How Digital Asset Treasuries Use Locked Tokens to Boost Valuations

Locked tokens have existed in crypto for years. Much like vested stock options, they are meant to restrict supplies and align incentives for key executives and leaders on a given project. 

But unlike stock options that vest, which are subject to forfeiture and have a very specific legal meaning, no universal definition for locked tokens exists. Furthermore, these assets can move in a bevy of ways before they actually become unlocked.

And some digital treasury companies have found a way to use them to their benefit.

Today’s newsletter is brought to you by Mantle

Mantle is building the Blockchain for Banking — where TradFi meets Web3. Explore real-world financial tools, powered fully on-chain.

How Digital Asset Treasuries Use Locked Tokens to Boost Valuations

Some treasury firms are circumventing the restrictions on "locked" or illiquid digital tokens, utilizing these assets to expand their balance sheets and generate greater profits.

The rise of digital asset treasury companies (DATs) set off a rat race this year between firms trying to stockpile tokens as quickly as possible. In many cases this strategy involves nine- and ten-figure purchases of bitcoin and ether at spot prices. 

However, companies also strategically use “locked” tokens, which they acquire in bulk at steep discounts, to fill their coffers. Some DATs leveraging this playbook include Sui Group (Sui), Ton Strategy Company (TON), Avalanche Treasury Company (AVAX), and StablecoinX (ENA). 

At first glance, these purchases, which oftentimes come from the issuing foundations, are savvy business moves because market observers typically ignore any transfer restrictions when buying the corresponding stocks. One needs to look no further than the heady premiums placed on various DATs to see proof of this investor exuberance. 

However, this market behavior is not simply due to blissful ignorance. Despite their name, locked tokens can often move freely between sellers and purchasers (the DATs), and it is common practice for them to be staked to networks as well in order to generate passive yield. The only real restriction seems to be preventing them from entering actual circulation and becoming available on the spot market. 

Unchained has identified multiple instances where DATs are issuing shares backed by these “illiquid” tokens that either become immediately tradeable, or have unlock schedules that end before the tokens themselves become liquid. These procedures seem to contravene the spirit of locked tokens. 

But more than that, one could make a case that obtaining liquid instruments backed by illiquid tokens is an unfair form of arbitrage that disadvantages spot purchasers. After all, these tokens are bought at a discount because they are supposed to be illiquid. The practice even runs the risk that the builders of the chain and ecosystem no longer feel as strongly incentivized to make it a success, plus raises important questions about how liquidations would occur should any of these companies face bankruptcy.

To be fair, not every company engages in risky behavior with locked tokens, and some take care to deploy them responsibly. But in the Wild West that has become DATs, investors need to look carefully at how each company employs these tokens and what risks these strategies may create.

The Difference Between Locked Tokens and Vesting

Crypto has a habit of co-opting TradFi terms to make the industry more accessible to outsiders. In this case, they are conflating the terms “vesting” and “locked.” Anyone familiar with executive compensation strategies or who has owned options in a venture-backed company has heard of the term “vesting.” In this case, options are conferred to a recipient over a period of time, typically several years, and the granting of those options can sometimes be dependent upon meeting certain performance criteria or completing a project. 

Importantly, options subject to vesting can be forfeited. If an employee is terminated or leaves voluntarily, they will likely relinquish claims to any unvested options. 

Locked tokens have different properties. Chief among them is that unlike options that will vest, tokens will definitely be conferred; the only question is when. “Lockup refers to a transfer restriction, vesting refers to a potential for forfeiture, as is typical in employee grants of equity or tokens,” said Greg Xethalis, General Counsel at Multicoin Capital, in an interview.

The most famous example in crypto is Ripple Labs, the primary developer of the XRP Ledger blockchain. When the company and blockchain was created over 10 years ago, 80 billion of the 100 billion XRP supply was gifted to the company and unlocked on a quarterly basis. According to a May 2025 report from the company, it still has 37.1 billion XRP in escrow, which is worth $89.5 billion at today’s prices. Those tokens will come to Ripple in the coming years no matter what.

