The Tokenomist Annual Report 2024
Compiled by: Nancy, PANews
At the end of January this year, Tokenomist released the Tokenomist Annual Report 2024, covering key trends such as token unlocks, low-float high-FDV tokens, Memecoins, and AI agents, and revealing their impact on market liquidity, investor sentiment, and long-term value capture.
The report points out that 2024 began with the launch of some important projects with low liquidity and high FDV (fully diluted valuation), setting the tone for the industry's development trajectory. However, market sentiment shifted mid-year. From short-term, low-cap tokens with vesting schedules to fully unlocked, community-driven meme coins, this reflected a diversification of investor preferences. By the end of the year, the "Supercycle MEME" had become the dominant narrative, attracting widespread attention.
Highlights:
· Over $150 billion in token unlocks are expected from 2024 to 2025, with around $82 billion absorbed in 2024 alone.
· By the end of 2024, the average circulating supply/FDV ratio at token launch had risen to 35%;
· The MEME sector returned 536% in 2024, far outperforming Bitcoin and Ethereum.
· The long-term success rate of Memecoins is very low, with 97% ultimately "dying" and an average lifespan of around 1 year, with many tokens disappearing in even less time;
· A new crypto trend emerges, combining MEME, AI, and autonomous social media entities, with frameworks like Virtuals and ai16z leading the innovation.
Top 5 Unlock Events of 2024
Token unlock events are key milestones in the crypto market. The release of locked tokens into circulation according to vesting schedules can impact prices and funding rates, especially in the short term. This section analyzes the five largest unlock events of 2024, focusing on price impact and funding rate trends within a 60-day window (-30 to +30 days). By analyzing the relationship between funding rates and price movements, we can assess whether market expectations (as reflected in derivative positions) are consistent with actual price trends. This provides valuable insights into market sentiment, especially around critical events like token unlocks.
1. Arbitrum (ARB): $2.22 billion unlocked
In March 2024, as Bitcoin hit a new all-time high of $74,000, Arbitrum (ARB) saw its largest token unlock event to date, unlocking $2.22 billion worth of tokens. This was the first unlock for Arbitrum's private investors and founders/team, introducing a significant new token supply to the market.
In terms of price impact, ARB's price impact steadily declined leading up to the unlock, potentially reflecting cautious trading behavior in anticipation of the expected supply increase. Within 30 days post-unlock, ARB's price impact continued to decline by 33.8%, which may be related to the market absorbing the additional supply.
Regarding funding rates, ARB's funding rates closely tracked BTC's within the 60-day window, but remained consistently higher, reflecting elevated demand for leveraged positions during that period.
2. Sui (SUI): $1.21 billion unlocked
In May 2024, Sui (SUI) was the second-largest unlock event of the year, unlocking $1.21 billion worth of tokens. This unlock released a significant amount of token supply, with the majority allocated to private investors.
Analyzing the price impact, SUI's price increased by 39.6% in the 30 days leading up to the unlock, but then declined by 20.3% in the 30 days after the unlock.
In terms of funding rates, SUI's funding rates entered negative territory in the 20 days leading up to the unlock, reaching -34.1% on the unlock day, indicating a pessimistic sentiment prior to the event. Around 20 days after the unlock, SUI's funding rates recovered and aligned with BTC's funding rates (around 11.0%).
3. Celestia (TIA): $977.44 million unlocked
In October 2024, Celestia (TIA) initiated a significant $977.44 million unlock event. This was TIA's first major unlock since its TGE, making it one of the largest token unlocks of the year, with the majority allocated to private investors and founders/team. The dominance of private investors and founders/team unlocks ensured continued incentives for long-term contributors and early supporters.
Regarding price impact, TIA's price continued to decline leading up to the unlock and dropped 25% within 20 days post-unlock. However, it quickly rebounded, surpassing BTC by 19.2% within 30 days after the unlock.
TIA's funding rate chart showed more volatility compared to other tokens. On the unlock day, TIA's funding rate remained in negative territory (-61.1%), but it quickly recovered to positive values and aligned with BTC's funding rate in the following days.
