Original title: Tokenomist Annual Report 2024

Original source: Tokenomist
Compiled by: Nancy, PANews

 

At the end of January this year, Tokenomist released the “Tokenomist Annual Report 2024”, which covers key trends such as token unlocking, low-liquidity and high-FDV tokens, Memecoin and AI agents, and reveals their impact on market liquidity, investor sentiment and long-term value capture.

 

The report pointed out that 2024 will start with the issuance of some important projects with low liquidity and high FDV (fully diluted value), setting the tone for the industry’s development trajectory. However, market sentiment shifted during the middle of the year. From short-term, low-market capitalization tokens and lock-in ownership plans to fully unlocked, community-driven memocoins, it reflects the divergence of investor preferences. By the end of the year, the “Super MEME Cycle” became the dominant narrative and attracted widespread attention.

 

Key points:

 

·More than US$150 billion in tokens are expected to be unlocked from 2024 to 2025, of which approximately US$82 billion will be absorbed in 2024 alone.

 

·As of the end of 2024, the average circulation/FDV ratio at the time of token issuance has increased to 35%;

 

·The return on the MEME track in 2024 will reach 536%, far exceeding the performance of Bitcoin and Ethereum.

 

· Memecoin has a low long-term success rate, with 97% eventually “dying” and an average life span of about 1 year, with many tokens disappearing in a shorter period of time;

 

Autonomous entities that combine MEME, AI and social media have emerged as a new encryption trend, with frameworks such as Virtuals and ai16z leading innovation.

 

Top five unlocking events in 2024

 

Token unlocking events are a key milestone in the crypto market. Releasing locked tokens into circulation under a predetermined vesting plan may affect prices and funding rates, especially in the short term. Therefore, this section analyzes the five largest unlock events in 2024, focusing on price impacts and funding rate trends within the 60-day window (-30 to +30 days). By analyzing the relationship between funding rates and price changes, we can assess whether market expectations (as reflected in derivative positions) are consistent with actual price trends. This provides valuable insight into market sentiment, especially at critical events like token unlocking.

 

1. Arbitrum (ARB) : Unlock value of US$2.22 billion

 

 

In March 2024, when Bitcoin hit a new all-time high of US$74,000, Arbitrum (ARB) launched the largest token unlocking event of the month, with an unlock value of US$2.22 billion. This is the first time that private investors and founder/team of Arbitrum have unlocked it, introducing a large supply of new tokens to the market.

 

In terms of price impact, ARB’s price impact steadily declined before the unlock date, which may reflect cautious trading behavior in anticipation of increased supply. Within 30 days after unlocking, the price impact of ARB continued to decline by 33.8%, which may be related to the market entering more supply.

 

 

 

2. Sui (SUI) : Unlock value of US$1.21 billion

 

 

In May 2024, Sui (SUI) was the second largest unlock event of the year, with an unlock value of US$1.21 billion. This unlock freed up a large supply of tokens, most of which were distributed to private investors.

 

Analyzing the price impact, the price of SUI increased by 39.6% in the 30 days before unlocking, but fell by 20.3% in the 30 days after unlocking.

 

 

In terms of funding rates, the (SUI) funding rate entered a negative range 20 days before the unlock and reached-34.1% on the day of the unlock, showing pessimism before the unlock event. About 20 days after unlocking, the (SUI) funding rate rebounded and remained in line with the BTC funding rate (approximately 11.0%).

 

3. Celestia (TIA) : Unlock value of US$977.44 million

 

 

In October 2024, Celestia (TIA) launched an important unlocking event worth $977.44 million. This was TIA’s first major unlock since the TGE incident and became one of the largest token unlocks of the year, with the vast majority of them allocated to private investors and founders/teams. Unblocking by private investors and founders/teams dominates, ensuring continued incentives for long-term contributors and early supporters.

 

Regarding the price impact, TIA’s price continued to fall before unlocking and fell by 25% within 20 days after unlocking. However, it rebounded quickly, exceeding BTC by 19.2% 30 days after unlocking.

