📌 Token Vesting Schedule Summary
A token vesting schedule is a plan that determines when and how tokens are gradually released to recipients, such as founders, team members or investors. Instead of receiving all their tokens at once, recipients get them over a set period, often with specific milestones or dates. This method helps encourage long-term commitment and reduces the risk of large amounts of tokens being sold at once, which could impact the token’s value.
🙋🏻♂️ Explain Token Vesting Schedule Simply
Imagine being given a big box of chocolates, but you are only allowed to eat a few each month instead of all at once. This way, you enjoy them for longer and avoid finishing them too quickly. A token vesting schedule works similarly, letting people access their tokens bit by bit rather than in one go.
📅 How Can it be used?
A start-up can use a token vesting schedule to reward employees over time, encouraging them to stay with the company.
🗺️ Real World Examples
A blockchain game studio gives its developers tokens as part of their pay, but sets up a four-year vesting schedule with a one-year cliff. This means developers receive no tokens for the first year, then start receiving a portion each month for the next three years, helping retain key talent and align their interests with the project’s growth.
An investment fund receives tokens for supporting a new cryptocurrency project. The tokens are locked and released gradually every quarter over two years, preventing the fund from selling all its tokens immediately and ensuring continued support for the project’s success.
✅ FAQ
Why do projects use a token vesting schedule instead of giving out all tokens at once?
A token vesting schedule helps make sure that team members, founders and investors stay committed to the project for a longer time. By releasing tokens gradually, it reduces the chance that a large number of tokens will be sold straight away, which could harm the token price. It also helps build trust among the community, showing that everyone involved has an incentive to support the project for the long term.
How does a typical token vesting schedule work?
Usually, a token vesting schedule starts with a short waiting period called a cliff, where no tokens are released. After this, tokens are given out in regular instalments, such as monthly or quarterly, until the full amount is received. The whole process can last from a few months to several years, depending on the project and the role of the recipient.
Who benefits from token vesting schedules?
Both the project and its community benefit from token vesting schedules. Team members and investors are encouraged to stick with the project, which can help it grow and succeed. At the same time, the community gains confidence that the project is less likely to face sudden price drops caused by large token sales.
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