Pi Network Supply Structure Analysis: Large-Scale Unlocks and Token Economy Rebalancing Under Protocol 23 Upgrade

According to Gate market data, on May 18, 2026, Pi Network’s PI token was reported at $0.15415 on the Gate platform, down 2.80% in the past 24 hours, with a cumulative decline of 79.59% over the past year. Meanwhile, two opposing forces are converging here: on one side is the peak unlocking of approximately 185 million PI in May — the largest single-month release until October 2027; on the other side is the official activation of Protocol 23 upgrade, transforming Pi from a basic mainnet into a programmable Layer 1, opening up technical possibilities for smart contracts and native DEXs. The collision of these two forces is posing a substantial test to the market supply and demand dynamics.

Protocol 23 Launch Meets the Largest Unlock in May

The core development team of Pi Network set May 15 as the mandatory deadline for nodes to upgrade to Protocol 23. All mainnet nodes must complete the upgrade by this date, or risk losing network connectivity. This upgrade is the largest technical leap since the mainnet went live, introducing native smart contract support based on Stellar Core 23, providing the underlying infrastructure for decentralized applications, native DEX (PiDex), and Launchpad. By mid-May, the network had over 421,000 active nodes, and more than 10 billion PI had migrated to the mainnet. Official data shows over 18.1 million users have passed native KYC verification, and over 16.7 million users have completed mainnet migration.

However, behind the technical move, another set of numbers cannot be ignored. In May, about 185 million PI tokens will enter the unlock phase. Combined with the previously accumulated PI supply on centralized exchanges, on-chain data shows that by mid-May, exchange-held PI had risen to nearly 540 million, the highest level since the mainnet launch.

The 185 million unlock and Protocol 23 activation are two separate timing events, with no direct causal relationship technically. But their interaction in market expectations forms a core clue to understanding the current PI supply and demand landscape.

From $2.98 High to 94% Retracement: Supply Logic

To understand the formation mechanism of current supply pressure, it is necessary to trace key milestones from Pi Network’s mainnet launch to Protocol 23.

In February 2025, Pi Network launched the mainnet, and PI tokens quickly reached a historical high of about $2.98. However, this high was not supported by demand. Subsequently, the token entered a prolonged downward channel lasting over a year, with a retracement of about 94% from the high by March 2026. In January 2026, about 136 million PI were unlocked in that month, the highest monthly unlock of the year. February saw about 130 million, March dropped to about 97 million, April to about 85 million, with the pace expected to slow significantly afterward. In April 2026, approximately 239 million PI entered a “future 30-day unlock” window, creating a peak supply shock.

In March 2026, exchange-held PI increased to 472 million, up about 79.5% from 263 million in the same period in 2025, setting a new high at that time. By May, with the activation of Protocol 23 and the simultaneous unlocking of 185 million PI, exchange balances reached nearly 540 million, a new peak. The supply expansion pace clearly outstripped the development of ecosystem demand, forming a pattern of “supply ahead, demand to be tested” lasting over a year.

Dual Perspectives on Exchange Balances and Supply Mechanisms

Continuous Rise in Exchange Balances

On-chain data provides an intuitive window into PI holding behavior changes. In March 2026, exchange-held PI reached about 472 million, up nearly 79.5% from the same period in 2025. By mid-May, this figure further increased to nearly 540 million.

In crypto asset analysis, a continuous increase in exchange balances is often interpreted as holders preferring to transfer tokens to immediately tradable venues, implying potential sell pressure is accumulating. If this trend continues, it indicates that the actual supply-side pressure has not been fully released — the nearly 540 million exchange-held PI itself constitutes a “stock pool” that could convert into sell orders at any time.

Monthly Unlock Scale and Supply-Demand Gap

The unlock schedule for 2026 shows a pattern of “intensive at the start of the year, slowing in the middle.” About 136 million PI were released in January, the highest for the month; about 130 million in February; around 97 million in March; about 85 million in April; and a jump to 185 million in May due to the Protocol 23 window. The total unlock for the year is expected to exceed 1.2 billion PI, while the daily trading volume of about $21 million to $26 million is significantly lower in comparison. The supply-demand gap is thus clearly visible.

