What is vesting?
Vesting is the process of holding and gradually releasing tokens held for investors, team members, and advisors — those who contribute to the project over time.
It addresses the need to reward individuals and entities willing to put their time, effort, and other resources into a project early in its development.
You can compare the vesting process to a central bank reserve mechanism. The larger the reserve, the stronger the currency, and similarly, the more notes on the market, the lower their value.
Stopping the tokens for a particular time (preventing them from being sold on exchanges) increases their value and raises the price.
The management reaches out for vesting to grow the token’s value and develop the project intensively and quickly. It is, in a way, a guarantee for the investors that the management will maintain their involvement.
The purpose of vesting is also to limit manipulation of the coin’s market price, as in the above example of the central bank reserve.
The idea is not to “spoil” the coin by lowering its value in the sale.
The sale of the entire pool of coins immediately after the ICO usually leads to a rapid decline in the coin price and reduces its value.
Wisely constructed vesting allows the company to go public through the listing in good shape and well prepared. The debut will translate into an increase in the value of the tokens.
Vesting in a project — what does it mean?
The introduction of vesting shows a high degree of commitment of the startup’s management and partners to the project. It provides a time buffer to create value and deliver the intended results.
Nowadays, this move is not only good practice but is one of the primary measures of a project’s value and its coin structure.
By introducing vesting, the management is informing that the open market is not yet able to see the true potential of the project and token, and that this potential is yet to be proven by the management.
How long does vesting last?
There is no one rule. Before 2016, the typical vesting schedule for token investors was most often 24 months, going up to 30 months. Today, the usual vesting schedule goes up to 48 months.
Occasionally, boards will shorten vesting on their own as the project reaches earlier maturity, and the value of the token is already high enough to safely release it to the market without worrying about its price and position.
Why is vesting necessary today?
Vesting has become the standard for most tokens because more and more investors and investment funds, including those unrelated to the cryptocurrency world, are joining ICOs.
Without vesting, speculative investors can collapse the value of a token. Kill even an up-and-coming and well-managed project with a bright future just to get a one-time profit at the expense of the killed project and its long-term investors.
Spreading in time, the issuance of coins stabilizes the price and drastically hinders the task of dishonest speculators.
Thanks to the above properties, vesting opens the way for cooperation with Venture Capital funds that require the security provided by vesting, which it gives to them and individual investors.
Vesting as part of the ccFOUND amendment proposal
ccFOUND stores token volume records on the shop.ccfound.com platform.
So far, an investor has been able to claim any number of tokens (have them withdrawn to a cryptocurrency address of their choice).
If tokens are vested, there is an option to claim only a certain number of them from the pool held by the investor.
As part of our proposal, we plan to release tokens gradually so that, on the one hand, we will allow investors interested in selling tokens to trade them on exchanges. Still, on the other hand, we will protect the token’s value from decline, which could occur if too many coins flood the market.
The ccFOUND project is currently in the phase of intensive work on portal development. We need time to show the market the value of our solution, which will positively affect the coin’s valuation on the market.
Maciej discussed the initial token release plan and vesting details in the voting video. Follow the link below: