AltLayer’s cryptocurrency token, ALT, has taken a substantial hit, plummeting over 17% since the beginning of the week. This sharp decline coincides with the blockchain scalability platform’s significant token release. As the project introduces a large volume of new tokens into the market, investors are becoming increasingly anxious about the potential impact on the token’s price.
The anticipated release, which is set to increase the circulating supply by a substantial margin, has sparked concerns of a possible sell-off, further exacerbating the downward pressure on ALT’s value. AltLayer have introduced approximately $100 million worth of ALT tokens into the market this week.
Specializing in enhancing blockchain scalability through Restaked Rollups, AltLayer is poised to significantly boost the circulating supply of its ALT token by 42.09%. This release will add 684.33 million ALT tokens, estimated to be worth around $100.37 million, into the market.
In this article we take a deep dive into the world of Altlayer’s recent token unlock, and uncover what the network is about.
The token unlock schedule
Currently, the AltLayer (ALT) token is trading at approximately $0.12 ALT/USDT on Gate.io. The token has experienced significant volatility in recent days, with a 24-hour trading volume indicating substantial market activity.
The team will receive 188 million tokens valued at $27.57 million. Investors are allocated 308 million tokens worth $45.17 million. Advisors will get 83 million tokens valued at $12.17 million. Protocol development will see an allocation of 35.5 million tokens worth $5.21 million. The community is set to receive 25 million tokens valued at $3.67 million. The treasury will get 44.83 million tokens worth $6.58 million.
This substantial influx of tokens is likely to create significant selling pressure on the ALT token. According to the crypto analytics platform DYOR, AltLayer is heavily influenced by venture capitalists (VCs), who have an average unrealized profit multiple of 12.41X. The allure of these potential high profits may lead some VCs to liquidate their holdings, potentially driving the ALT price even lower.
Furthermore, market sentiment is currently bearish, with some investors preemptively acting on the anticipated price drop. These investors are shorting ALT, viewing it as a risky asset in its present state. This behavior is exacerbated by the disparity between its current market capitalization of $250 million and its fully diluted valuation of $1.5 billion.
What is Altlayer?
AltLayer is a blockchain scalability platform that aims to enhance the efficiency and functionality of blockchain networks. Its primary innovation lies in the concept of Restaked Rollups, which builds on the rollup technology designed to increase transaction throughput and reduce fees on the Ethereum network and other compatible chains. Rollups essentially batch multiple transactions into a single transaction to be processed off-chain, with the resulting data then recorded on-chain, thus improving scalability and efficiency.
AltLayer’s approach incorporates several unique features to bolster the performance and security of these rollups. One of its key products, VITAL, focuses on Actively Validated Services (AVS), where operators verify the blocks and states committed by the rollup sequencer and raise fraud proof challenges if necessary. This system ensures that any malicious behavior can be detected and mitigated, maintaining the integrity of the rollup process.
Another significant component of AltLayer’s ecosystem is MACH, a protocol designed to provide faster finality to rollups. This is achieved by allowing operators to restake Ethereum-based assets, which back any claims on the rollup state, thereby accelerating transaction finality and enhancing security. Additionally, AltLayer introduces SQUAD, which offers decentralized sequencing with economic backing. This feature eliminates common issues associated with single-sequencer rollups, such as short-term liveness concerns, bad MEV (Miner Extractable Value), and rent extractions.
AltLayer’s native token, ALT, plays a central role in the platform’s operations. It is used for various functions, including as an economic bond alongside restaked assets, for governance decisions, and as rewards for protocol operators. The token is also used to pay for intra-network services, ensuring a fluid and incentivized ecosystem for all participants. The platform has garnered significant interest from prominent investors, including Polychain Capital, and Jump Crypto, reflecting strong confidence in its innovative approach to blockchain scalability.
Rollups explained
Rollups are a scalability solution designed to improve the efficiency and capacity of blockchain networks, particularly Ethereum. They work by aggregating multiple transactions into a single batch that can be processed off-chain before the results are posted back on-chain. This process reduces the computational load on the main blockchain, thereby increasing transaction throughput and lowering transaction costs.
There two main kinds of rollups are: Optimistic Rollups and Zero-Knowledge (ZK) Rollups. Optimistic Rollups assume that transactions are valid by default and post them to the main chain with minimal computational overhead. They include a challenge period during which anyone can dispute the validity of the transactions. If a challenge proves that a transaction is fraudulent, the invalid batch is rolled back, and the fraudulent party is penalized. This method relies on economic incentives to ensure honesty and minimize on-chain computation.
ZK Rollups, on the other hand, use cryptographic proofs to validate transactions. Each batch of transactions generates a succinct proof, known as a ZK-SNARK (Zero-Knowledge Succinct Non-Interactive Argument of Knowledge), which is posted to the main chain. This proof certifies that all the transactions in the batch are valid without revealing the transaction details. ZK Rollups provide immediate finality and enhanced security because the proofs are mathematically indisputable, making them highly efficient and scalable.
Both types of rollups significantly enhance blockchain performance by offloading the bulk of transaction processing off-chain. This reduces congestion and lowers gas fees on the main blockchain, making it more accessible and efficient.
