Cross-chain and oracle supply pressure testing: Market behavior analysis after unlocking PYTH, ZRO, and KAITO

Token unlocks have always been the most direct and measurable supply-and-demand shock events in the crypto market. When assets worth hundreds of millions of dollars flood into circulation in the short term, their impact on the price curve, market sentiment, and a project’s valuation model often becomes the focus of bullish versus bearish power struggles. In late May 2026, a concentrated token unlock event involving three major projects—Pyth Network, LayerZero, and Kaito—is driving this battle to a climax.

Triple liquidity releases stack up, and the market faces a critical stress test

According to publicly available token unlock timetables, between May 19 and May 20, 2026, the crypto market saw a wave of dense cliff-style unlocks. Pyth Network released up to 2.13 billion PYTH tokens, LayerZero followed by releasing 25.71 million ZRO tokens, and Kaito simultaneously released 17.6 million KAITO tokens. The combined nominal value of these three unlocks exceeded $770 million at the time of release.

As of May 28, 2026, Gate market data shows that after the unlocks settled, the market continued to weaken. PYTH is temporarily priced at $0.03951, down 5.73% over the past 7 days; ZRO is temporarily at $1.199, and its decline over the same period has widened to 12.28%; KAITO is temporarily at $0.4688, recording a 10.43% drop over 7 days. After the unlocks, all three assets continued an oscillating downward trend, and the short-term pressure from supply shocks has already been reflected in prices.

Cross-cycle token release nodes

This unlock is not an isolated event, but an inevitable node in the long-term tokenomics models of each project.

Pyth Network unlock background

On May 19, Pyth Network unlocked 2.13 billion PYTH tokens. According to Gate market data, the unlock value was about $92.46 million, accounting for 36.96% of the current circulating supply. It is one of the largest single cliff-style unlocks in the 2026 crypto space. The token allocation structure for this unlock shows that approximately 1.13 billion tokens are used for ecosystem development, which falls under the project treasury allocation; approximately 537 million tokens are allocated as publisher rewards, distributed to first-party data providers that supply price data to Pyth Network. Notably, the 1.13 billion tokens allocated for ecosystem development are essentially treasury assets and will not immediately enter secondary-market circulation after the unlock.

LayerZero unlock background

LayerZero is a cross-chain interoperability protocol that connects more than 260 blockchains. On May 20, its ZRO token unlocked 25.71 million ZRO tokens, worth about $32.65 million, accounting for 5.07% of the circulating supply. Since last October, ZRO has been unlocking roughly 25.71 million tokens each month steadily, and its circulating share has gradually decreased from 7.86% to 5.07% for this event, showing a regular declining trend. The tokens unlocked this time are mainly allocated to strategic partners and core contributors. This fixed monthly unlocking schedule gives the market ample expectations, so any pre-pricing effects may be even more pronounced.

Kaito unlock background

As an AI-driven Web3 information platform, Kaito also unlocked 17.6 million tokens on the same day. The value was about $8.51 million, accounting for 4.7% of the circulating supply. The allocation of the unlocked tokens includes the foundation, core contributors, early supporters, and ecosystem growth. As a relatively newer project, KAITO’s absolute amount is significantly lower than the first two, but the marginal change in circulating supply after the unlock is still worth monitoring.

A quantitative perspective on supply shocks

Nominal value and circulating market-cap pressure estimates

In terms of nominal unlock value, PYTH leads at about $92.46 million, accounting for the vast majority of the total release value during this release week. ZRO’s $32.65 million and KAITO’s $8.51 million are smaller in amount, but against the backdrop of the overall market’s risk appetite contracting, any increase in circulating supply could affect supply-demand balance.

One of the key metrics used to evaluate the impact of token unlocks is the ratio of unlock volume to circulating supply. PYTH’s unlock this time accounts for 36.96% of its circulating supply, meaning the number of tokens available for free trading in the market expands sharply in a single wave after the unlock. ZRO’s unlock ratio is 5.07%, and KAITO’s is 4.7%—both far lower than PYTH’s ratio. Based on this metric, PYTH faces the strongest supply-shock intensity.

However, the size of an unlock is not the same as the actual sell-off size. According to disclosures from the project team, PYTH’s effective circulating supply (i.e., the tokens that are truly freely tradable on the secondary market) after the unlock drops to about 8%. This implies that a substantial portion of the newly unlocked tokens may be locked in staking or governance mechanisms. Treating nominal unlock amounts as equivalent to actual selling pressure is a common cognitive bias in market analysis.

Revisiting historical unlock patterns

After large-scale unlocks, price evolution in history often follows an observable path. In the one to two weeks before the unlock occurs, speculative short positions tend to increase and prices trend downward proactively. On the day of the unlock and in the following few trading days, early low-priced lots enter the market, but because buyers’ expectations have already been priced in, sharp “cliff” declines often do not occur. Instead, there may be brief stabilization as the negative news or selling impetus is exhausted. After that, the permanent expansion of circulating supply gradually feeds into long-term valuation models.