4. Jito (JTO): $563.91 million unlocked
In December 2024, JTO concluded the year with a significant $563.91 million unlock event, releasing 151,909,981 JTO into circulation. The unlock was dominated by the founding team, accounting for 57.3%, followed by private investors at 37.9%, which was not unexpected.
Due to the high market volatility at the time, we observed JTO's price impact turning positive and then negative twice leading up to the unlock. Post-unlock, the price impact continued to rise and then sharply declined to around -15%. By the end of the 30-day period, it had turned negative again.
The funding rate trends also reflected this volatility. In the 30 days leading up to the unlock, JTO's funding rate broadly matched BTC's, sometimes exceeding it and sometimes falling below. However, in the 30 days after the unlock, we observed JTO's funding rate continuing to fluctuate, while BTC remained relatively calm.
5. Aptos (APT): $423.6 million unlocked
The fifth-largest unlock event of the year occurred in April 2024, when Aptos (APT) unlocked $423.6 million worth of tokens. The largest shares were held by founders/team and private investors, but around 13% was allocated to the community.
The price impact of APT increased by about 51.7% in the 5 days before unlocking (from the 20th day to the 15th day before unlocking), driven by high trading activity and speculative behavior. However, from the 15th day before unlocking, the price impact began to decline steadily. In the post-unlocking period, the price impact became negative and remained so for the next 30 days. During this time, the entire cryptocurrency market also showed a downward trend.
The funding rate trend of APT is very similar to that of BTC, similar to the funding rate trend of ARB. This suggests that the price impact may be more due to macroeconomic factors affecting the entire market.
Analysis
Through the analysis of these token unlocking events, it is clear that the market sentiment before and after the unlocking will be different due to the unlocking scale, market expectations, macroeconomic conditions and other factors. Predicting the results based on these factors is essentially complex, but they can provide some observations to help us understand how key driving factors influence market behavior during the unlocking events.
It is important to analyze market expectations as these unlocking events approach, which can be observed through price impact and funding rates. A pre-unlocking price decline may reflect the market's concern about the increase in supply, while a price increase may indicate market optimism or speculative behavior. Before the SUI unlocking in May 2024 and the TIA unlocking in October 2024, we observed that their price impact and funding rates both showed quite pessimistic sentiment. This is consistent with the view that unlocking events are usually bearish, as they dilute the supply and increase selling pressure. However, the opposite can sometimes occur; unlocking may be a bullish signal, releasing more supply to the market for buyers to snap up. We saw from the ARB case that the funding rate reached +115.8% before the unlocking, indicating an increase in leveraged long positions and optimistic market sentiment.
Although these factors provide valuable insights, we must also consider the overall state of the market. During downward market periods, there may be larger factors driving the price trend of a particular token, as seen in the cases of JITO and APT. The funding rates of these two tokens were closely correlated with BTC's changes, or experienced significant fluctuations when BTC's funding rate remained relatively stable.
Low Liquidity, High FDV Tokens
Liquidity, defined as the ratio of circulating supply to maximum supply, has become an increasingly important metric when considering supply data. Low liquidity, high FDV (fully diluted valuation) tokens, characterized by low initial circulating supply but high overall valuation, have become increasingly prominent in recent years. This model allows for rapid price appreciation due to limited liquidity, but has been criticized for long-term sustainability due to the downward pressure often exerted on the market by subsequent token unlocks. This section aims to examine the historical context, trends, and impacts of this token economic model, providing a data-driven perspective to assess its viability.
While the popularity of low liquidity, high FDV tokens has surged in recent times, this model is not entirely new. It first gained significant attention during the 2020-2021 bull market. A notable example is Curve (CRV), which was launched in August 2020, and the famous crypto investor Jason Choi used CRV to highlight the risks of this model. Within seven hours of trading, CRV's market cap increased from $2 million to $6 million. However, the FDV of the token at issuance was nearly half the market cap of Bitcoin, demonstrating the unsustainability of this valuation. Early investors faced massive losses as the price plummeted by 50% shortly after issuance, due to inflation and early seller exits that caused dilution.
