Unlock Risk Index

In crypto markets, token economics (Tokenomics) play a crucial role in long-term price performance. Many newly launched projects debut with a small circulating market cap but a massive Fully Diluted Valuation (FDV).

The Unlock Risk Index evaluates supply inflation risks and upcoming selling pressures by comparing a token's FDV to its circulating Market Cap (FDV/MC Ratio).

1. Understanding FDV and Market Cap

Market Cap: Current Price $\times$ Circulating Supply. Represents the active, tradeable value of the token.
Fully Diluted Valuation (FDV): Current Price $\times$ Total Supply. Represents the valuation if all tokens were unlocked and circulating.
FDV/Market Cap Ratio: Indicates future supply dilution. A ratio close to 1 indicates low inflation risk (most supply is unlocked). A high ratio (e.g., $>5\times$) indicates that a large share of the supply is locked and will be released to the market over time.

2. Dilution Risk Levels

Tokens are classified into four risk levels based on their FDV/MC ratio:

A. Safe: Ratio 1.0 – 1.5×

Description: Over 70% of the total token supply is unlocked and circulating.
Evaluation: Very low unlock risk. Price movements are driven by natural market supply and demand, with minimal risk of VC or team dumping events.

B. Medium Risk: Ratio 1.5 – 3×

Description: Between 35% and 70% of the total supply is circulating.
Evaluation: Moderate inflation risk. Investors should monitor periodic vesting schedules (e.g. monthly unlocks) for short-term price fluctuations.

C. High Risk: Ratio 3 – 5×

Description: Only 20% to 35% of the total supply is circulating.
Evaluation: High unlock risk. The token is susceptible to significant supply-side inflation in the near future.

D. Extreme Risk: Ratio > 5×

Description: Less than 20% of the total supply is circulating.
Evaluation: Extremely high dilution risk. Massive quantities of tokens are locked in investor/VC vesting pools, creating potential selling pressure upon release.

3. Trading Applications

Filter Long-term Portfolios (Spot DCA): If planning to hold a token for more than 1 year, prioritize assets categorized as Safe or Medium Risk to avoid supply inflation devaluing your position.
Combine with Strategic Traders DEX Status: If a token has an Extreme Risk classification but is showing Super Ultra Buy signals on the DEX status page $\rightarrow$ it indicates smart money is trading the asset for short-term speculation. Align your strategy by trading momentum rather than holding long-term.

[!IMPORTANT] Risk Warning: Cross-reference this index with the Token Unlock schedule to track the exact dates and sizes of upcoming token unlocks.