Glossary · V
Vesting
The scheduled release of tokens to team members, investors, or protocol treasuries over time. Vesting prevents insiders from receiving all tokens immediately at launch and immediately selling. Typical team vesting: 1-year cliff (no tokens for first year) followed by linear monthly vesting over 3-4 years. The vesting schedule is a critical factor in assessing a protocol's long-term token supply dynamics and potential selling pressure.
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How Vesting works in practice
Vesting releases tokens gradually rather than all at once, usually with an initial cliff followed by linear distribution. It is intended to align teams and investors with the long term by making it impossible to sell everything immediately.
Worked example
A four-year schedule with a one-year cliff releases nothing for twelve months, then a quarter of the allocation, then the rest monthly over three years. The cliff date is often a visible supply event.
Figures are illustrative and chosen to be checkable, not live market data.
The mistake that costs people money
Vesting controls when tokens can be sold, not whether they will be. Recipients can hedge or borrow against unvested allocations, so selling pressure can arrive well before the tokens themselves do.
Vesting: common questions
- What is Vesting?
- The scheduled release of tokens to team members, investors, or protocol treasuries over time. Vesting prevents insiders from receiving all tokens immediately at launch and immediately selling. Typical team vesting: 1-year cliff (no tokens for first year) followed by linear monthly vesting over 3-4 years. The vesting schedule is a critical factor in assessing a protocol's long-term token supply dynamics and potential selling pressure.
- How does Vesting work in practice?
- Vesting releases tokens gradually rather than all at once, usually with an initial cliff followed by linear distribution. It is intended to align teams and investors with the long term by making it impossible to sell everything immediately.
- Can you give an example of Vesting?
- A four-year schedule with a one-year cliff releases nothing for twelve months, then a quarter of the allocation, then the rest monthly over three years. The cliff date is often a visible supply event.
- What do people get wrong about Vesting?
- Vesting controls when tokens can be sold, not whether they will be. Recipients can hedge or borrow against unvested allocations, so selling pressure can arrive well before the tokens themselves do.