How Lockups Work

Tokens can be locked up in a few ways. 

1. The granting party, typically a foundation, holds the tokens in a wallet until they are ready to be released to a contractor or employee. 

2. A third-party omnibus custodian, such as Anchorage, Coinbase, BitGo, and others, holds the tokens and only releases them after a given period of time.

3. Tokens are moved into a smart contract operating as a type of escrow account that automatically distributes tokens under pre-written instructions when key markers are met.

4. A simple contract is set up between two parties to voluntarily place transfer restrictions on a set of assets.

‘Locked’ But Liquid

Given the amount of discretion accorded these various setups, it should be unsurprising to learn that locked tokens can and do move quite frequently.

Unchained reported on an egregious example of what not to do last month, when insiders behind the Zero Gravity blockchain moved $300 million of ostensibly “locked” tokens into a DAT in exchange for liquid shares once the business agreement closes. Said one industry expert at the time, “The scam here is that you put it into this DAT, you pull [liquidity] forward, and you can sell public shares after you register.” Said another industry expert, “Getting instant liquidity for something that was going to take several years is a major, major issue right now with the industry.”

Investors should also pay attention to other behaviors aside from this example. One common practice is to stake locked tokens on a network in order to receive passive rewards. Co-opting other TradFi terms, staking yields are often called the “risk-free” or “hurdle rate” for investment managers in much the same way that ultra-safe U.S. treasuries are seen as the “risk-free” rate in the real world. 

But staking is not risk-free. The entire reason that assets need to be posted to a network in order to achieve rewards is because they are collateral. If the stakers do not meet their obligations, those tokens can be slashed, or forfeited, to the network. 

Additionally, staking involves placing assets into smart contracts, i.e. automated computer programs. They can and have been hacked. One needs to look no further than last month when Kiln, a staking provider servicing both the Ethereum and Solana blockchains, was hacked. The firm lost millions in solana tokens and then had to pull out all of its ether to prevent a similar fate. No wallet infrastructure is perfect, but risks like this are considerably lower at a dedicated cold storage custodian that is not connected to the internet in any way.

And then investors need to look at particular risks and disadvantageous behavior in individual deals. 

Sui Group’s Liquidity ‘Mismatch’

Take Sui Group, for example. In an 8-K form filed with the SEC in July, SUI announced a $450 million private placement to create a DAT centered on the $8.9 billion token. As part of the deal, the company received a $25 million cash investment from the non-profit steward of the blockchain, the Sui Foundation. But it also purchased $140 million worth of locked tokens at a 15% discount to the spot value. 

The SEC filing pointed out that “the SUI tokens purchased will be subject to transfer restrictions for a period of two years following purchase.” This statement immediately raised questions because it is clearly a change from the initial lockup schedule for these tokens. The filing then went on to say, “In connection with the Offering, certain members of the Company’s management, the Lead Investor and the Foundation Investor have entered into lock-up agreements for a period of one-year, subject to limited exceptions. Fifty percent of the securities of the members of the Company’s management will be released from lock-up six months after the closing of the Offering.”

A logical reading of these statements would indicate that shares of the DAT obtained by the Sui Foundation backed by locked tokens will unlock a year before the tokens themselves become liquid. When asked about the liquidity mismatch, Marius Barnett, Chairman of SUI Group, said, “The management and Foundation equity lockups in SUIG are significantly longer than typical lockups seen in comparable treasury vehicles. We conducted a full market analysis to confirm this. Accordingly, we do not believe this mismatch represents any material issue.” In other comments he also noted that these locked tokens are also allowed to be staked during the interim period.

StablecoinX: Locked Tokens, Liquid Shares

StablecoinX also appears to be using locked tokens in interesting ways. As set out in its own SEC filings, the company entered into a locked token purchase agreement with the Ethena Foundation, in which the tokens will be placed into a custodian (Anchorage) and be given a four-year unlock schedule with a 12-month cliff. 