 

TIA’s funding rate chart is more volatile than other tokens. On the day of unlocking, TIA’s funding rate remained in the negative range (-61.1%), but returned to positive a few days after unlocking, quickly aligning with BTC’s funding rate.

 

 

4. Jito (JTO) : Unlock value of US$563.91 million

 

 

In December 2024, JTO ended the year with a major unlock event worth US$563.91 million, releasing 151,909,981 JTO into circulation. The founding team led the unlocking, accounting for 57.3%, followed by private equity investors, accounting for 37.9%. This is not surprising.

 

Due to the huge market volatility at that time, when observing the price impact, we saw that the price impact of JTO turned from negative to positive twice before unlocking. After unlocking, the price impact continued to rise, then dropped sharply to about-15%. At the end of 30 days, it turned from positive to negative again.

 

Funding rate trends also reflect this volatility. 30 days before unlocking, JTO’s funding rate roughly matches BTC, sometimes exceeding it and sometimes below it. However, within 30 days after unlocking, we can observe that JTO’s funding rates continue to fluctuate, while BTC remains relatively calm.

 

 

5. Aptos (APT): Unlock value of US$423.6 million

 

 

The fifth largest unlock event this year occurred in April 2024, when Aptos (APT) conducted a $423.6 million unlock event in April. Founders/teams and private investors hold the largest share of unlocks, but approximately 13% of that is allocated to the community.

 

The price impact of APT surged by approximately 51.7% in the five days before unlocking (from the 20th to the 15th day before unlocking), driven by high trading activity and speculation. However, starting from the 15th day before unlocking, the price impact began to decline steadily. In the post-unlock period, the price impact becomes negative and remains so for the next 30 days. During this period, the entire crypto market also showed a downward trend.

 

APT’s funding rate trend is very similar to BTC and similar to ARB’s funding rate trend. This suggests that the price impact may be more due to macro factors that affect the entire market.

 

 

analysis

 

By analyzing these token unlocking events, it is clear that market sentiment before and after unlocking will vary depending on the unlocking scale, market expectations, macroeconomic conditions and other factors. Predicting results based on these factors is inherently complex, but they can provide some observations that help us understand how key drivers affect market behavior during unlocking events.

 

As these unlocking events approach, it is important to analyze market expectations and can be observed through price impact and funding rates. Falling prices before unlocking may reflect market concerns about increasing supply, while rising prices may indicate market optimism or speculative behavior. Before the SUI unlock in May 2024 and the TIA unlock in October 2024, we observed that their price impact and funding rates showed considerable pessimism. This is consistent with the view that unlocking events are usually bearish because they dilute supply and increase selling pressure. However, sometimes the opposite can happen; unlocking can be a bullish signal, releasing more supply into the market for buyers to snap up. We saw from the ARB case that the capital rate before unlocking once reached +115.8%, indicating that the demand for leverage for long positions increased and the market sentiment was optimistic.

 

While these factors provide valuable insights, we must also consider the overall market situation. During market downturns, there may be larger factors that dominate the price trend of a given token, as the cases of JITO and APT show. The funding rates of these two tokens are closely related to changes in BTC, or there are large fluctuations when the funding rates of BTC remain relatively stable.

 

Low circulation high FDV tokens

 

Liquidity, defined as the ratio of circulating supply to maximum supply, has become an increasingly important indicator when considering supply data. Low-liquid and high-FDV (fully diluted valuation) tokens, characterized by low circulating supply at the time of issuance but high overall valuation, have become increasingly prominent in recent years. This model allows prices to appreciate rapidly due to limited liquidity, but is criticized for long-term sustainability because subsequent token unlocks often put downward pressure on the market. This section aims to examine the historical background, trends and impact of this token economy model and provide a data-driven perspective to assess its feasibility.

