How Does Token Vesting Schedules Affect Initial Governance Control?
Vesting schedules prevent founders, early investors, and team members from immediately dumping their large token allocations or using them to seize early governance control. Tokens are released over a period, often with a cliff, ensuring long-term commitment.
This gradual release of supply prevents a sudden concentration of voting power in the hands of insiders. It aligns the incentives of the core team with the long-term success of the project and the broader community.
Glossar
Tokenomics Design Choices
Parameters ⎊ Tokenomics design choices involve the fundamental decisions regarding supply cap, inflation rate, distribution methodology, and fee structure embedded in a protocol's native asset.
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.
Token Vesting Schedules
Allocation ⎊ Token vesting schedules, prevalent in cryptocurrency projects and increasingly mirrored in options trading and financial derivatives, represent a contractual mechanism distributing a portion of an asset ⎊ typically tokens or equity ⎊ over a predetermined period.