Steemit Crypto Academy Contest / S11W6 - Token Unlock

Hope you all are doing well and good and enjoying the best days of your life. This is me @shahid2030 from Pakistan and you are here reading my post. You all are welcome here from the core of my heart.

This is my participation in a contest Token Unlock organized in SteemitCryptoAcademy by @crypto-academy.

Locking up mechanism is very common in crypto world. Most crypto currencies follow it when they are newly launched are they are going through a development phase. Here in Steemit we have lock up mechanism too. Will discuss these things in details in the article below.

An unlock tokens are actually the same token as the normal one in the market, But the difference between them is unlock tokens are those which are initially restricted from any kind of use, or they have a partial access and can be released or unlocked under certain conditions. These conditions often involve fulfilling specific milestones, time-based vesting schedules, or meeting predefined criteria set by a project or its creators.

The locking of these coins are not useless or without any special aim. Their are certain reasons behind it.Some common reasons projects choose to lock tokens are:

Goading holders: incentivizition and motivation is the reason behind it.It helps remain the users engaged and supportive over time.

Preventing immediate market: To control a high volatility in a project is the aim of every owner. So they keep some tokens save to avoid high volatility caused by large sell-offs. It helps their project to be sustainable for longer period of time.It can foster trust and confidence among the community and investors.

** Attracting and inhancing people toward their project**: Locking tokens serves as a strategic mechanism to promote stability and alignment of interests within a project's ecosystem.

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In crypto market or simply you can say that in Blockchain technology the locked tokens are released into the market through various methods. The specific method used to lock and release tokens can vary greatly depending on the blockchain or project's design.Let me mention some of them which I know here.

1. Time-Based Locking: This is the locking of Tokens for a specific period of time. They are locked when they are distributed initially. During this specific period of time, the tokens are unable to be traded, one cannot transfer or used it. Once the vesting period expires, the tokens are released and can be freely traded or utilized.

2. Smart Contracts: The another reason for locking the tokens up is smart contracts. The Blockchain or crypto currency make an agreement they will unlock their tokens until a certain special event happens. These contract is done through predefined conditions that must be met for the tokens to be released. For instance, a company says they will unlock their tokens if a specific they complete a specific project,

1. Staking: Proof of Stake (PoS). In PoS blockchain networks, the users decide to "stake" their tokens. They give their collateral support the network's operations. You must know that staked tokens are locked too, and in return, users they give you rewards or transaction fees. Tokens can be released when users decide to unstake them.

1. Governance Decisions: This happens in a community governance system. In decentralized networks, sometimes token holders have voting rights to make governance decisions. The Tokens can be locked temporarily during voting periods. It's aim is to ensure that users should participate actively in network decision-making.

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The impact of tokens unlocking may have very positive impacts on the project or crypto currency. It can change the statistics of the supply and demand of that token. This decision will effect the token, but we will look for the number of tokens released, market sentiments and other project fundamentals. Tokens unlocking may have these following impacts.

Increasing Supply: If abondant number of tokens are released, it will increase the supply of that very token. Unlocking will increase number of tokens available for trade in the market.

Price pressure: If a sudden increase is seen in the supply of the crypto currency and it's demand is the same or decrease, we can see a dump in the price of that currency.

Monitoring Token Unlocks: The process of tokens unlocking is mostly schedule. The investors are monitoring it, if they show interest they invest their capital in it and it increase the price of the token.

I am not sure that all the crypto currencies have the lockup mechanism. Infact I am sure the answer for this question is no. Every crypto currency lunch their coin with their own strategy. Mostly they follow the airdrop mechanism. They give free airdrops to the users to attract them towards their project. The locking up system is optional it is not compulsory.

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I know a coin by the name of Ape. I remember when it was lunched. Their wasn't any Lock up mechanism followed there. Actually it was a NFT based token with a very limited supply. I don't remember the exact supply, but I know non of the amount of Ape was locked up. We have multiple examples here from the market.

However talking about steem coin so yes it follows a lock up mechanism. You may have seen here the 50 % of your reward goes automatically to your account power up. These coins are actually locked up in your account. You can't use it or trade it unless you power down it. You can read out the whole information their in Steemit white paper, you will understand it better.

The aim of Steem.Inc's lock up is to prevent hostile takeovers and maintain control over the network. This decision give benefits to the Blockchain, but it depends on the specific goals and needs of the ecosystem. It can be proved advantageous for maintaining network stability and preventing centralization of power.

Both risks and profits are associated with this Lock up mechanism. Let me mention them one by one.

This is all about my research I have done on this topic. I hope you guys have enjoyed reading it. See you soon with a new amazing and interesting topic till take care.