The upcoming unlock of 9.54 million tokens comes as Avalanche’s native cryptocurrency slid nearly 11.5% in the past seven days, making it among the worst-performing of the top ten cryptocurrencies by market cap for that period.

Avalanche’s unlocked supply of AVAX is set to increase by 9.54 million tokens, data from tokenonomics dashboard TokenUnlocks shows, making the upcoming AVAX unlock worth about $350 million.

On Wednesday evening, the Avalanche team and strategic partners will receive 6.75 million tokens—the bulk of the freshly unlocked tokens—while 1.67 million AVAX is dedicated to the Avalanche Foundation, with the remaining 1.13 million designated for an airdrop, according to TokenUnlocks. 

Many crypto protocols lock up or vest their tokens, in part to prevent large-scale selling during the early stages of the project, which in turn prevents these tokens from being traded on the open market. 

Token unlocks refer to the gradual process of releasing previously restricted tokens into the supply, allowing holders to use their tokens however they see fit, whether that involves selling their tokens or using them in decentralized finance protocols. 

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Avalanche, a layer 1 blockchain network known for its smart contract functionality like Ethereum and Solana, regularly conducts token unlocks, with the last time taking place on Nov. 23, 2023, per TokenUnlocks. 

Token Unlocks Can Lead to Lower Prices

Token unlocks typically lead to a decline in price as investor demand tends to lag behind the token’s circulating supply growth. For example, in the week before the November unlock, AVAX slid about 4.4% from $21.62 on Nov. 16 to $20.66 on Nov. 23, according to CoinGecko. 

Similarly, the upcoming token unlock, set to occur in roughly seven hours, comes as AVAX slid nearly 11.5% in the past seven days from $41.47 on Feb. 14 to $36.72 at presstime, per CoinGecko, making it one of the worst performers among the top ten cryptocurrencies by market cap.

AVAX, which is capped at 720 million tokens, as outlined by Avalanche’s documents, is used to secure the Avalanche blockchain network and for day-to-day operations such as facilitating transactions by paying for gas fees.