Vesting Schedule

A cliff period is an initial lock-up phase during which no tokens are released. After the cliff expires, a large initial grant is typically unlocked, followed by regular linear vesting. This structure protects the project from immediate sell pressure and ensures recipient commitment.

• Example: A 4-year schedule with a 1-year cliff. The recipient receives 0 tokens for the first year, then 25% of the total grant unlocks at the 1-year mark, with the remainder vesting linearly over the next 3 years.

Linear vesting is the most common release pattern, where tokens unlock continuously at a constant rate over the vesting period. It provides predictable, smooth distribution without large, discrete unlocks.

• Mechanism: If 1000 tokens vest over 1000 days, 1 token unlocks per day.
• Advantage: Reduces market impact from large, scheduled unlocks and aligns long-term incentives between recipients and the project.

Acceleration clauses are contractual provisions that can speed up the vesting schedule upon specific triggering events. These modify the standard time-based unlock.

• Single-trigger acceleration: Vests upon a change of control (e.g., company acquisition).
• Double-trigger acceleration: Requires two events, typically a change of control followed by termination of the recipient, providing stronger protection.
• These clauses are critical in equity and token grants for founder and employee agreements.

This feature defines who controls the unvested tokens and whether the schedule can be altered.

• Revocable Vesting: The issuer (e.g., project treasury) retains custody of unvested tokens. The schedule is enforced by a smart contract or legal agreement, and tokens are only minted or transferred upon vesting.
• Irrevocable Vesting: The recipient receives all tokens upfront into a locked wallet (e.g., a vesting escrow contract). The schedule is enforced by the smart contract's unlock logic, removing issuer discretion.
• The choice impacts security, tax implications, and trust assumptions.

The vesting curve defines the mathematical function governing the release rate of tokens over time. While linear is standard, other curves tailor incentives.

• Linear: Constant rate (straight line).
• Cliff-Linear: Cliff period followed by linear vesting.
• Exponential/Logarithmic: Accelerating or decelerating release rates.
• Step-function: Discrete unlocks at specific milestones (e.g., quarterly).
• The curve is programmed into the vesting smart contract's logic.

Vesting contracts typically involve distinct roles with specific permissions, enabling flexible governance.

• Beneficiary: The recipient of the vested tokens. Can often renounce their claim, permanently forfeiting unvested tokens.
• Admin/Owner: The entity (often a multi-sig wallet) that deploys the contract. May have powers to revoke unvested tokens (if revocable), change the beneficiary address, or adjust schedules, depending on contract design.
• Clear role separation is fundamental for secure and manageable vesting implementations.

A structure where no tokens are unlocked until a specified initial period (the cliff) has passed. After the cliff, a large portion vests, often followed by regular linear vesting.

• Purpose: Ensures commitment before any rewards are granted.
• Typical Cliff: 1 year for employee equity plans.
• Example: A 4-year schedule with a 1-year cliff. After 12 months, 25% of the total grant vests immediately. The remaining 75% vests monthly over the next 3 years.

The most common structure, where tokens vest continuously and equally over the vesting period.

• Mechanism: Tokens unlock incrementally with each block or time period (e.g., per second, day, or month).
• Calculation: Vested Amount = (Total Grant * Time Elapsed) / Total Vesting Duration.
• Use Case: Foundational model for employee stock options and many token distributions, providing predictable, smooth unlocks.

A hybrid model combining elements of cliff and linear vesting, where tokens vest in discrete chunks or "tranches" at regular intervals.

• Structure: After an initial cliff, a percentage vests, followed by subsequent vesting events (e.g., quarterly or annually).
• Example: A 4-year schedule with 25% vesting after Year 1, then 25% at the end of each subsequent year.
• Context: Common in venture capital deals for founder equity, providing milestone-like checkpoints.

A performance-triggered structure where vesting is contingent on achieving specific, pre-defined goals rather than the passage of time.

• Triggers: Product launches, revenue targets, user growth metrics, or technical achievements.
• Application: Often used for advisor grants, founder equity, or project-based contributor compensation.
• Key Feature: Directly ties asset release to value creation, but requires clear, objective milestone definitions to avoid disputes.

A mechanism typically applied to founders where they initially own 100% of their tokens or equity subject to a buyback clause if they leave the project early.

• Flow: The company holds a right to repurchase unvested shares at a nominal price if the founder departs before the schedule completes.
• Purpose: Protects the company and co-founders by ensuring commitment; the founder's stake "vests in" over time.
• Context: A standard provision in startup founder agreements and SAFT (Simple Agreement for Future Tokens) documents.

A schedule modified by clauses that accelerate the vesting of tokens under specific conditions, shortening the lock-up period.

• Single-Trigger Acceleration: Vesting accelerates upon a single event, usually a change of control (e.g., company acquisition).
• Double-Trigger Acceleration: Requires two events to accelerate, typically a change of control followed by termination of the employee. This is the more common and investor-friendly structure.
• Function: Serves as a key retention and protection tool in employment and investment contracts.

A vesting schedule is a time-based mechanism that controls the gradual release of locked tokens or assets to their designated recipients. Its primary purposes are:

• Aligning incentives between early contributors and the long-term health of the project.
• Preventing token dumping by ensuring a controlled, predictable release into the market.
• Enforcing commitment by requiring recipients to remain involved for a period to receive their full allocation.

Most vesting schedules are defined by a few standard parameters:

• Cliff Period: An initial lock-up period (e.g., 1 year) during which no tokens vest. After the cliff, a large portion vests at once.
• Vesting Duration: The total period over which the remaining tokens gradually become unlocked (e.g., 3-4 years).
• Vesting Schedule: The frequency of release after the cliff (e.g., monthly, quarterly).
• Vested Balance: The amount of tokens the recipient can currently claim or transfer.
• Unvested Balance: The remaining locked tokens that will vest in the future.

