Ethereum LayerZero To Enter 500M LZO Unlock Season, Implications for Price

Ethereum Layer-2 scaling solution LayerZero is about to begin a primary token unlock season, with 500 million LZO set to hit the market in bits from June 20, 2025.

With $46.92 million worth of tokens coming in the first wave, the development has raised concerns about price drops due to rising supply pressure.

The unlocks will run monthly until May 2027, and while the network holds a strong position in Ethereum’s Layer 2 space, traders are watching closely for short-term volatility.

LayerZero Token Unlock Season Raises Price Fears

In major news, Ethereum LayerZero is preparing to release 500 million LZO tokens over two years. As revealed, the first unlock will come on June 20, 2025.

It is worth noting that this first wave will see 25.7 million LZO tokens enter the market. This is about 23.13% of the circulating supply.

At the current market value, this unlock equals $46.92 million. Analysts and traders believe this could add selling pressure to the protocol.

This is especially important as the token’s 24-hour trading volume is already down 30.07%, at $31.24 million.

Meanwhile, the fear of token dilution is not new. In recent memory, token unlocks in other projects like zkSync have triggered sell-offs. It, however, led to temporary price dips.

This follows basic supply-demand logic. As more tokens become available, prices fall unless there is an equal or higher level of demand.

That same trend could affect Ethereum’s LayerZero. As a result, market watchers on social platform X are preparing for increased volatility.

Messari confirms that these monthly unlocks will continue until May 2027. If demand does not keep up, price drops could become the norm.

However, some argue that LayerZero’s strong ecosystem, built on solid partnerships, may help absorb the supply gradually, lessening the impact.

LayerZero’s Role in Ethereum L2

In the Ethereum L2 ecosystem, LayerZero is best known for its omnichain technology.

This project essentially allows blockchains like Avalanche and Polygon to interact easily.

This is important because the approach helps developers move assets and data across networks without friction.

Meanwhile, it strategically positions LayerZero as an essential player in the growing cross-chain space.

According to L2Beat, a platform that ranks Ethereum Layer 2 networks, LayerZero currently ranks 12th with 192,545 unique operations per second (UOPS).

While this shows meaningful activity, it still lags behind top performers like Base and Arbitrum One.

Still, the protocol’s 13.50x scaling factor shows it has room to improve in efficiency and adoption.

Backed by well-known venture capital firms and integrated with platforms like Radiant Capital, LayerZero continues to grow.

However, the coming token unlocks may test how resilient the protocol’s market support really is.

LZO Price Outlook and What to Watch

CoinMarketCap data shows that LZO trades at $1.79, down 2.68% from the previous day. The price has been slipping from $1.83 in the early hours.

With a circulating supply of 110 million and a fully diluted valuation of $1.79 billion, LayerZero may feel added pressure as the unlocked tokens flood in, totaling $449.27 million in market cap.

If anything, short-term pain seems likely for current holders. Traders are worried that if selling outweighs buying, prices will fall further.

However, some are optimistic about the long-term picture, pointing to strong developer interest and use cases tied to its omnichain tech.

It is essential to mention that if LayerZero continues to build partnerships, the demand for its cross-chain tools will increase, cushioning any headwinds.

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