Original article: " 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 unlocking, low circulation and high FDV tokens, Memecoin and AI agents, and revealing their impact on market liquidity, investor sentiment and long-term value capture.
The report states that 2024 began with the issuance of some important projects with low circulation and high FDV (fully diluted value), setting the tone for the industry's development trajectory. However, market sentiment shifted in the middle of the year. From short-term, low-market-cap tokens with lock-up vesting plans to fully unlocked, community-driven meme coins, it reflects the differentiation of investor preferences. By the end of the year, the "super MEME cycle" became the dominant narrative, attracting widespread attention.
Key points:
Over $150 billion in tokens are expected to be unlocked from 2024 to 2025, with approximately $82 billion absorbed in 2024 alone.
The average circulation/FDV ratio at token issuance rises to 35% by the end of 2024;
The return rate of the MEME track in 2024 is as high as 536%, far exceeding the performance of Bitcoin and Ethereum.
Memecoin has a low long-term success rate, with 97% eventually “dying” and an average lifespan of about 1 year, with many tokens disappearing in a shorter time;
Autonomous entities combining MEME, AI, and social media are emerging as a new crypto trend, with frameworks such as Virtuals and ai16z leading the innovation.
Top 5 Unlocking Events in 2024
Token unlock events are key milestones in crypto markets. The release of locked tokens into circulation according to a predetermined vesting schedule can impact price and funding rates, especially in the short term. Therefore, this section analyzes the five largest unlock events in 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 the market's expectations (as reflected in derivatives positions) are consistent with actual price trends. This provides valuable insights into market sentiment, especially around key events like token unlocks.
1. Arbitrum (ARB) : Unlocked value of $2.22 billion
In March 2024, when Bitcoin hit a new all-time high of $74,000, Arbitrum (ARB) launched the largest token unlocking event of the month, unlocking $2.22 billion. This was the first unlocking by Arbitrum private investors and founders/teams, introducing a large amount of new token supply to the market.
In terms of price impact, ARB's price impact steadily decreased before the unlocking date, which may reflect cautious trading behavior in anticipation of increased supply. Within 30 days after unlocking, ARB's price impact continued to decline by 33.8%, which may be related to the entry of more supply into the market.
Regarding funding rates, ARB’s funding rate closely matched BTC’s funding rate over the 60-day period, but was consistently higher than BTC, reflecting the higher demand for leveraged positions during that period.
2. Sui (SUI) : Unlocked value of $1.21 billion
Sui (SUI) was the second largest unlock event of the year in May 2024, unlocking $1.21 billion in value. This unlock released a large amount of token supply, and most of it was allocated 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 rate, 20 days before the unlock, the (SUI) funding rate entered the negative range and reached -34.1% on the day of unlock, showing pessimism before the unlock event. About 20 days after the unlock, the (SUI) funding rate rebounded and was consistent with the funding rate of BTC (about 11.0%).
3. Celestia (TIA): Unlocked value of $977.44 million
In October 2024, Celestia (TIA) launched a major unlocking event worth $977.44 million. This was TIA's first major unlocking since the TGE event, becoming one of the largest token unlockings of the year, and the vast majority was allocated to private investors and founders/teams. Unlocking by private investors and founders/teams dominated, ensuring continued incentives for long-term contributors and early supporters.
Regarding the price impact, before the unlocking, the price of TIA continued to fall and fell by 25% within 20 days after the unlocking. However, it quickly rebounded and exceeded BTC by 19.2% 30 days after the 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 zone (-61.1%), but returned to positive a few days after unlocking, quickly aligning with BTC’s funding rate.
4. Jito (JTO): Unlocked value of $563.91 million
In December 2024, JTO ended the year with a major unlocking event worth $563.91 million, releasing 151,909,981 JTO into circulation. The founding team led the unlocking, accounting for 57.3%, followed by private placement investors, accounting for 37.9%. This is not surprising.
Due to the huge market volatility at the 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, and then dropped sharply to about -15%. At the end of the 30 days, it turned from positive to negative again.
The funding rate trend also reflects this volatility. In the first 30 days of unlocking, JTO's funding rate roughly matched BTC, sometimes exceeding it and sometimes falling below it. However, in the 30 days after unlocking, we can observe that JTO's funding rate continues to fluctuate, while BTC remains relatively calm.
