The Sandbox Token Drops 20% Ahead Of Major Unlock

SAND, the native token of the web3 game The Sandbox, is down 20% in around four weeks as investors brace for a major token unlock event on August 14.

Roughly $136M worth of SAND tokens will hit the market, equating to 16.6% of the token’s current capitalization, according to Token Unlocks. With 38% of the tokens earmarked for early investors, plus 11% for consultants, tokenholders are reducing their SAND exposure in advance of the unlock event. A third of the tokens will also go to The Sandbox’s team and foundation.

SAND’s previous unlock event released 18% of the token supply into circulation on Feb. 14, precipitating a 50% drawdown in the asset’s price from Feb. 21 through today.

Investors Spooked By Large Unlocks

Token unlocks indicate when large portions of a digital asset’s supply will enter circulation, and are important to note for crypto investors.

The early accessibility of Proof of Work mining combined with multiple market cycles have helped to distribute the supply of veteran cryptocurrencies like ETH and BTC into the hands of a wide variety of holders.

However, for many newer or VC-backed cryptocurrencies, oftentimes a small cohort of investors and team members will hold claims to outsized portions of an asset’s supply. These allocations are generally subject to a vesting schedule that distributes them over time, hopefully providing enough opportunity for a token to attract sufficient liquidity before early stakeholders offload their allocations.

For example, Optimism’s OP token saw volatility in the lead-up to and aftermath of an early June unlock event that increased the asset’s supply by 90%. Despite tumbling 40% in four weeks from mid-May, OP has since recovered by 44% and is now trading higher than it was at the time of the unlock.

Metaverse Tokens Show Signs Of Life

The metaverse sector was among the most hyped of the 2021 bull market, before suffering brutal drawdowns amid last year’s bear trend.

After starting 2022 with a combined capitalization of $15B, metaverse tokens ended the year at just $5.1B, according to CoinGecko. The metaverse market cap rebounded to $7.5B at the end of the first quarter but has since retraced to $6.9B.