Vesting schedules play a critical role in determining how tokens or shares are distributed over time—especially in startups and blockchain projects.
A well-structured vesting schedule promotes fairness, long-term commitment, and gradual ownership. It protects the interests of the company while ensuring stakeholders stay engaged.
✦ What is a Vesting Schedule?
A vesting schedule outlines how and when recipients—such as employees, investors, or advisors—gain full ownership of allocated equity or tokens. Rather than granting everything upfront, assets are released over time to encourage loyalty and prevent rapid sell-offs.
➤ Token Generation Event (TGE)
The TGE is the moment when a token is first launched and becomes publicly available. A small portion of tokens is typically released at this point.
Example: “10% of tokens are released at TGE.”
Purpose: Provides initial liquidity while keeping most tokens locked to ensure price stability and long-term alignment.
➤ Cliff Period
A cliff is a predetermined period during which no tokens are released. It acts as a trial phase before any ownership rights are granted.
Example: “A 3-month cliff means no tokens are released for the first 3 months.”
Purpose: Ensures participants are genuinely committed before earning any rewards.
➤ Release Schedule
After the cliff, the remaining tokens are released based on a specific distribution model. The two most common are cycle-based vesting and linear vesting.
3.1. Vesting Cycles (Fixed Intervals)
Tokens are unlocked in fixed percentages at regular intervals (e.g., monthly or quarterly).
Example: “5% of tokens unlock every month after a 3-month cliff.”
Cycle Duration: Daily, monthly, quarterly, etc.
Purpose: Predictable releases aligned with long-term participation.
3.2. Linear Vesting
Tokens vest evenly across a defined time period, unlocking small amounts continuously.
Example: “Tokens vest linearly over 12 months after the cliff.”
Purpose: Smooth, fair distribution without large unlock events.
➤ Full Vesting Schedule Example
Let’s combine the components:
TGE: 10% unlocked immediately
Cliff: 3 months (no tokens released)
Post-Cliff:
Cycle Model: 5% released monthly for 18 months
Linear Model: Remaining 90% unlocked continuously over 18 months
✦ Vesting Schedule Template
You can customize this template to suit your project:
Stage | Timeframe | % of Tokens Released | Notes |
TGE | Day 0 | 10% | Tokens available immediately |
Cliff | Months 0–3 | 0% | No tokens released during this time |
Vesting Cycle | Months 4–21 | 5% per month | 90% unlocked in monthly intervals |
Full Vesting | End of Month 21 | 100% | Full ownership achieved |
➤ Bonus: Linear Vesting Formula
To calculate daily unlocks for linear vesting:
Daily Unlock Rate = (Total % to Vest) / (Total Vesting Days)
Example: 90% over 540 days →
90% / 540 = 0.1667% unlocked per day
This means ownership accrues gradually each day—no waiting for monthly payouts.
✦ Key Takeaways
Vesting schedules define when and how much equity or tokens are unlocked.
Key terms to understand: TGE, cliff, release cycles, and linear vesting.
Whether you're receiving tokens or offering them, a clear vesting plan supports sustained engagement and protects value for everyone involved.