The digital asset landscape is currently facing a significant shift in how private tokens are valued, with recent reports suggesting that secondary market discounts have reached unprecedented levels. While the primary market often captures the headlines with massive funding rounds and high valuations, the secondary market is where the true reality of liquidity and sentiment is revealed. Industry experts, including veteran investors like Santiago Roel Santos, have pointed out that the average discount on the vast majority of crypto secondaries has widened dramatically. In previous cycles, a standard discount for locked tokens with typical vesting schedules hovered around 60 percent. However, current data suggests that in many distressed cases, these discounts are now plunging toward the 90 percent mark. This phenomenon highlights a growing gap between the paper value of crypto projects and the actual price that buyers are willing to pay for illiquid assets in a tightening financial environment.
Understanding why these discounts have reached such extreme levels requires a deep dive into the mechanics of token unlocking and market supply. According to market analysts and OTC trading desks, there is a massive supply overhang that continues to weigh on prices. It is estimated that between 500 million and 1 billion dollars worth of tokens are unlocked every single week across various ecosystems. When this constant stream of new supply meets a market where demand is relatively weak, the result is a significant widening of the spread between buyers and sellers. Many early participants, including venture capital funds and project employees, are looking for exits to secure liquidity, but the pool of opportunistic buyers remains small. This imbalance is particularly visible in tokens that lack clear value accrual mechanisms or those that were launched during the 2021-2023 era with high fully diluted valuations and low circulating floats.
The duration of the lockup period also plays a critical role in determining the depth of the discount. Market data shows that for tokens with short-term horizons, the discounts remain somewhat manageable. However, for the long end of the market – deals with 36 months or more of remaining vesting—the situation is much more dire. In these instances, buyers are increasingly uncomfortable taking on the time risk associated with the volatile crypto market. A median discount that was once 50 percent has now ballooned to over 80 percent for many long-duration secondary deals. While 90 percent discounts are not yet the universal norm for the entire market, they are appearing more frequently in the “tail end” of the asset class. These extreme cases usually involve distressed projects or specific structures where the risk of the project failing before the tokens unlock is perceived to be exceptionally high by the investment community.
The Impact of High Fully Diluted Valuations on Secondary Pricing
One of the primary culprits behind the current 90 percent discount trend is the legacy of high fully diluted valuations or FDVs. During the peak of the previous bull run, many projects launched with multi-billion dollar valuations despite having only a tiny fraction of their tokens in circulation. This “low float, high FDV” model was designed to keep prices artificially high in the short term, but it created a ticking time bomb for secondary markets. As more tokens are released into the market through vesting schedules, the lack of organic demand becomes apparent. Investors in the secondary market are now savvy to these tactics and are demanding much steeper discounts to compensate for the inevitable dilution. If a project does not have a clear way to link its token value to actual protocol revenue or usage, the secondary market acts as a harsh judge of its true worth.
Furthermore, the shift in investor preference toward equity over tokens has further complicated the secondary landscape. In many cases, professional investors would rather own a piece of the company behind the protocol than the volatile token itself. This preference stems from the fact that many tokens do not offer the same legal protections or rights to revenue that equity does. When secondary buyers have the choice between a discounted token and a discounted equity stake, the token often loses out unless the price is slashed significantly. This competition for capital is driving the 90 percent discounts we see today. Projects that have failed to innovate on their tokenomics or those that have not found a sustainable product market fit are the most likely to see their secondary market prices collapse as the market prioritizes quality over hype.
Liquidity Challenges and the Role of OTC Trading Desks
Liquidity remains the most significant hurdle in the crypto secondary market. Unlike public exchanges where trades happen in milliseconds, secondary deals for locked tokens can take weeks or even months to finalize. This lack of “instant exit” capability means that buyers require a massive liquidity premium. OTC trading desks report that while they are seeing plenty of sell-side interest from funds needing to return capital to their limited partners, the buy-side is much more selective. Buyers are currently focusing on a limited set of “blue chip” tokens that have strong ecosystems, shorter lockups, or those that can be easily hedged in more liquid markets. For everything else, the bid-ask spread remains wide, often forcing sellers to accept deep cuts just to find a counterparty.
The role of market sentiment cannot be understated in these negotiations. When the broader crypto market is in a state of uncertainty, the secondary market is usually the first to feel the freeze. Because these assets are illiquid, they are the hardest to sell during a downturn, leading to “fire sale” conditions where 90 percent discounts become a reality. However, some analysts view these deep discounts as a healthy correction. By flushing out overpriced assets and bringing valuations back down to earth, the secondary market is performing a vital price-discovery function that public markets often delay. For long-term investors with a high risk tolerance, these distressed levels represent a potential entry point, provided they can accurately identify which projects will survive the current liquidity crunch and thrive in the next cycle.
Looking Ahead: Will Secondary Discounts Normalize in 2026
As we move deeper into 2026, the question remains whether these extreme discounts will become a permanent fixture of the crypto landscape or if they are a temporary symptom of a transitional market. Most experts agree that the market is currently in a state of “repricing.” As the industry moves away from the unsustainable tokenomics of the past, we may see a more standardized approach to secondary valuations. If newer projects launch with more realistic valuations and better alignment between token holders and protocol success, the need for 90 percent discounts may diminish. However, for the backlog of projects launched in 2022 and 2023, the pain is likely to continue as their massive unlock schedules proceed.
The evolution of secondary marketplaces like SecondLane and OFFX is also a positive sign for the future. These platforms provide much-needed transparency and data that was previously unavailable to the general public. By tracking median discounts and spreads, these marketplaces help both buyers and sellers understand the “clearing price” for assets. As more data becomes available, the “tail” of 90 percent discounts might shrink as pricing becomes more efficient. For now, the crypto secondary market remains a high-stakes environment where only the most informed and patient investors can navigate the complexities of locked tokens and distressed valuations. The 90 percent discount might be a warning sign for some, but for others, it is the ultimate signal of a market reaching its bottom.
