A prominent crypto data analyst is raising concerns that one of the industry’s most widely used tokenomics tools or time-based vesting and unlock schedules, may be backfiring in the era of liquid derivatives markets.
In a series of posts, DeFiLlama contributor 0xngmi argued that token cliffs and lockups, originally designed to align teams and early investors with long-term price appreciation, can produce the opposite effect once perpetual futures and borrowing markets are available.
Hedging Changes The Incentive Structure
The logic hinges on market evolution. If a token has active perpetual futures markets or can be borrowed, holders of locked allocations can hedge future unlocks by shorting the asset.
According to 0xngmi, hedge funds have for years structured trades in which they agree to purchase locked tokens at a significant discount to spot prices, sometimes 20% or more below current market levels, while simultaneously shorting the token in derivatives markets.
If the unlock occurs months later, the structure can generate attractive annualized returns.
From the seller’s perspective, the arrangement allows them to secure gains ahead of time, reducing exposure to market volatility.
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But the presence of a short hedge introduces a new dynamic: if the token price rises sharply before unlock, the short position can incur significant losses.
That, 0xngmi suggests, creates a subtle but powerful distortion. Participants who are hedged may prefer price stability or even downside movement over sharp appreciation.
Alignment Mechanisms Under Strain
Token vesting schedules were initially introduced to prevent insiders from immediately selling their allocations and to ensure teams remained incentivized to build long-term value.
The higher the token price climbed, the greater the payoff at unlock.
However, once derivatives liquidity exists, that linear relationship weakens. Locked holders can effectively lock in profits early through hedging, reducing their exposure to upside while protecting against downside.
0xngmi characterized this as a “total perversion of incentives,” arguing that a system intended to align insiders with token holders may now encourage behavior that dampens upward price momentum.