 

Despite the recent surge in popularity of low-circulation, high-FDV tokens, this model is not new. It received significant attention for the first time in the bull market of 2020-2021. A prominent example is Curve (CRV), which was launched in August 2020 and used by prominent crypto investor Jason Choi to highlight the risks of this model. Within seven hours of trading, CRV’s market value increased from $2 million to $6 million. However, the token’s FDV at the time of issuance was almost half of Bitcoin’s market value, proving that this valuation was unsustainable. Early investors faced huge losses, with prices falling by 50% shortly after the offering due to inflation and dilution caused by early sellers withdrawing from positions.

 

The CRV case reveals a key issue: the initial price movements of low-liquid, high-FDV tokens can mislead investors who ignore the long-term impact of future dilutions. Although CRV had its exaggerated inflation mechanism, it laid the foundation for a broader trend that developed since then.

 

 

Analysis of token issuance from 2020 to 2024 shows that the adoption of the low-circulation and high-FDV model shows an obvious pattern. These tokens were particularly common in late 2020 and early 2024, just before the Bitcoin halving and the ensuing bull market.

 

Over time, the crypto community has become increasingly aware of the risks posed by this model, prompting recent projects to adapt to token economics. One obvious trend is the change in the liquidity/FDV ratio at the time of issuance. By the end of 2024, the average ratio has risen to about 35%, reflecting greater prudence among investors. For example, Binance has introduced listing standards that consider TGE (token generation event) liquidity, encouraging projects to prioritize sustainable token economics.

 

 

To further understand the impact of the low-liquidity and high-FDV model, we analyzed the performance of altcoins issued in 2024. We summarized key indicators, including FDV, market value, liquidity at TGE, price performance and price changes, and targeted the top 25 altcoins by FDV at TGE date.

 

 

After excluding outliers like Hyperliquid and Ondo Finance, the data shows no strong correlation between liquidity at TGE and price performance this year, which can be visualized in the scatter chart below. There are many possible reasons for this. Most notably, increased demand and liquidity, as well as increased attention to hypation-driven/emotion-related narratives in the recent bull cycle, may reduce the correlation of liquidity to price performance. On the other hand, for some tokens, the evolution of token economics includes new dimensions, such as inflationary or deflationary token economics, and pledge mechanisms, which may also dilute the impact of liquidity at TGE.

 

Scatter plot of 90-day price performance versus liquidity/FDV ratio at the first pricing date. Abnormal values such as HYPE and ONDO were excluded.

 

As mentioned above, there are exceptions. Hyperliquid was issued without VC unlocking, allocating 33% of its token supply to community airdrops. This approach promotes decentralization and community participation, setting a benchmark for fair token issuance.

 

The chart below shows the total value of tokens unlocked from 2020 to 2030, revealing some significant patterns in the past two bull cycles. The total unlocked value peaked at US$136.7 billion in 2021, more than eight times higher than in 2020 (US$16.9 billion). Although the increase is not as large, the total unlock value in 2024 ($82 billion) is approximately twice that of the previous year ($47 billion). This peak coincides with the peak of the previous bull market, when many projects were issued with large token allocations locked in for future release.

 

 

Looking to the future, the market will face huge pressure to unlock. From 2024 to 2025, more than US$150 billion in tokens are expected to be unlocked, of which approximately US$82 billion will be absorbed in 2024 alone. This poses a short-term risk to market stability. However, as the lock-up plan is completed, reduced unlocking pressure may help long-term market stability.

 

The token model with low liquidity and high FDV has proven to be a double-edged sword. Although 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 parties must carefully evaluate token economics to ensure it is consistent with long-term goals. The evolution of token allocation mechanisms like Hyperliquid provides promising alternatives that focus on fairness and sustainability.

 

It should be noted 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 destruction mechanisms, may change these dynamics.

 

MEME and AI Agents

 

Throughout 2024, Bitcoin has maintained its dominant position in the cryptocurrency market, attracting increasing investment from the traditional financial sector. However, sentiment about the poor performance of altcoins is also growing. Despite a surge in growth at the end of the year, many altcoins failed to follow in Bitcoin’s footsteps.

