Token Lockup

The phrase "token lockup" describes a set time frame during which cryptocurrency tokens cannot be traded or used in transactions. These lockups are typically employed as a preventative measure to preserve the stability of an asset's long-term worth. This could aid in preventing huge bag owners from selling all of their tokens at once, which would probably send market prices down very rapidly. Massive sell-offs are sometimes observed during Initial Coin Offerings (ICO), in which early investors (or even the project's team) sell their holdings as soon as the cryptocurrency enters the market, leading to sharp decreases in price. Token lockups are therefore used to prevent this from happening and they increase the level of confidence among prospective buyers of a token sale. Vesting periods are another name for token lockups. These are frequently set to occur one or two years following a cryptocurrency's introduction. For instance, if a firm develops a cryptocurrency and launches it through an ICO, they might set a two-year lockout period for the team, preventing anyone from accessing their tokens before the lockup period expires. This is encouraging for the project and the team because it will probably keep them motivated to concentrate on long-term projects without worrying about the token's market value. It's important to note that locked-up tokens (or coins) are not included in the circulating supply and are not taken into account by chartists and traders when performing technical analysis.