Vesting

Vesting locks a portion of a project's tokens and releases them on a fixed timetable. It is borrowed from startup equity, where employees earn their shares over several years. In crypto it typically applies to founders, employees, and venture investors who received tokens at a discount before public trading began.

A common structure is a one-year cliff followed by linear vesting over two or three more years. With a four-year schedule and a one-year cliff on 48 million tokens, nothing unlocks in year one, then 12 million unlock at the cliff, and the remaining 36 million release at 1 million per month. Public unlock calendars track these dates because large unlocks can add selling pressure.

Vesting protects public buyers from insiders dumping immediately, but it does not prevent selling later. When reviewing a project, compare the circulating supply with the total supply and check when the biggest unlocks arrive. A token whose price has risen sharply ahead of a large cliff unlock is a common setup for a sell-off, because early holders may be sitting on gains of many multiples.