Tokenomics Crisis of Celestia: TIA Drops 90% After Strong Unlocking Event

Once hailed as a symbol of the "modular blockchain" movement, Celestia's native token TIA has fallen over 90% since its peak in 2024. Although initially inflated by a large airdrop and promises of decentralization, the sharp decline of this token is now raising difficult questions about tokenomics, strong unlock events, and the exit strategies of venture capitalists.

Launched with significant support from the community at the end of 2023, the TIA token of Celestia was distributed to 580,000 users through one of the largest airdrops in recent history. The price of TIA skyrocketed to $20 in September 2024, thanks to optimism about the architecture and adoption prospects of Celestia. However, when the ownership period began to expire, a large amount of previously locked tokens was released into circulation. According to Tokenomist data, many of these tokens belong to early supporters and core contributors, including venture capital firms that acquired TIA at a significant discount in the early funding rounds. The result was a massive sell-off wave. When these tokens were released to the open market, the price of TIA plummeted to a low of just $1.65, falling over 90%. However, the market capitalization of this token increased by 50%, currently hovering around $1.2 billion. Polychain Exit and efforts to regain control of Celestia The turning point came in July when one of Celestia's largest investors, Polychain Capital, fully exited the project. The Celestia Fund announced the acquisition of the remaining 62.5 million dollars worth of TIA shares from Polychain, at a price of about 1.44 dollars per token, close to the market price at that time. In an effort to stabilize the tokenomics, the fund plans to redistribute the repurchased tokens according to a new continuous unlocking schedule, starting from August 16 and ending on November 14. This revised structure is part of a broader strategy to manage inflation and restore investor confidence.

Polychain's handling of staking rewards has faced much criticism. Although the initial investment is still locked, on-chain analysts estimate that the company has liquidated over $240 million TIA, primarily from staking profits. Many believe that this significant sell-off is due to exploiting a loophole in the reward system, providing asymmetric benefits to early participants, disadvantaging retail participants. In response, Celestia has introduced a staking reform as part of the upcoming "Lotus" mainnet upgrade. This update has implemented a locking mechanism, whereby initial investors will no longer be able to withdraw their staking funds prematurely, ensuring access to rewards that align with a long-term commitment to the network. From boom to bankruptcy: The collapse of TIA highlights the fragility of new tokenomics. The recent fall in the price of Celestia's TIA token reflects a common pattern that is challenging newer Layer 1 and Layer 2 projects, where an aggressive unlocking schedule and poor liquidity management are dissipating the initial hype. The most notable collapse came from Blast, which initially attracted over $2.7 billion in Total Value Locked (TVL), becoming the sixth largest blockchain within six months. At its peak, Blast boasted over 200 dApps deployed and 180,000 daily active users. However, this growth momentum did not last long. A large unlock event in June 2024, with over 10.5 billion tokens, accounting for more than half of the supply, has flooded the market, driving prices down to record lows. As of today, the TVL has fallen by more than 96% to just 105 million dollars, with daily activity dropping to only 3,800 users. Additionally, the price of Berachain has fallen by 50% within just a few hours after its launch due to allegations of insider trading and an unpopular airdrop that caused some users to receive millions of dollars while others received nothing. Similarly, the token of Omni Network has fallen more than 50% on its launch day. With 15.98 million OMNI unlocked on May 3rd, worth nearly 40 million dollars at the current price, the downtrend appears to be continuing. OMNI has lost more than 92% from its all-time high of 53.81 dollars. These failures highlight the growing skepticism towards new tokens that prioritize initial liquidity and high valuations over sustainable ecosystem growth. The unlocking of tokens continues to put pressure on the market as major projects prepare for volatility. The cryptocurrency market is gearing up for another volatile week as large token unlocks threaten to shake investor sentiment. From August 4 to August 10, 2025, several prominent projects, such as Ethena (ENA), Jito Labs (JTO), and Immutable (IMX), will be releasing millions of tokens, potentially creating new waves of volatility.

Ethena leads the list with a plan to unlock 171.85 million ENA tokens on August 5, estimated to be worth 101.87 million dollars, equivalent to 2.70% of the market capitalization. The price of ENA has fallen -61.43% from its all-time high of 1.52 dollars and is currently trading at 0.5883 dollars. The project previously conducted a highly followed airdrop in April 2024, distributing 750 million tokens to participants. However, the new supply could put further pressure on the price if recipients decide to sell to unlock. On August 7, Jito Labs will release 11.31 million JTO tokens, worth 19.07 million dollars and accounting for 3.14% of the market capitalization. This Solana-based DeFi project distributed approximately 225 million dollars in tokens during the airdrop in December 2023. Since then, the price of JTO has fallen -70.13% from its all-time high of 5.61 dollars and is currently trading at 1.69 dollars, raising concerns about the continued downside risk. Immutable will unlock IMX tokens worth $12.15 million on August 8, equivalent to 1.30% of the market capitalization. Although over 95.1% of the total supply of IMX has been released, the unlocking remains crucial, as IMX has fallen sharply by -94.57% from its peak of $9.50 and is currently trading at $0.5173. The token volatility of IMX reflects the general trend of many airdrop projects — a brief initial frenzy, followed by a strong sell-off after the unlock. The upcoming unlocks are taking place at a time when market confidence in tokens distributed through airdrops continues to weaken. With airdrop recipients often acting as active sellers, future unlocks, especially in a bear or sideways market, may increase downward pressure across the altcoin sector.