How Does Token Vesting Schedule Impact DCF Valuation?
A token vesting schedule dictates when pre-mined or allocated tokens are released to the market, affecting the circulating supply and potential selling pressure. In a DCF, the vesting schedule is crucial for calculating the Fully Diluted Valuation (FDV) and understanding future dilution risk.
A large, imminent release of tokens can increase the risk premium in the discount rate and suppress near-term price forecasts, even if the intrinsic value is high.
Glossar
DCF
Valuation ⎊ Discounted cash flow, or DCF, within cryptocurrency and derivatives markets represents a projection of future free cash flows of an underlying asset or protocol, discounted to present value using a risk-adjusted rate.
Token Vesting Schedule
Allocation ⎊ The token vesting schedule, prevalent in cryptocurrency projects and increasingly mirrored in options and derivatives compensation structures, dictates the timed release of tokens or assets to participants ⎊ founders, team members, advisors, or investors ⎊ preventing immediate market saturation and incentivizing long-term commitment.
Token Vesting Schedule Impact
Schedule ⎊ The Token Vesting Schedule defines the pre-determined timeline and quantity for releasing previously locked tokens, typically allocated to founders, team members, or early investors, into the open market.
Fully Diluted Valuation
Calculation ⎊ Fully Diluted Valuation in cryptocurrency, options, and derivatives represents the theoretical price of an asset assuming all potential convertible securities are exercised.
Token Vesting
Condition ⎊ Token Vesting refers to the contractual time-based release mechanism applied to early investor or team token allocations, ensuring that these tokens are unlocked gradually rather than all at once upon launch.
Vesting Schedule
Schedule ⎊ Vesting Schedule is the predefined timeline dictating the rate and conditions under which allocated tokens are gradually released from lockup contracts to team members, advisors, or early investors over a set period.