Vesting Vault

The most common schedule, where tokens are released continuously over time. For example, a 4-year vest with a 1-year cliff means:

• 0% released for the first year (the cliff).
• 25% released at the cliff's end.
• The remaining 75% vests linearly each second for the next 3 years. This creates predictable, smooth unlocks rather than large, discrete events.

A mandatory initial lock-up period where zero tokens are claimable. The cliff enforces a minimum commitment period before any vesting begins. Common in employee and advisor grants, a typical cliff is 1 year, after which a large initial portion vests (e.g., 25% of the total grant) and the remainder vests linearly.

The vault manages two key roles:

• Granter (Admin): The entity (e.g., a DAO treasury, project team) that deposits tokens into the vault and sets the vesting terms. They can often revoke unvested tokens under specific conditions.
• Beneficiary: The recipient (e.g., an employee, investor, contributor) who gains the right to claim tokens as they vest. Their public address is immutable in the contract.

Vested tokens are not automatically sent; the beneficiary must invoke a claim() function. Modern vaults often implement a streaming model, where the vested balance updates in real-time (per second), allowing frequent, gas-efficient claims. This contrasts with epoch-based models that only allow claims at specific intervals.

A critical governance feature. Revocable vesting schedules allow the granter to claw back unvested tokens, typically for cause (e.g., an employee leaving). Irrevocable schedules cannot be altered. Forfeiture clauses define conditions under which unvested tokens are returned to the granter, a key tool for enforcing contractual obligations.

Vesting vaults are foundational to on-chain governance. They allow beneficiaries to vote with their full vested amount, not just claimed tokens. This is achieved by having the vault contract delegate voting power from the locked tokens to the beneficiary, ensuring alignment between voting power and long-term incentive.

Used to secure capital from early investors by locking their purchased tokens. This protects other token holders and the project's market stability by preventing large, immediate sell-offs post-Token Generation Event (TGE). Structures often involve longer vesting schedules with cliffs to ensure sustained investor commitment.

Distributes protocol governance tokens (e.g., COMP, CRV) to liquidity providers over time. This encourages long-term participation rather than short-term "farm-and-dump" behavior. Users often have the choice to stake their rewards in a vesting vault to receive boosted yields or voting power.

Decentralized Autonomous Organizations (DAOs) use vesting vaults to manage investments in portfolio projects. When a DAO invests, it receives tokens that are locked in a vesting vault, ensuring the DAO's treasury cannot liquidate its position all at once and remains a committed, long-term partner.

Protocols issue grants to developers and projects building within their ecosystem. Distributing these funds via a vesting vault ties disbursement to milestone completion or time-based deliverables, ensuring accountability and sustained development effort.

Blockchain-native companies use token vesting vaults as a direct analog to traditional employee stock option plans (ESOPs). Employees earn tokens representing ownership or profit-sharing rights that vest over their employment period, creating a clear Web3 compensation structure.

The most standard schedule. A cliff period (e.g., 1 year) where no tokens vest, followed by a linear vesting period where tokens unlock continuously. For example: 1-year cliff, then 25% vests linearly over the next 3 years.

Tokens unlock in discrete, periodic chunks after an initial cliff. Common in equity compensation.

• Example: 4-year schedule with a 1-year cliff, then 25% vests, followed by equal monthly or quarterly installments for the remaining 3 years.

Vesting is contingent on achieving specific, pre-defined goals or Key Performance Indicators (KPIs), not just time. Used to align incentives with project development, product launches, or funding rounds.

All tokens are released immediately upon the vesting start date. This carries the highest risk of token dumping and misaligned incentives, as recipients have no ongoing commitment to the project.

An initial lock-up period at the start of a vesting schedule during which no tokens are released. After the cliff expires, a large initial grant is typically unlocked, followed by regular linear vesting. For example, a 1-year cliff on a 4-year schedule means the beneficiary receives 0% for the first year, then 25% of the total grant, followed by monthly vesting for the remaining 3 years.

The most common vesting mechanism, where tokens are released in equal increments over the vesting period after any cliff. For a 4-year schedule with monthly unlocks, 1/48th of the total grant becomes available each month. This creates a predictable, steady release of tokens, contrasting with one-time unlocks or exponential schedules.

A broader term for any mechanism that prevents the transfer or sale of tokens for a specified period. While vesting is a type of lockup with a release schedule, lockups can also be absolute (no transfers until a specific date) or staggered. They are commonly used for investor, team, and advisor allocations to prevent immediate market dumping post-launch.

A smart contract primitive that enforces a mandatory waiting period before a transaction can be executed. While vesting vaults use time-locks for scheduled releases, time-locks are also used for protocol governance (delaying execution of proposals) and treasury management (requiring multi-sig approval after a delay) to increase security.

A neutral third-party (or smart contract) that holds assets until predefined conditions are met. A vesting vault is a specialized form of cryptographic escrow where the condition is purely time-based. In broader DeFi, escrow contracts can hold funds contingent on oracle data, multi-sig approval, or the completion of a separate transaction.