Vesting
Vesting is a mechanism in tokenomics that delays full distribution of a token or a coin by releasing small amounts of it over a larger period of time.
Usually projects will implement some kind of vesting for the allocation of tokens of early investors (VCs, early backers, advisors), as well as for the tokens of the protocol development team. It incentivises investors and teams to stay focused on making project a success over a longer period of time (in contrast where the team or investors can dump all of their tokens right after the public sale and just walk away).
Most usual vesting in a decent project will be 2-4 years with a cliff of 6-12 months.
A cliff or vesting with a cliff adds a delay to the initial access to the token. It removes some of the sale side pressure in the initial stages of a token launch.
Vesting Examples
Examples | Description | Graph |
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4 year linear vesting | Project A raises money from investors in exchange for the some amount of tokens with a 4 year linear vesting schedule.
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4 year linear vesting with a 1 year cliff | Project B raises money from investors in exchange for the some amount of tokens with a 4 year linear vesting schedule with a 1 year cliff.
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