The CRV case revealed a key issue: the initial price trajectory of low liquidity, high FDV tokens may mislead investors who overlook the long-term impact of dilution. While CRV had its exaggerated inflationary mechanism, it laid the foundation for the broader trend that followed.
The analysis of token issuances from 2020 to 2024 shows a clear pattern in the adoption of the low liquidity, high FDV model. These tokens were particularly prevalent at the end of 2020 and the beginning of 2024, coinciding with the Bitcoin halving and the subsequent bull market.
Over time, the crypto community has become increasingly aware of the risks associated with this model, prompting recent projects to adapt their token economics. A noticeable trend is the change in the circulating supply/FDV ratio at issuance. By the end of 2024, the average ratio has risen to around 35%, reflecting greater caution from investors. For example, Binance has introduced listing standards that consider TGE (token generation event) circulating supply, encouraging projects to prioritize sustainable token economics.
To further understand the impact of the low liquidity, high FDV model, we analyzed the performance of Altcoins issued in 2024. We compiled key metrics, including FDV, market cap, circulating supply at TGE, price performance, and price changes, for the top 25 Altcoins by FDV at the TGE date.
Excluding outliers like Hyperliquid and Ondo Finance, the data shows no strong correlation between circulating supply at TGE and this year's price performance, which can be visualized in the scatter plot below. There are likely several reasons for this. Most notably, the increase in demand and liquidity, as well as the greater focus on hype-driven/sentiment-related narratives in the recent bull market cycle, may have reduced the correlation between circulating supply and price performance. On the other hand, for some tokens, the evolution of token economics has included new dimensions, such as inflationary or deflationary token economics and staking mechanisms, which may also have diluted the impact of circulating supply at TGE.
Scatter plot of 90-day price performance vs. circulating supply/FDV ratio at first pricing date. Outliers like HYPE and ONDO have been excluded.
As mentioned, there are exceptions. Hyperliquid issued its tokens with 33% of the supply allocated to community airdrops, without any VC unlocks. This approach promoted decentralization and community engagement, setting a benchmark for fair token distribution.
The chart below shows the total value of token unlocks from 2020 to 2030, revealing some notable patterns during the past two bull market cycles. The total unlocking value peaked at $136.7 billion in 2021, more than eight times the 2020 figure ($16.9 billion). While the increase is not as dramatic, the total unlocking value for 2024 ($82 billion) is about twice the previous year's ($47 billion). This peak coincides with the high point of the last bull market, when many projects issued tokens with large allocations locked for future release.
Looking ahead, the market will face significant unlocking pressure. From 2024 to 2025, over $150 billion in tokens are expected to be unlocked, with around $82 billion absorbed in 2024 alone. This poses short-term risks to market stability. However, as lock-up plans are completed, the reduction in unlocking pressure may contribute to long-term market stability.
The low liquidity, high FDV token model has proven to be a double-edged sword. While it can drive rapid price appreciation, it also carries significant risks due to future dilution and unsustainable valuations. As the crypto market matures, both investors and project teams must carefully evaluate token economics to ensure alignment with long-term goals. The evolution of token distribution mechanisms, like that of Hyperliquid, offers promising alternatives that prioritize fairness and sustainability.
Here is the English translation of the text, with the content within <> tags preserved without translation:It is important to note that these forecasts are based on data from 378 tokens tracked by Tokenomist, representing a portion of the market. New token issuances and changes in the economics of existing tokens, such as re-locking or burning mechanisms, may alter these dynamics.
MEME and AI Agents
Throughout 2024, Bitcoin maintained its dominance in the Altcoin market, attracting increasing investment from the traditional finance sector. However, the sentiment regarding the poor performance of Altcoins is also growing. Despite the surge in growth at the end of the year, many Altcoins failed to keep pace with Bitcoin.