 

Source: Glassnode x Fasanara_Digital Assets Report Q4 2024

 

Analytical data shows that among the top 250 altcoins by market capitalisation, only 28.1% outperformed Bitcoin, while 45.5% outperformed Ethereum.

 

 

In contrast to the broader altcoin market, one area has significantly outperformed its peers: Memecoin. This area has shown extraordinary growth in 2024, achieving a year-to-date return of 536%-a performance that outperforms Bitcoin and Ethereum by 177% and 300% respectively. It is worth noting that of the top 54 tokens issued this year, 19 are Memecoin.

 

 

The appeal of Memecoin

 

Memecoin’s astonishing success raises important questions about its appeal and the reasons for its continued popularity. This section explores the data and motivations behind this unique phenomenon.

 

·Fair distribution model

 

One of the main factors driving the appeal of Memecoin is its fair offering model, which makes its entire supply of tokens available to the community from day one. This approach ensures 100% circulation and conforms to the core principles of cryptocurrencies: fairness, transparency and decentralization. Unlike many other projects, Memecoin avoids excessive team assignments or early investor privileges and promotes fair participation.

 

This fair offering model resonates strongly with investors, especially as dissatisfaction with venture capital-backed projects grows. Such projects are sometimes criticized for having complex token economics and distribution structures that may appear biased towards early stakeholders.

 

In addition, Memecoin provides simpler and more understandable narratives than other altcoins, which often require a lot of technical expertise to evaluate. Memecoin’s focus on community engagement and cultural relevance makes it an effective tool to attract new users of cryptocurrencies.

 

·Alignment of long-term community incentives

 

Traditional methods of Web3 community building rely mainly on token airdrops to inspire early contributors. These rewards are usually for individuals who create content, participate in Discord, or engage in agreement-specific activities. While this model effectively sparked initial interest, our analysis revealed significant flaws in long-term community retention. Research has shown that airdrop hunters often sell tokens immediately after receiving them, especially when the allocation does not meet expectations, which leads to a decrease in community participation and can generate negative emotions about the agreement.

 

Our research shows that the Memecoin project has shown significant success in building sustainable communities through an innovative incentive alignment approach. These projects effectively integrate the interests of the team and the community, creating what market participants describe as “the best marketing is price increases.” Drawing on Murad’s framework, successful crypto communities often exhibit characteristics similar to ardent followers, with loyal supporters and unique shared beliefs. This phenomenon creates a strong shared enthusiasm among participants, which improves Retention rate and drives organic growth through community-driven initiatives. This approach creates a gamified environment where users feel directly related to the success of the project and motivates them to remain engaged over the long term.

 

Community takeover: A new paradigm

 

An emerging trend in protocol governance is community takeover (CTO). When the original developer of a project abandons the project, community users and token holders will take over the future direction and management of the project, and a community takeover occurs. When a project shifts to community ownership, the token holder is both the owner and operator. 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 the tokens they hold.

 

·Growth catalysts

 

In 2024, a major catalyst for the Memecoin phenomenon is pump.fun, which aims to make it easier for more people to create and trade their own tokens, greatly lowering the barrier to entry. Since its launch in January 2024, as of January 6, 2025, more than 5,581,665 tokens have been created on pump.fun As the figure below shows, most Solana-based tokens are now issued through pump.fun rather than traditional methods. The success of pump.fun has also spurred competition, with other blockchain ecosystems exploring similar platforms to take advantage of the growing focus on fair issuance of tokens.

 

 

·Risks and limitations

 

Although Memecoin is popular in 2024, they still carry inherent risks. Just like unissued coins, Memecoin is essentially a trend and typically experiences rapid popularity and equally rapid decline. Similarly, repeated over-saturation of Memecoin can weaken its influence, as Murad’s “Memecoin Pyramid” shows, successful Memecoin make up a small proportion compared to those that gradually disappear.