5. Aptos (APT): Unlocked value of $423.6 million
The fifth largest unlock event of the year occurred in April 2024, when Aptos (APT) unlocked $423.6 million worth of tokens. The founders/team and private investors held the largest share of the unlock, but about 13% of it was allocated to the community.
The price impact of APT surged by about 51.7% in the first 5 days of unlocking (from the 20th day 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 steadily decline. In the post-unlocking period, the price impact turned negative and remained so for the next 30 days. The entire crypto market also showed a downward trend during this period.
APT’s funding rate trend is very similar to BTC’s, similar to ARB’s funding rate trend. This suggests that the price impact may be more due to macro factors affecting the entire market.
analyze
By analyzing these token unlocking events, it is clear that market sentiment before and after the unlocking will vary depending on the size of the unlocking, market expectations, macroeconomic conditions, and other factors. Predicting outcomes based on these factors is inherently complex, but they can provide some insights into how key drivers influence market behavior during unlocking events.
As these unlocking events approach, it is important to analyze market expectations, which can be observed through price impact and funding rates. A drop in price before unlocking may reflect market concerns about increased supply, while a rise in price may indicate market optimism or speculative behavior. In the lead-up to the SUI May 2024 unlock and the TIA October 2024 unlock, we observed that their price impact and funding rates both showed quite pessimistic sentiment. This is consistent with the view that unlocking events are generally bearish, as they dilute supply and increase selling pressure. However, sometimes the opposite can occur; unlocking can be a bullish signal, releasing more supply onto the market for buyers to snap up. We saw in the case of ARB that the funding rate reached +115.8% before unlocking, indicating increased leverage demand for long positions and optimistic market sentiment.
While these factors provide valuable insights, we must also consider the overall market conditions. During periods of market decline, there may be larger factors that dominate the price action of a particular token, as shown in the cases of JITO and APT. The funding rates of these two tokens have been closely correlated with changes in BTC, or have experienced large fluctuations while BTC's funding rate has remained relatively stable.
Low circulation high FDV token
Circulating supply, defined as the ratio of circulating supply to maximum supply, has become an increasingly important metric when considering supply data. Low circulating supply, high FDV (fully diluted valuation) tokens, characterized by low circulating supply at launch but high overall valuation, have become increasingly prominent in recent years. This model has led to rapid price appreciation due to limited liquidity, but has been criticized for long-term sustainability as subsequent token unlocks often exert downward pressure on the market. This section aims to examine the historical context, trends, and impact of this token economic model, providing a data-driven perspective to assess its viability.
Despite the recent surge in popularity of low-flow, high-FDV tokens, this pattern is not new. It first gained notable traction during the 2020-2021 bull run. A notable example is Curve (CRV), which launched in August 2020 and was used by prominent crypto investor Jason Choi to highlight the risks of this pattern. Within seven hours of trading, CRV’s market cap increased from $2 million to $6 million. However, the token’s FDV at launch was nearly half of Bitcoin’s market cap, proving that this valuation was unsustainable. Early investors faced huge losses, with the price falling 50% shortly after launch due to inflation and dilution caused by early sellers exiting their positions.
The case of CRV reveals a key issue: the initial price action of a low-circulation, high-FDV token can mislead investors who ignore the long-term impact of future dilution. While CRV had its own exaggerated inflation mechanism, it laid the foundation for a broader trend that has since developed.
Analysis of token issuance from 2020 to 2024 shows a clear pattern of adoption in the low circulation, high FDV model. These tokens are particularly prevalent in late 2020 and early 2024, just before the Bitcoin halving and subsequent bull run.
Over time, the crypto community has become more aware of the risks posed by this model, prompting recent projects to adapt their token economics. One clear trend is the change in the circulation/FDV ratio at the time of issuance. By the end of 2024, the average ratio had risen to about 35%, reflecting greater investor prudence. For example, Binance introduced listing criteria that considers TGE (token generation event) circulation, encouraging projects to prioritize sustainable token economics.
To further understand the impact of the low circulation high FDV model, we analyzed the performance of altcoins issued in 2024. We aggregated key metrics including FDV, market cap, circulation at TGE, price performance, and price change for the top 25 altcoins by FDV on the TGE date.
After excluding outliers like Hyperliquid and Ondo Finance, the data shows that there is no strong correlation between the circulating supply at the time of the TGE and the price performance this year, which can be visualized in the scatter plot below. There are many reasons that may cause 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 cycle, may have made circulating supply less relevant to price performance. On the other hand, for some tokens, the evolution of token economics to include new dimensions, such as inflationary or deflationary token economics, and staking mechanisms, may also dilute the impact of circulating supply at the time of the TGE.
