// GLOSSARY -- DEFI

What is Token Vesting?

1 min read Updated

Token vesting is a time-based release schedule that controls when allocated tokens become transferable — preventing insiders from selling immediately and aligning long-term incentives with project success.

WHY IT MATTERS

Vesting prevents the obvious problem: if team and investors get all their tokens at launch, they can immediately sell, crashing the price. Vesting locks tokens for a period (cliff) then releases them gradually (linear or milestone-based).

Standard vesting terms: 6-12 month cliff (no tokens transferable), followed by 2-4 years of linear vesting (monthly or quarterly releases). Investor tokens often vest faster than team tokens.

Monitoring vesting schedules is important for token investors — large unlock events create selling pressure. Tools like Token Unlocks track upcoming vesting events across the ecosystem.

FREQUENTLY ASKED QUESTIONS

What is a cliff?
The initial period during which no tokens are released. After the cliff (e.g., 12 months), all accrued tokens are released at once, then remaining tokens vest linearly.
How to check vesting schedules?
Token Unlocks, CoinGecko, and project documentation track vesting. On-chain, you can verify vesting contracts directly through block explorers.
Do vesting schedules prevent selling?
They prevent direct selling of locked tokens. But derivatives, options, and OTC agreements can create synthetic selling exposure before tokens unlock.

FURTHER READING

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