It is important to note that historical data does not support a single linear conclusion that “unlock must lead to a drop.” When a project is in a strong fundamental growth cycle, unlocked tokens are often absorbed by long-term investors, forming a bottoming turnover process. Conversely, in phases where the overall market’s risk appetite is shrinking, unlock events are more likely to become triggers for accelerated price declines. The macro environment and the competitive landscape within the sector during this unlock week form an important background for assessing subsequent trends.

Mainstream market narratives and disagreements

At present, market views around this unlock week show clear divergence.

The core logic of the pessimistic camp

Pessimistic sentiment mainly focuses on the difficulty of digesting the supply shock. The core argument is that overall crypto market trading activity is currently in a relatively low trough, and some tokens have limited market depth. In this context, unlocks worth hundreds of millions of dollars are essentially a hard supply shock. Pessimists generally believe that after prolonged time locks, the holders of PYTH’s ecosystem fund and publisher rewards will have strong intentions to cash out, and that any short-term rebound could become a window for reducing positions.

The support of the optimistic camp

The optimistic view places its focus on fundamentals. For LayerZero, supporters emphasize its irreplaceable role as a cross-chain infrastructure. ZRO is not merely a governance token, but a practical consumable asset used for cross-chain message transmission. As the cross-chain stablecoin transfer volume across ecosystems continues to grow, the accumulation of protocol revenue may partially offset unlock pressure. For PYTH, supporters believe that the data provider nodes in its oracle network need to stake PYTH, which to a certain extent creates a passive demand for locking.

The core disagreement lies in the time dimension mismatch: the pessimistic camp looks at short-term liquidity, while the optimistic camp is anchored on the long-term network value.

Strip away hype and return to data verification

Behind every bout of market turbulence, various narratives emerge—but not all can withstand scrutiny.

“Gas tokens for a cross-chain interoperability protocol” and value accumulation

ZRO is widely referred to as “the invisible glue for 260 chains.” This metaphor accurately describes LayerZero’s industry positioning, but the ability of its token value capture still needs to be assessed objectively. As of May 2026, although the number of cross-chain messages supported by LayerZero continues to grow, the absolute scale of protocol fees relative to its fully diluted valuation remains in an accumulation phase. ZRO’s monthly unlocks have shown a regular pattern of decline—its circulating share falling from 7.86% to 5.07%. This trend implies that the marginal market impact of each unlock is decreasing. The logic of holding ZRO across cycles remains valid, but short-term price volatility will still be highly constrained by the supply-and-demand structure.

“Oracle network staking lock-up” and anti-sell pressure capacity

PYTH’s staking mechanism provides returns to token holders. Looking at the current data, the project team’s disclosed effective circulating supply after the unlock is only about 8%, far below the increase in technically circulating supply. If a large amount of unlocked PYTH flows into staking contracts, pressure in the secondary market will be significantly alleviated. Conversely, if the staking rate does not increase accordingly after the unlock, it means that the additional circulating supply is primarily absorbed by trading sell demand.

Industry impact analysis: a subtle reshaping of the sector’s competitive landscape

This concentrated unlock may bring structural effects to the cross-chain protocol and oracle sectors.

In the cross-chain sector, LayerZero’s main challenge is not protocol security, but token price stability. Continued pressure on the ZRO price may affect users’ perception of the gas cost as an input, which in turn can influence the protocol’s pricing strategy during network expansion. However, the trend of continuously declining monthly unlock amounts suggests that the peak supply shock period may already have passed.

In the oracle sector, PYTH’s large-scale unlock expands the circulating float sufficiently. On one hand, the increase in fully diluted valuation may suppress speculative premium space in the secondary market; on the other hand, broader token distribution helps decentralize network governance, which is beneficial for long-term ecosystem security. The allocation structure of the ecosystem fund (1.13 billion tokens) and publisher rewards (537 million tokens) indicates that most of the newly unlocked tokens ultimately tie back to the protocol’s long-term development.

In addition, this unlock week coincides with a period when market liquidity tends to be tight. Multiple projects releasing tokens at the same time could form “supply congestion” in localized areas. In history, this kind of concurrent effect has repeatedly triggered discussions in the market about the transparency of token unlock schedules, and it also imposes higher requirements on projects to optimize their unlock strategies.

Conclusion

A token unlock week with a total value exceeding $770 million is not only a liquidity stress test for the market, but also a key window for assessing the quality of a project’s fundamentals. In the unlock nodes released in the same week by PYTH, ZRO, and KAITO, short-term supply-demand imbalances are almost unavoidable. However, repeated historical experience shows that a token’s long-term price has never been determined by the unlock event itself, but rather by the genuine demand and network value that the protocol creates after the unlock. Investors need to closely track changes in staking data after the unlock, on-chain trading indicators, and cross-chain routing volumes for stablecoins—these are the core coordinates for cutting through short-term noise and locating value anchors.