In crypto markets, liquidity is king, but what happens when assets are locked, illiquid, and months (or even years) away from vesting? That's the problem SecondSwap aims to solve.

During the Avalanche Summit in London, CCN spoke with Kanny Lee, the founder, to understand how this new platform is tackling a niche but increasingly relevant challenge: the trading of locked tokens on-chain.

The Rise of Token Secondary Markets

"Secondary markets are not a crypto invention," Lee emphasizes. "They've existed in traditional finance for years. Think back to the Facebook IPO -- employees sold shares before listing through private secondary deals."

This concept is now being adapted to the blockchain world. Instead of focusing on tokens already in circulation, SecondSwap targets locked or illiquid token allocations -- often held by early investors, team members, or advisors.

How SecondSwap Works: Moving Beyond OTC

Historically, these deals happen over-the-counter (OTC), with brokers manually matching buyers and sellers -- a slow, opaque process prone to failure.

SecondSwap introduces a tri-party structure where the token foundation plays an active role from the start. "We get upfront approval from the foundation," Lee explains, "so there's no last-minute veto after weeks of negotiation."

This turns what's usually a legal gray area into a pre-approved, on-chain process. Foundations maintain oversight, while traders gain clarity and speed.

Why Avalanche?

SecondSwap is currently built on Avalanche. Lee cites its real-world integrations, such as stablecoin-powered ride-hailing payments in Singapore, as a key reason for the choice.

"Avalanche has shown traction across different sectors, not just DeFi or gaming," he says. "Plus, they're open to experimentation."

The integration allows users to buy locked AVAX tokens directly through the platform, marking what Lee describes as a first in the space.

Smart contract risk, wallet-based UX friction, and protocol-level security are all in play. Lee, a former cybersecurity specialist, says SecondSwap emphasizes segregation of funds, access controls, and transparent on-chain execution to mitigate these.

There's also the potential for market manipulation or wash trading, but according to Lee, that's harder to pull off on-chain.

"It's easier to trace behavior on decentralized platforms. Tools like Dune Analytics make spoofing patterns visible."

Who's Buying Locked Tokens?

One might assume demand is low, but Lee says it's the opposite.

"There are public companies building strategic positions in layer-1 ecosystems," he explains.

"It's like a new version of MicroStrategy, but instead of Bitcoin, they're stockpiling Solana or Avalanche at a discount," he points out.

The buying logic? Tokens are already locked. Investors who are bullish on long-term prospects can acquire them at a lower price without affecting the circulating supply.

A Different Way To Participate in Token Ecosystems

Unlike airdrops, which often lead to rapid sell-offs, SecondSwap emphasizes incentivized ownership. Community members can buy tokens at a discount, but still remain under the original lock terms.

"There's a difference between getting something for free and buying it at a discount," Lee says. "The latter creates more committed holders."

Fractional sales are also possible. Users don't need to sell an entire allocation, just a portion, adding flexibility.

Regulatory Navigation

SecondSwap avoids direct custody or exchange roles. Instead, it integrates with know-your-customer (KYC) providers and leans on token foundations to define eligibility. "We're not bypassing restrictions," Lee says. "We're enforcing them. Whatever a SAFT says, we follow."

This makes SecondSwap more of a facilitator than an exchange -- a design choice aimed at reducing compliance risk.

Is This the Start of a New Liquidity Model?

As of 2025, more than $37 billion worth of tokens are locked across the crypto ecosystem.

Lee believes platforms like SecondSwap could act as "pressure relief valves," helping move tokens into stronger hands without flooding markets.

Still, he acknowledges the biggest challenge isn't legal or technical -- it's speed.

"Foundations keep asking us to move faster," he says. "They see the need. They just want it now."

The Bigger Picture

Whether SecondSwap becomes a standard tool or remains a niche solution depends on how the broader market evolves. But it's clear the demand for smarter token liquidity is rising, especially as crypto matures beyond hype cycles and toward longer-term capital strategies.

As Lee puts it: "We're not inventing a new idea. We're adapting a proven one to the world of crypto -- and trying to do it right."