Token Supply and Dilution
The project is growing. Why is the token falling?
The idea
Price depends on demand relative to circulating supply, while unlocks and emissions can increase future selling pressure.
In the real world
A low-float token unlocks a large allocation to insiders next quarter.
Going deeper
Price is set by demand against available supply, and supply in most token designs is scheduled rather than fixed. Unlocks and emissions add float on a published timetable regardless of how the project performs.
This is why adoption metrics and price can move in opposite directions for a quarter. Growth raises demand; a 30% increase in circulating supply raises the other side of the equation by more. The schedule is usually public, which means this is one of the few things in the space that can be checked in advance rather than explained afterwards.
Where it stops applying
Unlocks are widely anticipated and often partly priced in before they occur, so the effect is rarely as mechanical as the arithmetic suggests. Who receives the tokens matters as much as how many.
Why it matters
Price responds to demand against available supply, and supply can be scheduled to increase.
Try this today
Review circulating supply, maximum supply, emissions, and unlock schedules.
Test yourself
Adoption metrics rise all quarter and the token falls 40%. An unlock released tokens equal to 30% of circulating supply. What happened?
Show the answer
New supply arrived faster than new demand. Growth raises demand, but scheduled unlocks and emissions raise the float regardless of how the project performs, and price is set by the balance between the two.
Learn this in the feed Answering from memory, then again days later, is what makes it stick.