Vesting / lockup

How it works

When a project allocates tokens to its team and early investors, those tokens are typically locked in a smart contract and released according to a published schedule. Common patterns:

• Cliff — no tokens for a fixed period (often 1 year), then a chunk unlocks at once.
• Linear vesting — tokens unlock continuously after the cliff over a multi-year period.
• Quarterly cliffs — chunks unlock every 3 months.

Total schedule lengths range from 1 year (aggressive, retail-unfriendly) to 4+ years (closer to startup norms). Public token sale buyers usually get fully-liquid tokens at launch; insiders are locked.

Example

A typical Series A token allocation:

• 100M tokens total supply
• 20M (20%) to investors, 4-year vesting with 1-year cliff, then linear
• 25M (25%) to team, 4-year vesting with 1-year cliff, then linear
• 30M (30%) to community/airdrops/treasury, various schedules
• 25M (25%) to public sale, fully liquid at TGE

For 12 months after launch, only 25M+the community-released portion is circulating. At month 13, the cliff hits and ~12M+ insider tokens unlock. The sell pressure from holders who've waited a year to be liquid often dominates price action that month.

Trackers like Token Unlocks publish schedules so traders can plan around large upcoming unlocks (sell into strength before, buy back during the post-unlock dip).

Why it matters

Vesting schedules drive predictable supply pressure:

• Cliff unlocks tank prices. A 12-month cliff release that adds 20%+ to circulating supply rarely doesn't move the chart down. Traders short into known unlocks.
• FDV vs market cap divergence. A token with 10% of supply circulating has a market cap that's 1/10th its fully-diluted valuation. Public buyers of the float are the bag-holders if FDV → MC convergence happens via dilution.
• Long vesting = good signal (usually). A 4-year team vest with a 1-year cliff says the team is in this for the long haul. A 6-month full unlock for everyone says it's a cash grab.
• Ecosystem/foundation tokens are dilutive too. "Locked in foundation treasury" tokens still come to market eventually as ecosystem grants, partnerships, etc.

Before buying any token, look at:

1. Circulating supply / total supply ratio. Below 30% means most supply is yet to come.
2. Upcoming unlock schedule. Are the next 6 months chunky?
3. Insider concentration. Does the team + investors collectively hold >50%?

Tokenomics is half of every crypto investment thesis — sometimes more important than the product itself.