Solana Token Unlock

On January 19, 2025, SOL reached its all-time high of $295. However, by February 25, the price had dropped by more than 55% to $132. Meanwhile, the Argentine president is caught in a meme coin scandal involving LIBRA, which was launched on the Solana blockchain. At the same time, the Solana community is preparing for a significant token unlock. On March 1, 11.2 million coins will be unlocked. But what does this mean for Solana?

To put the numbers surrounding the Solana token unlock into perspective, it's helpful to compare them to the existing circulating supply of SOL. The circulating supply represents the SOL tokens currently available for buying and selling on the market.

Currently, nearly 490 million SOL coins are in circulation. The 11.2 million set to be unlocked account for approximately 2.3% of that total.

Additionally, it’s helpful to compare the market value of the unlocked SOL to the daily trading volume. The trading volume represents the total amount of SOL bought and sold within 24 hours in U.S. dollars.

The current market value of 11.2 million SOL is around $1.5 billion. Solana’s daily trading volume fluctuates depending on the source and market conditions, typically ranging between $3 billion and $6 billion.

Since this token unlock has been planned for some time, it is not new information for potential traders. Whether all the unlocked coins will be sold immediately on March 1 remains uncertain. The mere fact that coins are unlocked does not necessarily mean they will be sold right away and the full impact of the unlock is impossible to predict.

The holders of the SOL being discussed in this unlock are primarily institutional investors, as several crypto news websites report. These investors acquired a total of 41 million SOL from the crypto and trading platform FTX during its bankruptcy in November 2022. 

Solana has had various token unlocks in the past.

• Linear Unlocks: Coins/tokens are released evenly over a specific period.

• Cliff Unlocks: Large amounts are released all at once.

Solana's only major cliff unlock so far took place in January 2021, when 320 million SOL were unlocked, increasing the circulating supply from 151 to 470 million SOL. During the week surrounding this token unlock, from January 3 to January 8, 2021, the SOL price - contrary to what the industry had predicted - surged by nearly 80%, from $1.80 to $3.23. Since then, all unlocks on Solana have been largely linear.  

According to reporting on the data analyst platform, Messari, the unlocks will continue into the future. Currently, around 17% of all existing SOL are not available for trading.

By February 2025, 498 million SOL will be in free circulation for trading, while the total supply will be 594 million SOL. This total supply is not capped, though a steadily declining inflation rate applies. The Solana network initially launched with an annual inflation rate of 8% and this inflation rate will decrease by 15% of the launch rate each year until it ultimately reaches 1.5% per year. New SOL tokens enter circulation through staking rewards.