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Definition cliffcliff vestinglockuptoken lockup

Vesting

A rule that releases an allocation of tokens gradually over time instead of all at once, usually for founders, staff, and early investors.

A vesting arrangement has two parts. The cliff is an initial period during which nothing is released; if the recipient leaves before it, the allocation is normally forfeited, and when it passes a first tranche unlocks at once. After the cliff, the remainder releases linearly, typically per block or per month, over a further period measured in years. The purpose is to tie the people who received supply cheaply to the long-term work rather than to the launch. Enforcement varies and matters: a schedule executed by an on-chain vesting contract can be verified by anyone, whereas a schedule described only in a document depends on the parties honoring it.

In practice

A one-year cliff followed by three years of monthly vesting means nothing is released for twelve months, after which roughly one thirty-sixth of the remaining allocation unlocks each month.

The common misunderstanding

Locked does not mean inert: locked allocations can still be borrowed against or sold forward through private agreements before a single token has unlocked.

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Related terms

Circulating Supply The number of units of an asset currently held by the public and able to move, excluding locked or…
Initial Coin Offering A sale of a newly created token to the public to raise funds, typically before the product the…
Insider Allocation The share of a token's supply reserved at launch for the founding team, employees, advisors, and…
Unlock Overhang The pool of still-locked tokens scheduled for future release, described as supply the market may…
Unlock Schedule The calendar showing when locked tokens become transferable and enter circulating supply.
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