The specific language is as follows: “The Locked ENA Token may not be transferred for a period of 48 months after the date of the Token Purchase Agreement, subject to earlier unlock and release from such transfer restrictions as follows: (i) 25% of the Locked ENA Token will be unlocked on the 12 month anniversary of the Closing and (ii) the remaining 75% of the Locked ENA Token will be unlocked in 36 equal monthly installments thereafter.” The company will not be able to stake the locked tokens for now, as the Ethena project still resides on Ethereum and Anchorage does not support the token.

But, according to a separate lockup agreement filed in conjunction with the 8-K, it appears that insiders will be able to sell shares in the DAT long before all of these tokens become liquid. In fact, according to the document, sponsor shares are only subject to a six-month lockup.

“Holder hereby agrees not to, without the prior written consent of the Company, during the period (the “Lock-Up Period”) commencing from the Closing Date and ending on the earlier of (A) the six (6) month anniversary of the Closing Date and (B) the date on which the Company consummates a liquidation, merger, capital stock exchange, reorganization or other similar transaction that results in all of its stockholders having the right to exchange their shares of common stock of the Company for cash, securities or other property: (i) sell, offer to sell, contract or agree to sell, hypothecate, pledge, grant any option to purchase or otherwise dispose of or agree to dispose of, directly or indirectly, or establish or increase a put equivalent position or liquidation with respect to or decrease a call equivalent position within the meaning of Section 16 of the Securities and Exchange Act of 1934, as amended, and the rules and regulations of the Securities and Exchange Commission promulgated thereunder with respect to, any Restricted Securities…”

In response to a question from Unchained, a spokesperson said, “[The lockup] is actually far longer than any of the other DATs that typically have no lockup requirements for any of those DAT sponsors.” 

DYOR

Utilizing locked tokens in these ways is not illegal. Venture capital firms have been buying tokens in bulk for years at discounts, often to the chagrin of the retail public, who can become exit liquidity. 

In fact, Ted Chen, co-founder of StablecoinX, said in a interview that DATs could actually offer better deals for locked tokens than venture capital firms. “They [venture firms] have to do these 30, 40, 50% discounts because they are worried about the liquidity risk on the backend,” said Chen, implying that DATs get smaller discounts. “Is there just a better function here where a public DAT could actually function as the best bid in terms of creating liquidity and doing this effectively, capital raising for the foundation in a more efficient manner?” He also stressed the importance of creating liquid markets for DATs as quickly as possible so that the market does not incur massive drops when an initial cohort of shares becomes liquid. 

Those are fair points, but in the Wild West of DATs it is important for investors to understand the illiquidity risk of a token stack and ensure that the long-term interests of shareholders and executives are aligned. Especially during periods when premiums are dropping. 

THE NUMBER: 5x

– Juan Aranovich, managing editor of Unchained

MegaETH, a high-speed L2 on Ethereum, is launching its public token sale next week, starting at just a $1M fully diluted valuation via English auction.

It’s a move that could seriously reward early participants.

This is the same project that already raised from Echo community buyers (at VC-level terms) and saw massive demand in its Fluffle NFT round. Now, it’s opening the door wide.

Premarket traders on Hyperliquid are already pricing $MEGA at a nearly $5B FDV, with strong volume. 

That’s a huge gap between entry and potential market pricing. 

But, Komodo CTO Kadan Stadelmann laid out a warning. He told me that “a low starting valuation looks attractive on paper, but if the network doesn’t achieve real usage or liquidity depth, early allocations can quickly lose momentum.”

Still, this approach feels deliberate. Instead of debuting like Starknet did in 2024 at a $50B FDV (now down 97%), MegaETH is letting the market decide.

If demand shows up (and I think it will) this could be a real printer.

5x is not bad at all, right? 

Related content: 

• DATs Want to Use LSTs to Juice Yields. The Problem? They Can Hurt Earnings

• This DAT Claims It Raised $401 Million. But the Fresh Capital Is Only $13.7M

• These 4 Crypto Treasury Companies Are Primed for a Price Crash