🔹 Token Vesting Schedules for Founders and Teams

1. What is Token Vesting?

Token vesting is a process where founders, team members, and early investors receive their allocated tokens gradually over time, rather than all at once.

👉 The goal is to align incentives with the project’s long-term success and prevent team members or insiders from dumping tokens immediately after launch.

2. Why is Token Vesting Important?

Builds Trust: Shows investors that the team is committed for the long run.

Prevents Dumping: Avoids sudden token sell-offs that could crash the price.

Incentive Alignment: Encourages founders and teams to stay engaged until full vesting.

Market Stability: Gradual release ensures healthy supply and demand.

3. Common Vesting Structures

✅ Cliff Vesting

A “cliff” is a minimum time before any tokens are unlocked.

Example: 12-month cliff → no tokens are available for the first year, then vesting starts.

✅ Linear Vesting

Tokens unlock gradually (daily, monthly, or quarterly).

Example: 25% unlocked at TGE (Token Generation Event), then remaining tokens vested monthly over 3 years.

✅ Hybrid Vesting

Combines cliff + linear.

Example: 1-year cliff, then tokens vest monthly over the next 3 years.

✅ Milestone-Based Vesting

Tokens unlock when specific project goals are met.

Example: 10% unlocked after testnet launch, 20% after mainnet release, etc.

4. Typical Vesting Schedules

Founders & Core Team:

3–4 years vesting with a 1-year cliff.

Ensures long-term commitment.

Advisors:

1–2 years vesting, sometimes shorter since they are not full-time contributors.

Investors (VCs, Private Sale):

6–24 months vesting with partial unlock at TGE.

Community Incentives & Rewards:

Often shorter (to boost adoption), but still gradual to avoid inflation.

5. Example: Founder Vesting Schedule

Suppose a founder receives 10 million tokens with the following terms:

4-year vesting

1-year cliff

Monthly vesting after the cliff

📌 Timeline:

Year 1: No tokens released (cliff period).

Month 13 onward: ~208,333 tokens released monthly.

Year 4: All 10 million tokens fully vested.

6. Challenges with Token Vesting

Enforcement: Requires smart contracts to ensure transparency and prevent manipulation.

Liquidity Needs: Founders may need liquidity before tokens are fully vested.

Market Pressure: Unlock events can cause token price volatility.

✅ In summary:

Token vesting schedules are crucial for ensuring long-term commitment, investor confidence, and market stability in blockchain projects. A well-designed vesting plan balances team incentives with community trust.

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