It’s worth noting that April’s actual face was a “future 30-day unlock window” of about 239 million PI, not a single-month release, with peak daily unlock density in mid-April.

Hidden Constraints in Circulation Structure

In the context of relatively limited trading volume, the price impact of large-scale unlocks is not entirely linear. The proportion of PI actually tradable on exchanges accounts for less than 5% of circulating supply. This buffers the direct impact of supply inflows on price to some extent, but also means that when prices experience a phased rebound, holders’ transfer willingness may increase simultaneously, forming a self-regulating selling pressure mechanism.

The above analysis is factual and trend-based, not a directional prediction of PI’s price movement.

Divergent Valuation Narratives and Cognitive Gaps

Currently, market valuation logic for PI shows clear divergence, summarized into three typical orientations.

Global consensus on currency vision. The logic chain is: over 18.1 million KYC-verified users can be converted into active ecosystem participants, Protocol 23’s smart contracts and native DEX will foster application prosperity, ultimately shifting PI from a speculative trading asset to a practical economic network, with demand naturally absorbing supply. This has long dominated some community narratives.

Supply-driven oversupply risk. Proponents believe that with over 1.2 billion PI unlocking in 2026, about 100 million PI enter potential circulation monthly, and daily trading volume cannot cover this incremental supply. If transaction and consumption capacity within the ecosystem do not improve in tandem, supply will dominate pricing. The historical retracement — PI falling about 94% from $2.98 — is cited as a direct reflection of supply-demand imbalance.

Valuation alternative “gambling” label. This narrative starts from the extremely low nominal price of PI, constructing a low-cost speculative logic of “betting on community explosive growth or major benefits for project parties with minimal holdings,” which continues to spread in some communities. Correspondingly, discussions about non-official valuation models like “$31,415.9” for PI reflect community storytelling preferences rather than pricing based on real liquidity or confirmed market trades.

Behind these three narratives are different interpretations of the same data, fundamentally differing in expectations for “ecosystem landing speed.”

Industry Impact Analysis: Can Protocol 23 Become a Demand-Side Turning Point?

The core variable of Protocol 23 is that it introduces full smart contract support for Pi Network for the first time. Coupled with the launch of native DEX (PiDex) and Launchpad, the network has the basic technical conditions of a Layer 1 public chain to onboard external developers.

From a supply-demand rebalancing perspective, protocol upgrade itself does not directly generate demand. Smart contracts are a set of technical tools — they offer “possibility,” not “outcome.” Only when the following conditions are gradually met can demand-side logic potentially change:

First, whether developers are willing to deploy applications with real user value on Pi Network; second, whether Pi Network’s large KYC user base truly converts into application users rather than just “registering users” who only complete migration; third, whether native DEX can provide sufficient trading depth and liquidity experience.

A relevant industry reference point is: Pi Network co-founder Dr. Fan Chengjiao stated at the 2026 Consensus conference that tokens should serve as “tools to promote real user participation and product benefits, rather than capital raising tools.” This aligns with the technical direction of Protocol 23’s application layer. But alignment in direction still requires waiting for actual results.

It’s also noteworthy that the Pi Core Team cleaned up DApps like WorldBanksPi, deemed to be Ponzi-like, involving over 140,000 users, just before the upgrade. This indicates the project is trying to establish a more compliant ecosystem foundation, but may also cause a temporary impact on community activity.

Conclusion

According to Gate market data, as of May 18, 2026, PI is priced at $0.15415 on Gate, with a market cap of $1.63B. Against the backdrop of simultaneous 185 million unlocks and Protocol 23 upgrade, supply expansion and ecosystem development are in a race against time. Protocol 23 has opened a window for technological infrastructure, but supply pressure will not automatically diminish due to the upgrade — it requires quantifiable ecosystem demand to absorb it.

For market participants, the key is not to predict short-term prices but to continuously observe marginal changes on both supply and demand sides: whether exchange balances shift from rising to stabilization or decline; whether on-chain applications move from “functionality上线” to “real usage.” The trend of these data points will reveal the true progress of supply-demand rebalancing more than any narrative.