Source: Glassnode x Fasanara_Digital Assets Report Q4 2024
The data analysis shows that among the top 250 Altcoins by market capitalization, only 28.1% outperformed Bitcoin, while 45.5% outperformed Ethereum.
In contrast to the broader Altcoin market, one area has shown a remarkable performance compared to its peers: Memecoins. This sector exhibited extraordinary growth in 2024, achieving a year-to-date return of 536% - outperforming Bitcoin and Ethereum by 177% and 300%, respectively. Notably, 19 out of the top 54 tokens issued this year were Memecoins.
The Allure of Memecoins
The remarkable success of Memecoins has raised important questions about their appeal and sustained popularity. This section explores the data and motivations behind this unique phenomenon.
· Fair Launch Model
One of the key factors driving the appeal of Memecoins is their fair launch model, which makes the entire token supply available to the community from day one. This approach ensures 100% circulation, aligning with the core principles of Cryptocurrencies: fairness, transparency, and decentralization. Unlike many other projects, Memecoins avoid excessive team allocations or early investor privileges, promoting equitable participation.
This fair launch model resonates strongly with investors, especially as the sentiment against venture-backed projects grows. These projects are sometimes criticized for having complex token economics and distribution structures, which may appear to favor early stakeholders.
Furthermore, Memecoins offer a simpler and more easily understandable narrative compared to other Altcoins, which often require significant technical expertise to evaluate. Memecoins focus on community engagement and cultural relevance, making them an effective tool for attracting new Cryptocurrency users.
· Long-term Incentive Alignment
The traditional approach to Web3 community building has primarily relied on token airdrops to incentivize early contributors. These rewards are typically targeted at individuals who create content, participate in Discord, or engage in protocol-specific activities. While this model has effectively sparked initial interest, our analysis reveals significant shortcomings in long-term community retention. Research shows that airdrop hunters often sell their tokens immediately, especially when the distribution does not meet their expectations, leading to a decline in community engagement and potentially negative sentiment towards the protocol.
Our research indicates that Memecoin projects have demonstrated remarkable success in building sustainable communities through an innovative incentive alignment approach. These projects have effectively aligned the interests of the team and the community, creating a scenario described by market participants as "the best marketing is the price going up." Borrowing from Murad's framework, successful Crypto communities often exhibit characteristics similar to fanatical followers, with loyal supporters and unique shared beliefs. This phenomenon generates a strong collective enthusiasm among participants, enhancing retention and driving organic growth through community-driven initiatives. This approach creates a gamified environment where users feel directly tied to the project's success and are incentivized to maintain long-term engagement.
· Community Takeover: A New Paradigm
An emerging trend in protocol governance is Community Takeover (CTO). CTO occurs when the original developers of a project abandon it, and the community users and token holders take over the future direction and management of the project. As the project shifts to community ownership, token holders become both owners and operators. This dual role fundamentally changes their relationship with the project. Community members must actively participate in governance, development, and marketing to maintain and enhance the value of their held tokens.
· Growth Catalysts
In 2024, a major catalyst for the Memecoin phenomenon was pump.fun, which aimed to make it easier for more people to create and trade their own tokens, significantly lowering the barrier to entry. Since its launch in January 2024, as of January 6, 2025, over 5,581,665 tokens have been created on pump.fun. As shown in the image below, most Solana-based tokens are now issued through pump.fun rather than traditional methods. The success of pump.fun has also sparked competition, with other blockchain ecosystems exploring similar platforms to capitalize on the growing focus on fair token issuance.
· Risks and Limitations
Although Memecoins gained significant popularity in 2024, they still carry inherent risks. Like unissued tokens, Memecoins are essentially fads, often experiencing rapid rise and equally swift decline. Similarly, the oversaturation of repetitive Memecoins may diminish their impact, as Murad's "Memecoin Pyramid" illustrates, with successful Memecoins comprising a small fraction compared to those that gradually disappear.
