May is a month of large unlocking. In addition to the $SUI one-year anniversary unlocking not long ago, the unlocking of $PYTH has also attracted attention.
The impact of unlocking on token prices is confusing. Some people say that there will be a surge before unlocking, while others think that the price will be priced in in advance.
I’m sorry, this article will not make any judgment on the impact of $PYTH unlocking on the token price, but this article will tell you what key information is worth paying attention to behind the unlocking, and the possible long-term impact on the PYTH project itself.
Unlocking 21.25%, where do the tokens come from?
First, let’s review the token distribution of $PYTH:
Max Supply: 10,000,000,000
Initial circulating supply: 1,500,000,000 (15%)
Lock-up period: 85% of PYTH tokens are initially locked, and the locked tokens will be gradually unlocked 6 months, 18 months, 30 months and 42 months after the initial token launch.
Of the 10 billion tokens, an additional 21.25%, or 2.125 billion tokens, will be unlocked this time, so our core focus is how these 2.125 billion tokens are distributed.
Publisher Rewards refers to rewards for data publishers, accounting for 22% of the total. Approximately 537.5 million new tokens will be unlocked this time.
This portion of the token allocation is reserved for data providers or “publishers” of the Pyth Network, who are responsible for publishing price data to the Pyth protocol. The “Data Publisher Rewards” token allocation consists of reserved tokens for various incentive mechanisms and bounty programs to encourage data publishers to publish accurate and timely price data.
Ecosystem Growth refers to ecological growth, which accounts for 52% of the total. Approximately 1.125 billion new tokens were unlocked this time.
This part is the strategic token portion reserved by Pyth Network for contributors, including community contributors, developers, educators, researchers, strategic contributors, early data publishers, etc. This allocation is intended to recognize and reward individuals and organizations that have made core contributions to promoting the expansion and vitality of Pyth Network.
Protocol Developer is the developer token, accounting for 10% of the total. Approximately 212.5 million new tokens were unlocked this time.
This portion of tokens has been allocated to core contributors such as Douro Labs who are focused on building oracle tools, products, and infrastructure to expand the protocol's decentralized data service offerings.
Community & Launch is the part used for token launch, accounting for 6% of the total, and 0 was newly unlocked this time.
This part of PYTH tokens is used for the initial launch phase and the allocation of related community activities and plans. Currently, all 600 million PYTH tokens have been fully unlocked on the first day of release.
Private Sale, i.e. the VC part, accounts for 10% of the total, and 250 million new tokens will be unlocked this time.
This part of the tokens will be allocated to the VC of Pyth Network. Currently, all 1 billion PYTH tokens are locked and will be gradually unlocked according to the above unlocking schedule.
Therefore, we can see that the two biggest sources of unlocking this time are: Publisher and Ecosystem Growth.
Pyth Ecosystem Grants, PYTH towards a new ecosystem
It is not difficult to see that the Pyth team has also started to work hard on the Ecosystem part recently. In summary, it wants to convey a signal: the largest unlocking comes from Ecosystem Growth, but this part is in the hands of the Pyth DAO treasury and will not form a selling pressure (NOT "sell pressure").
In terms of actions, on May 16, the official Pyth Ecosystem Grants Program was launched, which will provide 50 million PYTH grants to eligible community members to encourage community members to share their ideas and insights on the Pyth network with the wider Web3 community.
The grant program is divided into three categories: community grants, research grants, and developer grants. Although the initial amount is not large compared to the unlocked amount, when extended to half a year or more, the team's Ecosystem Growth part is more like a strategic reserve for the future. It has been released, but how much will be circulated depends on the future ecological situation.
This is also Pyth's effort to build a larger community and a larger ecosystem. At the same time, Pyth has also launched the Pyth Forum for the community, which is also a key step in promoting Pyth DAO.
As for the publisher part, Pyth currently has a total of 100 publishers, who provide price feeds for the protocol, receive rewards, and are also important participants in the ecosystem. From the white paper, we can learn that in order to participate in the ecosystem, publishers also need to pledge their own $PYTH, so the tokens in this part may not all form selling pressure, but the specific situation remains to be seen.
So, in general, of the 2.125 billion newly released tokens, theoretically more than 60% will not be circulated immediately, and their use will depend on the plans of the treasury and ecosystem participants.
$PYTH’s practicality and future ecology
From the initial "Stake for Airdrop" to the current "Stake at least 1000/2000" or even more to get Airdrop, the less circulation, the higher the cost of Stake will be.
Therefore, this unlocking will not only give more people the opportunity to participate in the future staking of Pyth, but may also allow more users to participate in the full staking requirements at a lower cost.
So besides staking, what other functions does $PYTH have?
This is also the key point of Pyth Forum, because judging from the feedback from the community, the team does not want to promote more use cases in a centralized manner, but hopes that users will participate and come up with better proposals together.
The most discussed issue at the moment is that in addition to Staking for Airdrop, you can also Staking for Yield.
According to community discussions, there may be three sources of revenue in the future:
1-APY Return
Similar to Chainlink staking with a 4%+ return, $PYTH can also have a similar model;
2- Pledge to Publishers and share profits with them
For example, Pyth's Publishers will receive $PYTH rewards, and whether users can get part of the rewards through staking.
For details about Pyth’s mechanism, please refer to: Pyth Network: Creating a Permissionless, Low-Latency, High-Fidelity DeFi Oracle Benchmark
3-Share the revenue of the Pyth Network agreement
Many people say that oracles are a good track, and they can issue coins and make money through protocols. When Pyth makes a profit through the Protocol, whether it can distribute certain rewards to stakers will be discussed in the Forum.
Half a year after its launch, Pyth has integrated 350+ applications, launched 500+ price feeds and 55 chains.
It is true that this unlocking will definitely bring some selling pressure, and whether the selling pressure can be controlled also depends mainly on the above three core parts. In the long run, the flow of more tokens will also allow more users to become Pyth Stakers, making the community stronger.
Pyth Network will also continue to move towards Pyth DAO.
