How Does a “Cliff” Period in a Vesting Schedule Function, and What Is Its Purpose for a Crypto Project?

A cliff is an initial period (e.g. one year) during which no vested tokens are released to the recipient. Only after the cliff period ends does the first large tranche of tokens vest, and subsequent vesting continues monthly or quarterly.

Its purpose is to ensure founders and early team members are committed long-term before receiving a significant portion of their allocation, protecting the project from quick abandonment.