 

Murad’s Memecoin Pyramid Source: Minoin Supercycle- TOKEN2049

 

Memecoin has a significantly lower long-term success rate. According to Chainplay’s “2024 Status of Memecoin” report, the average life expectancy of Memecoin is one year, of which 97% of Memecoin is ultimately considered “dead”(defined as a 24-hour transaction volume of less than $1000, liquidity of less than $50,000, and no updates on Twitter within three months). Currently, only one Memecoin on pump.fun has a market value of more than US$1 billion, and eight have a market value of more than US$100 million.

 

Another key risk is possible malicious activity. Despite a fair issuance, insiders or developers may still control most tokens, undermining the principle of decentralization and allowing pull-ups. Although pump.fun fights this situation through its bond curve mechanism and the way tokens “graduate” to Raydium, the scam may still go undetected. Even for fairly issued Memecoin, there have been cases involving teams or insiders using virtual wallets to attack memocoins. It’s worth checking websites such as gmgn.ai for metrics to analyze risk, such as the 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 that can perform tasks and interact with other users/agents, using blockchain technology for on-chain operations. They have been likened to an enhanced version of Memecoin because they combine memes, AI and social media elements to create autonomous entities that can interact with users and spread themselves. In 2024, we saw the emergence of major players like Virtuals and ai16z, providing a framework for developing and deploying AI agents.

 

In an article on crypto predictions for 2025, Haseeb Qureshi, managing partner at Dragonfly Capital, predicts that tokens related to AI agents will overtake Memecoin the coming year. He believes that unlike KOL and Internet celebrities, AI agents never rest, obey the majority’s opinions, and are less motivated by self-interest. They also excel at aggregating and amplifying real-time information. Current agents like aixbt create alpha streams by grabbing social media data, showing possible incremental improvements over the next year or two.

 

Still, Qureshi predicts that over time, the innovation of these agents may diminish. Excessive AI proxies may cause emotions to reverse, and the crypto community may return to supporting human preferences. Of course, this is also a natural change in the trend. However, Qureshi suggests that the truly transformative impact in this area will come from software engineering agents that have the potential to fundamentally change the development and security of blockchain projects.

 

wider implications

 

In addition, it is worth noting that the DeFi field has continued to innovate over the past year. OG projects like Aave have maintained a strong performance, setting record deposits this year. At the same time, new projects such as Ethena have also attracted increasing attention from the traditional financial sector. RWA projects like Ondo Finance have also exceeded expectations this year, likely driven by increased demand for tokenization of financial products.

 

Memecoin’s success and its community-driven token economy model have inspired other areas to adopt similar fair issuance practices. For example, DeSci tokens. There is also a clear trend that during the token issuance process, more and more projects are allocating a larger proportion to the community.

 

Another potential trend worth looking forward to is the integration of Memecoin and practicality. User@hmalivya9 proposed the concept of “community cluster” on X. The model recommends that Memecoin projects be cooperated with utility token projects through a pledge system. Memecoin holders can pledge tokens to earn rewards from multiple utility token projects. The system will enhance the effect by requiring active social media engagement, essentially gamifying the brand awareness of utility tokens. Hmalivya9 envisions this symbiotic relationship as a blueprint for the future structure of encrypted communities, with entertainment and utility intertwined, a concept that is not new. For example, holders of Hyperliquid and its native spot token $PURR can receive airdrops of other spot tokens within the Hyperliquid ecosystem and earn Hyperliquid points.$ PURR can only be traded within Hyperliquid, which greatly increases its user base.

 

In the coming year, AI agents will also continue to develop. AI16z proposes a token economics model in which token pledges serve as a verification system that provides platform access, enables governance participation, and establishes accountability through possible penalty conditions. In this evolved pledge model, stakeholders ‘economic interests are directly linked to their contribution to ecosystem quality and growth.

 

2025 will undoubtedly be an exciting year, whether it is the evolution of existing trends or the emergence of emerging trends.

 

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