Murad's Memecoin Pyramid Source: The Meme Coin Supercycle - TOKEN2049
The long-term success rate of Memecoins is significantly lower. According to Chainplay's "State of Memecoins 2024" report, the average lifespan of a Memecoin is one year, with 97% of Memecoins ultimately being considered "dead" (defined as having a 24-hour trading volume below $1,000, liquidity below $50,000, and no Twitter updates for three months). Currently, only one Memecoin on pump.fun has a market capitalization exceeding $1 billion, and eight have a market capitalization above $100 million.
Another key risk is the potential for malicious activities. Although the issuance is fair, insiders or developers may still control the majority of tokens, undermining the principles of decentralization and allowing for pump-and-dump schemes. While pump.fun has mechanisms like its bond curve and token "graduation" to Raydium to address this, scams may still go undetected. Even in the case of fairly launched Memecoins, there have been instances of teams or insiders using dummy wallets to target Memecoins. It is worth consulting websites like gmgn.ai for risk analysis indicators, such as top 10 token holders, blacklists, developer activity, and bubble charts.
AI Agents
Another prominent area in 2024 is AI Agents. AI Agents are essentially autonomous entities capable of performing tasks and interacting with other users/agents, leveraging blockchain technology for on-chain operations. They are akin to supercharged Memecoins, as they combine memes, AI, and social media elements to create self-propagating autonomous entities that can interact with users. In 2024, we saw the emergence of major players like Virtuals and ai16z, providing frameworks for the development and deployment of AI Agents.
In an article on crypto predictions for 2025, Dragonfly Capital partner Haseeb Qureshi predicted that tokens related to AI agents will surpass Memecoins in the coming year. He believes that unlike KOLs and internet celebrities, AI agents never rest, conform to majority opinions, and are less driven by self-interest. They also perform well in aggregating and amplifying real-time information. Current agents like aixbt, which create alpha information streams by scraping social media data, show potential for gradual improvements in the next one or two years.
However, Qureshi predicted that over time, the innovativeness of these agents may diminish. Excessive AI agents may lead to a reversal of sentiment, and the crypto community may revert to a preference for human-centric solutions. Of course, this is a natural evolution of trends. Nevertheless, Qureshi suggests that the truly transformative impact in this field will come from software engineering agents, which have the potential to fundamentally change the development and security of blockchain projects.
Broader Impacts
Additionally, it is worth noting that the DeFi space has continued to innovate over the past year. Established projects like Aave have maintained strong performance, reaching new historical highs in deposits this year. Meanwhile, new projects like Ethena have also attracted increasing attention from the traditional finance sector. RWA projects like Ondo Finance have also exceeded expectations this year, potentially driven by the growing demand for the tokenization of financial products.
The success of Memecoins and their community-driven token economic models have incentivized the adoption of similar fair launch practices in other domains, such as DeSci tokens. Another noticeable trend is that an increasing number of projects are allocating a larger proportion of their token distribution to the community during the token launch process.
Another anticipated potential trend is the convergence of Memecoins and utility. User @hmalivya9 on X proposed the concept of "community clusters," where a staking system would allow Memecoin holders to earn rewards from multiple utility token projects by staking their tokens. This system would gamify the brand awareness of utility tokens by requiring active social media participation. hmalivya9 envisions this symbiotic relationship as a blueprint for the future structure of the crypto community, where entertainment and utility are intertwined, a concept not entirely new. For example, on Hyperliquid, holders of its native spot token $PURR can receive airdrops of other spot tokens within the Hyperliquid ecosystem and earn Hyperliquid credits. $PURR can only be traded within Hyperliquid, significantly increasing its user base.
In the coming year, AI agents will also continue to evolve. a16z proposed a token economic model where token staking serves as a verification system, providing platform access, enabling governance participation, and establishing accountability through potential penalties. In this evolving staking model, the economic interests of stakeholders are directly tied to their contributions to the quality and growth of the ecosystem.
2025 will undoubtedly be an exciting year, whether it's the evolution of existing trends or the emergence of new ones.