Different release patterns serve different strategic goals:

• Linear Vesting: Tokens release in equal increments at regular intervals (e.g., monthly) after any cliff. This is the most common and predictable model.
• Graded Vesting: Tokens release in increasing or decreasing amounts over time (e.g., more tokens released in later years).
• Milestone-Based Vesting: Release is triggered upon achieving specific project goals or key performance indicators (KPIs), common for advisors and developers.

On-chain vesting is typically enforced by a vesting contract or token locker. These are specialized smart contracts that:

• Hold the total allocated token amount in escrow.
• Automatically calculate the vested amount based on block timestamps or a predefined schedule.
• Allow beneficiaries to claim their vested tokens via a transaction. Prominent examples include OpenZeppelin's VestingWallet and popular locker protocols used in DAO treasuries.

Vesting schedules are applied to key stakeholder groups to manage supply and incentives:

• Core Team & Employees: Subject to long-term schedules (often 4+ years with a 1-year cliff) to ensure continued development.
• Investors & Early Backers: Tokens are locked post-Token Generation Event (TGE) to prevent immediate sell pressure.
• Advisors & Partners: Often have shorter, milestone-triggered schedules.
• Community & Airdrop Recipients: May have short-term linear vesting ("streaming") to encourage ongoing participation rather than instant selling.

Understanding vesting requires context of adjacent mechanisms and potential issues:

• Token Lock-up: A simpler, full-period lock with no gradual release.
• Vesting Acceleration: Clauses that may speed up vesting upon certain events (e.g., acquisition).
• Smart Contract Risk: Bugs in the vesting contract can permanently lock or incorrectly release funds.
• Cliff Risk: If a contributor leaves before the cliff, they typically forfeit all unvested tokens, which can impact team stability.

A vesting schedule is a contractual mechanism that gradually releases locked tokens or equity to recipients over a predefined period. It prevents immediate dumping by ensuring stakeholders remain economically aligned with the project's long-term success. Key components include:

• Cliff Period: An initial lock-up (e.g., 1 year) where no tokens are released.
• Vesting Period: The duration over which tokens are linearly released after the cliff.
• Release Events: Scheduled unlocks (e.g., monthly, quarterly).

Founders, developers, and advisors typically have the longest vesting schedules (e.g., 3-4 years with a 1-year cliff). This time-based vesting mitigates the risk of a team abandoning the project after a token generation event (TGE). It's a critical signal of commitment to investors and the community, as seen in protocols like Uniswap (UNI) and Aave, where core contributor tokens are locked for multiple years.

Early investors and venture capital firms agree to vesting terms to prevent market manipulation post-launch. Schedules are often shorter than team vesting but still enforce a disciplined release. For example, a seed round might have a 6-12 month cliff followed by 18-24 months of linear vesting. This prevents large, concentrated sell pressure that could crash the token's price immediately after listings on exchanges.

Vesting is applied to community airdrops and ecosystem rewards to promote sustained participation. Instead of a one-time distribution, tokens are released over months. This discourages sybil attackers and mercenary capital from immediately selling. Optimism's OP token airdrop utilized a vesting model for its initial community distribution, aiming to reward genuine users and delegates over time.

The two most common vesting structures are:

• Cliff Vesting: No tokens are unlocked until a specific date (the cliff). If an employee leaves before the cliff, they forfeit all tokens.
• Linear (or Graded) Vesting: After the cliff, tokens are released continuously or in regular, discrete intervals (e.g., daily, monthly) until the schedule is complete. Many schedules combine both, creating a cliff-linear hybrid.

On-chain vesting is enforced by vesting smart contracts (e.g., OpenZeppelin's VestingWallet). These immutable contracts hold the locked tokens and automatically release them according to the coded schedule. This provides transparent, trustless enforcement. Key functions include:

• release() to claim vested tokens.
• vestedAmount() to query unlocked balance.
• releasable() to check currently claimable amount.

An initial lock-up period at the start of a vesting schedule during which no tokens are released. This ensures long-term commitment before any benefits are realized.

• Purpose: Prevents immediate dumping by team members or early investors.
• Example: A 4-year schedule with a 1-year cliff means the first 25% of tokens vest after 12 months, with the remainder vesting linearly thereafter.

The most common vesting model where tokens are released in equal, continuous increments over the vesting period.

• Mechanism: After any cliff, tokens vest per second, day, or month.
• Contrast: Differs from graded vesting, which may release larger chunks at specific milestones.
• Use Case: Standard for employee equity and many token grants to ensure steady, predictable distribution.

A broader term for any contractual or technical restriction preventing the transfer or sale of tokens. A vesting schedule is a type of lockup with a defined release timeline.

• Technical vs. Contractual: Can be enforced by smart contract code or legal agreement.
• Context: Often used for investors post-TGE (Token Generation Event) or team allocations to maintain network stability.

A provision that speeds up the vesting schedule upon a specific triggering event.

• Common Triggers: Company acquisition (change of control), termination without cause, or reaching a performance milestone.
• Purpose: Protects beneficiaries by ensuring they receive a significant portion of their allocation if the project's circumstances change dramatically.

A key metric calculated by multiplying a token's current price by its maximum total supply. Understanding vesting is crucial for accurate FDV analysis.

• Importance: A high FDV with a large portion of tokens still locked (unvested) indicates significant future sell-side pressure as schedules mature.
• Analyst View: Distinguishes between circulating market cap and FDV to assess true valuation and inflation schedule.