Typically, token unlocks exert a bearish effect on the market, as they lead to additional dilution for existing holders. In some instances, cryptocurrency companies mitigate the impact of token unlocks through token burn mechanisms, which remove tokens from circulation. However, Axie Infinity has not implemented such a strategy.
Gaming Platform Performance
The token unlock coincides with a period of decline for Axie Infinity’s gaming platform. Recent data from DappRadar reveals a 22% decrease in the number of Unique Active Wallets (UAW) in the ecosystem over the past 30 days. While these numbers remain higher than those of comparable platforms such as Sandbox and Decentraland, it is nevertheless a concerning trend.
Active Wallet Distribution
Further analysis indicates that 80% of the active wallets during the past 30 days were power users, followed by everyday users, forgotten accounts, and low-value users. Despite this distribution, the ecosystem has experienced a positive trend in the number of transactions.
Historical Performance
At the height of its popularity, Axie Infinity boasted millions of active players eager to earn AXS and Smooth Love Potion (SLP) tokens as rewards. However, the value of these tokens has plummeted by over 80% since their peak, resulting in significant losses for holders.
NFT Market Decline
The decline in Axie Infinity’s performance is also reflective of a wider trend in the non-fungible token (NFT) market. Recent data indicates a significant decrease in trading volume across the NFT market.