Why Time-Locked Vesting is Just the Start of Programmable Equity

Locked tokens provide security but kill optionality. Founders and employees can't hedge, borrow, or transact, creating a $50B+ market of frozen assets.\n- No price discovery for private rounds\n- Zero leverage against locked holdings\n- Forced HODLing through market cycles

Wrapping locked tokens (e.g., Sablier streams, VestLock tokens) creates composable financial primitives. These wrappers act as on-chain proof of future cash flow.\n- Borrow against vesting via Aave/Compound forks\n- Sell forward contracts on OTC desks like Oku\n- Delegate voting power without transferring custody

Linear schedules ignore performance, market conditions, or individual needs. This creates misaligned incentives and retention risk.\n- No acceleration for key milestones\n- No clawback for malicious actors\n- Rigid timelines ignore liquidity events

Smart contracts that release equity based on oracle-verified conditions (revenue targets, product launches) or multi-sig governance votes. Inspired by Llama's treasury streams.\n- Milestone-based unlocks via Chainlink oracles\n- DAO-voted acceleration for top performers\n- Automated clawbacks for code-defined breaches

Traditional cap tables are spreadsheets. On-chain equity adds transparency but exposes sensitive data (allocations, valuations) to competitors and speculators.\n- Privacy leaks from public blockchains\n- Manual errors in equity issuance\n- No real-time audit trail for investors

Zero-knowledge proofs (using zkSNARKs via Aztec, Polygon zkEVM) verify equity holdings and transactions without revealing amounts or identities.\n- Prove eligibility for airdrops/grants privately\n- Audit-friendly with selective disclosure\n- Instantly settle secondary transactions

Private company equity is trapped in spreadsheets and legal docs, creating massive friction for secondary sales, collateralization, and governance.

• Manual processes for transfers and approvals create ~30-day settlement delays.
• Zero price discovery outside of infrequent funding rounds.
• No programmability for automated distributions or on-chain voting.

Represent equity as a programmable token (ERC-20, ERC-1400) on a private or permissioned ledger like Polygon CDK or Base. This unlocks composability.

• Instant settlement and global 24/7 secondary markets via AMMs.
• Automated compliance (KYC/AML, transfer restrictions) embedded in the token standard.
• Native integration with DeFi for use as collateral in protocols like Aave Arc.

Linear, time-based unlocks ignore performance, market conditions, or individual contribution, leading to misaligned incentives.

• No mechanism to accelerate vesting for key milestones.
• Cliff dumps create sell pressure and destabilize tokenomics.
• One-size-fits-all schedules fail to account for role or seniority.

Use oracles (Chainlink) and smart contracts to create vesting schedules that react to real-world data.

• Revenue-based unlocks: Vesting accelerates upon hitting $ARR milestones.
• Market-condition triggers: Extend cliffs during bear markets to retain talent.
• Multi-sig governed adjustments: Founders/board can vote to modify terms based on performance.

Vested equity sits idle, offering no utility until a liquidity event. Employees can't leverage future value for loans or investments.

• Zero yield on locked tokens.
• No borrowing power against unvested or locked holdings.
• Capital inefficiency for both the company and the holder.

Use tokenized equity as the reserve asset for a new class of structured products.

• Vesting Token Vaults: Deposit locked tokens to mint a liquid derivative (like Element Finance for time).
• On-chain salary streaming: Automate equity distributions via Superfluid.
• Collateralized Lending: Borrow stablecoins against vested equity via undercollateralized protocols like Maple Finance.

Traditional equity is locked in cap tables and legal docs, creating a ~$10T+ market of dead capital. It can't be used as collateral, transferred instantly, or programmed with logic.

• Zero composability with DeFi protocols like Aave or Compound.
• Manual, error-prone processes for transfers and approvals.
• Liquidity is trapped for years, even for early employees.

On-chain equity tokens are dynamic assets with embedded logic, enabling new financial primitives. Think ERC-20s with governance rights and cash flows.

• Automated compliance via transfer restrictions and allowlists.
• Instant secondary liquidity through permissioned AMMs or OTC pools.
• Composability for use as collateral in lending markets or within DAO treasuries.

Move beyond linear cliffs. Vesting schedules can be tied to real-time KPIs, revenue, or governance participation. This aligns incentives precisely.

• Performance-based unlocks using oracles like Chainlink for verifiable metrics.
• Automated dividend distributions in stablecoins or native tokens.
• Vote-escrowed models (like Curve's veCRV) to align long-term holders.

On-chain equity requires a bridge to off-chain law. Entities like OpenLaw, LexDAO, and legal wrappers from Ondo Finance provide the crucial link.

• Enforceable legal rights anchored to on-chain tokens.
• Regulatory compliance baked into the token's transfer logic.
• Automated cap table management via protocols like Syndicate.

Programmable equity creates a flywheel. Treasury assets can be deployed in DeFi, tokens can fund grants via Streaming payments (Superfluid), and M&A can happen via token swaps.

• Treasury yield generation via Aave, Compound.
• Acquisitions as token mergers, simplifying cap table consolidation.
• Real-time, programmable payroll for contributors globally.

The final stage is an entity whose capital, governance, and operations are fully on-chain. This is the convergence of DAOs, RWA tokenization, and DeFi.

• Equity and governance tokens become synonymous.
• Revenue streams are automatically split to token holders.
• The corporate legal shell becomes a minimal wrapper for a maximally efficient on-chain entity.