LayerZero Faces 23.13% Supply Surge as 25.7 Million LZO Tokens Unlock

Generated by AI AgentCoin World
Saturday, Jun 21, 2025 7:05 am ET1min read

Ethereum Layer-2 scaling solution LayerZero is set to commence a significant token unlock season, with 500 million

LZO
tokens scheduled to be released into the market in phases starting from June 20, 2025. This development has sparked concerns among traders and analysts about potential price drops due to the increased supply pressure.

The unlocks will occur monthly until May 2027. The first wave, on June 20, 2025, will see 25.7 million LZO tokens enter the market, constituting approximately 23.13% of the circulating supply. At the current market value, this unlock is equivalent to $46.92 million. This influx of tokens could exert significant selling pressure on the protocol, potentially leading to short-term volatility.

Historically, token unlocks in other projects, such as zkSync, have triggered sell-offs and temporary price dips. This phenomenon is driven by basic supply-demand dynamics: as more tokens become available, prices tend to fall unless there is a corresponding increase in demand. Market watchers are bracing for similar volatility in the Ethereum LayerZero ecosystem.

LayerZero's omnichain technology is a key component of the Ethereum L2 ecosystem, enabling seamless interaction between blockchains like Avalanche and Polygon. This technology allows developers to move assets and data across networks with minimal friction, positioning LayerZero as a crucial player in the cross-chain space. Despite its strong ecosystem and partnerships, the upcoming token unlocks will test the resilience of the protocol's market support.

Currently, LZO is trading at $1.79, down 2.68% from the previous day. With a circulating supply of 110 million and a fully diluted valuation of $1.79 billion, LayerZero may face added pressure as the unlocked tokens enter the market, potentially increasing the market cap by $449.27 million. Short-term pain seems likely for current holders if selling pressure outweighs buying interest. However, some analysts remain optimistic about the long-term outlook, citing strong developer interest and the potential for increased demand for LayerZero's cross-chain tools as the protocol continues to build partnerships.