Scatter plot of 90-day price performance vs. first pricing date float/FDV ratio. Outliers such as HYPE and ONDO are excluded.
As mentioned above, there are exceptions. Hyperliquid launched 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 launches.
The chart below shows the total value unlocked by tokens from 2020 to 2030, revealing some notable patterns from the past two bull cycles. Total unlocked value peaks at $136.7 billion in 2021, more than eight times higher than in 2020 ($16.9 billion). While the increase isn’t as dramatic, total unlocked value in 2024 ($82 billion) is roughly double the previous year ($47 billion). This peak coincides with the peak of the previous bull run, when many projects locked up large token allocations for future release at launch.
Looking ahead, the market will face huge unlocking pressure. From 2024 to 2025, more than $150 billion of tokens are expected to be unlocked, with about $82 billion absorbed in 2024 alone. This poses a short-term risk to market stability. However, as the lock-up plan is completed, the reduction in unlocking pressure may help long-term market stability.
The low circulation, 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, investors and project owners must carefully evaluate token economics to ensure that it is aligned with long-term goals. The evolution of token distribution mechanisms like Hyperliquid offers promising alternatives that focus on fairness and sustainability.
It’s important to note that these forecasts are based on data from 378 tokens tracked by Tokenomist, representing a subset of the market. New token issuance and changes to the economics of existing tokens, such as re-locking or burning mechanisms, could alter these dynamics.
MEME and AI Agents
Throughout 2024, Bitcoin maintained its dominance in the cryptocurrency market, attracting increasing investments from the traditional financial sector. However, sentiment regarding the underperformance of altcoins also grew. 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
Analysis data 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 sector has significantly outperformed its peers: Memecoin. This sector has demonstrated exceptional growth in 2024, achieving a year-to-date return of 536% - a performance that outperforms Bitcoin and Ethereum by 177% and 300%, respectively. Notably, 19 of the top 54 tokens by market cap issued this year are Memecoins.
Memecoin’s appeal
The astonishing success of Memecoin raises important questions about the reasons for its appeal and continued popularity. This section explores the data and motivations behind this unique phenomenon.
Fair issuance model
One of the main factors driving Memecoin's appeal is its fair launch model, which provides its entire token supply to the community from day one. This approach ensures 100% of the circulating supply and is in line with the core principles of cryptocurrency: fairness, transparency, and decentralization. Unlike many other projects, Memecoin avoids excessive team allocations or early investor privileges, promoting fair participation.
This fair launch model resonates strongly with investors, especially as discontent grows with venture-backed projects, which are sometimes criticized for having complex token economics and distribution structures that can appear biased toward early stakeholders.
Additionally, Memecoin offers a simpler, easier to understand narrative than other altcoins, which often require significant technical expertise to evaluate. Memecoin’s focus on community engagement and cultural relevance makes it an effective tool for attracting new users to cryptocurrency.
Community long-term incentive alignment
Traditional approaches to Web3 community building rely heavily on token airdrops to incentivize early contributors. These rewards are often targeted at individuals who create content, participate in Discord, or engage in protocol-specific activities. While this model is effective in stimulating initial interest, our analysis reveals significant flaws in long-term community retention. Research shows that airdrop hunters tend to sell tokens immediately after receiving them, especially when the distribution is not in line with expectations, which leads to a decrease in community engagement and potential negative sentiment towards the protocol.
Our research shows that Memecoin projects have demonstrated significant success in building sustainable communities through an innovative approach to incentive alignment. These projects have effectively merged the interests of the team and the community, creating a situation described by market participants as “the best marketing is price increase.” Drawing on Murad’s framework, successful crypto communities often exhibit characteristics similar to a cult following, with loyal supporters and unique shared beliefs. This phenomenon creates a strong shared passion among participants, which improves retention and drives organic growth through community-driven initiatives. This approach creates a gamified environment where users feel directly connected to the success of the project and incentivizes them to remain engaged over the long term.
Community takeover: a new paradigm
An emerging trend in protocol governance is community takeover (CTO). Community takeover occurs when the original developers of a project abandon the project and the community of users and token holders take over the future direction and management of the project. When a 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 the tokens they hold.
