Token vesting is a distribution mechanism where tokens allocated to team members, investors, or other stakeholders are released gradually over a set period rather than being available immediately. This approach aligns long-term incentives and prevents large sell-offs that could destabilize the token price.
Vesting schedules typically include a cliff period followed by linear or periodic unlocks. For example, a 4-year vesting schedule with a 1-year cliff means no tokens are released for the first year, after which tokens vest monthly or quarterly over the remaining 3 years.
Vesting is a key component of tokenomics design. Projects with well-structured vesting schedules demonstrate commitment to long-term value creation, while aggressive unlock schedules can signal potential selling pressure.