Token Vesting is a term widely used in cryptocurrency investments, especially for early investors who are often concerned about it. So, what exactly is Token Vesting, how many types, and what are the top 4 market-leading Token Vesting tracking tools? You can find detailed information below.
What Is Token Vesting? Best tools for tracking token
What Is Token Vesting?
This term works similarly to traditional companies rewarding stocks to employees in the financial sector.
In traditional finance, when stocks are rewarded to employees over a specific period rather than all at once, it can reduce the impact on the company’s stock. Therefore, these companies use vesting to reduce selling pressure and encourage employees to stay longer with the company to receive their full rewards (such as stocks).
In the crypto industry, Token Vesting is quite similar, with investors receiving tokens instead of stocks. Understanding Token Vesting helps investors know when they will receive their rewards and how many tokens they can trade.
3 Types of Token Vesting you need to Know
There are three types of Token Time-Locking: Linear, Graded, and Cliff Vesting.
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Linear Vesting: Tokens are gradually unlocked over a specified period at an equal rate. For example, a crypto project may announce that they will unlock 5% of tokens for investors in the Private Round every month, and after about 20 months, these investors can receive 100% of their tokens.
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Graded Vesting: In this type of token vesting, tokens are unlocked at varying rates for each stage. The ratio can be adjusted based on the project’s needs. For example, in the first 3 months, 20% of tokens are unlocked, followed by 30% in the next 6 months, 40% in the subsequent year, and the remaining 10% unlocked in the final 3 months.
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Cliff Vesting: Cliff Vesting is a period during which tokens are not issued, meaning the project locks the tokens until the cliff period ends. For example, Project X has a cliff vesting of 5 months, and after that, tokens will be gradually released to investors at a rate of 10% each month. During the first 5 months, investors cannot trade their tokens, and after that, they will receive them gradually until the 15th month.
Advantages of Token Vesting
Thanks to the implementation of Token Vesting, both projects and investors can benefit in several ways:
+ Incentivizes Commitment: encourages long-term commitment from team members, advisors, and early investors by restricting their access to tokens for a certain period. This ensures that they have a vested interest in the project’s success and are less likely to engage in short-term profit-taking.
+ Price Stability: Vesting prevents a large influx of tokens into the market immediately after a project’s launch, which could lead to price volatility. By gradually releasing tokens, it helps maintain price stability.
+ Reduced Dumping: Vesting reduces the risk of token holders, especially early investors and team members, dumping their tokens all at once, which could crash the token’s price.
+ Trust Building:: It can build trust among the community and investors as they see that key project contributors are committed for the long term.
Cons (Disadvantages) of Token Vesting
+ Illiquidity: Token vesting can create illiquidity for team members and early investors who may need access to their tokens for various reasons, such as personal financial needs or investments in other projects.
+ Delayed Rewards: delays the full reward for contributors, which can be frustrating for individuals who have put in significant effort but cannot access their tokens immediately.
+ Complexity: Managing token vesting schedules and smart contracts can be complex and require additional development resources.
+ Regulatory Concerns: In some jurisdictions, token vesting may raise regulatory concerns, as it could be seen as a form of security or an investment contract.
+ Token Dump After Vesting: While vesting may prevent immediate dumping, there is still a risk that token holders will sell off their entire stake once the vesting period ends, potentially causing price fluctuations.
+ Smart Contract Risk: Smart contracts used for token vesting can have vulnerabilities, and if they are exploited, it can lead to unintended consequences.
Top Token Tracking Tools in the Market
Drops Tab
- Website: https://dropstab.com/
This tracking tool covers hundreds of different crypto projects and offers features such as:
+ Tracking the market capitalization of the project’s token
+ Comparing token price changes to the ICO price
+ Monitoring the circulating and locked token supply
+ Providing information about upcoming token unlock periods.
Vestlabs
- Website: https://vestlab.io/
One of the first token unlock tracking tools in the crypto market, Vestlabs provides information such as the current token price compared to the ICO price, the percentage of tokens unlocked or still locked, and the timing of the next token unlock.
Token Unlocks
- Website: https://token.unlocks.app/
Compared to the tools mentioned above, Token Unlocks is praised for its beautiful and user-friendly interface. However, one drawback is that it does not provide the feature to compare the current token price with the ICO price.
Token Tracks
- Website: https://tokentrack.co/
Last but not least is Token Tracks, with an impressive interface and currently in the final stages of development. Compared to the first two tools, it still lacks some features, but the project is actively evolving and is sure to provide more useful information for users in the future.
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In summary, hope you understood what is Token Vesting and why it’s essential to pay attention to this information when investing in cryptocurrencies. If you have any further questions or concerns, feel free to leave a comment below for a prompt response. Wishing you success in your investments.