Growth catalyst
A major catalyst for the Memecoin phenomenon in 2024 was pump.fun, which aims to enable more people to easily create and trade their own tokens, greatly 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 chart below, the majority of Solana-based tokens are now issued through pump.fun rather than traditional methods. The success of pump.fun has also inspired competition, with other blockchain ecosystems exploring similar platforms to capitalize on the growing focus on fair token issuance.
Risks and limitations
Despite the popularity of memecoins in 2024, they still carry inherent risks. Like unlaunched tokens, memecoins are essentially fads, often experiencing rapid popularity and equally rapid decline. Likewise, oversaturation of repeat memecoins can weaken their influence, as shown in Murad's "Memecoin Pyramid", where the number of successful memecoins is very small compared to those that fade away.
Murad's Memecoin Pyramid Source: Memecoin Super Cycle - TOKEN2049
Memecoins have a significantly lower chance of long-term success. According to Chainplay's "The State of Memecoin in 2024" report, the average lifespan of a memecoin is one year, with 97% of memecoins eventually considered "dead" (defined as less than $1,000 in 24-hour trading volume, less than $50,000 in liquidity, and no updates on Twitter in three months). Currently, only one memecoin on pump.fun has a market cap of more than $1 billion, and eight have a market cap of more than $100 million.
Another key risk is possible malicious activity. Despite a fair launch, insiders or developers may still control the majority of tokens, undermining the principle of decentralization and allowing pumps. Although pump.fun combats this with its bonding curve mechanism and token "graduation" to Raydium, scams may still go undetected. Even with the fair launch of Memecoin, there have been cases involving teams or insiders using virtual wallets to sniper Memecoin. It is worth consulting sites such as gmgn.ai to obtain indicators for analyzing risks, such as the top 10 token holders, blacklists, developer activity, and bubble charts.
AI Agent
Another area that stood out in 2024 was AI agents. AI agents are essentially autonomous entities that can perform tasks and interact with other users/agents, leveraging blockchain technology for on-chain operations. They have been likened to a souped-up version of Memecoin, as they combine elements of memes, AI, and social media to create autonomous entities that can interact with users and self-propagate. In 2024, we saw the emergence of major players like Virtuals and ai16z, providing frameworks for developing and deploying AI agents.
In an article about crypto predictions for 2025, Haseeb Qureshi, managing partner at Dragonfly Capital, predicts that tokens associated with AI agents will surpass Memecoin in the coming year. He believes that unlike KOLs and influencers, AI agents never rest, obey majority opinion, and are less motivated by self-interest. They also excel in aggregating and amplifying real-time information. Current agents such as aixbt, which produce alpha information streams by scraping social media data, show possible incremental improvements in the next year or two.
Nonetheless, Qureshi predicts that the innovativeness of these agents may wane over time. An overabundance of AI agents could lead to a reversal of sentiment, with the crypto community returning to supporting human preferences. Of course, this is also a natural change in trends. However, Qureshi suggests that the truly transformative impact in this space will come from software engineering agents, which have the potential to fundamentally change the development and security of blockchain projects.
Wider impact
In addition, it is worth noting that the DeFi field has continued to innovate over the past year. OG projects such as Aave have maintained strong performance, setting a record high in deposits this year. At the same time, new projects such as Ethena have also attracted increasing attention from the traditional financial sector. RWA projects such as Ondo Finance have also exceeded expectations this year, possibly driven by the increased demand for tokenization of financial products.
The success of Memecoin and its community-driven token economic model has inspired other areas to adopt similar fair issuance practices. For example, DeSci Token. There is also a clear trend that more and more projects are allocating a larger proportion to the community during the token issuance process.
Another potential trend to look forward to is the convergence of Memecoin and utility. User @hmalivya9 proposed the concept of “community clusters” on X. The model proposes to partner Memecoin projects with utility token projects through a staking system, where Memecoin holders can stake tokens to earn rewards from multiple utility token projects. The system will be enhanced by requiring active social media engagement, essentially gamifying the brand awareness of utility tokens. hmalivya9 envisions this symbiotic relationship as a blueprint for the structure of future crypto communities, where entertainment and utility are intertwined, and this concept is not entirely 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, there will also be continued development of AI agents. ai16z proposes a token economics model where token staking serves as a validation system, providing platform access, enabling governance participation, and establishing accountability through possible penalty conditions. In this evolved staking model, stakeholders’ economic interests are directly tied to their contribution to the quality and growth of the ecosystem.
2025 will undoubtedly be an exciting year, both in terms of the evolution of existing trends and the emergence of new ones.
