You know, I’ve been thinking for a long time about how to simply explain what vesting really is. Imagine this: a new project launches, and all its founders, investors, and developers receive tokens. But not all at once and not immediately. Some tokens are locked for a certain period — this is what’s called vesting.

The essence is simple. Vesting is a mechanism to prevent quick dumping. Remember rug pulls, when the founder just sells all their tokens on the very first day? Well, vesting is like insurance against such scenarios. Tokens are released gradually, in parts, over a long period of time.

There’s also a concept called cliff — a period during which tokens are completely locked and cannot be sold. For example, an investor might have a 6-month cliff, and then tokens are gradually released over 2-3 years. During this time, the person cannot do anything with these assets.

Why is this necessary? Because vesting is not just a formality. It creates incentives. If your tokens are locked for a year or two, you’re motivated by the long-term growth of the project, not quick profit. The team works towards results, investors don’t panic at the first price drop, and the token’s price itself becomes more stable.

Let me give a specific example. dYdX — a classic case. In December 2023, a cliff occurred for a large number of tokens. Investors and team members gained access to their assets, which, of course, put pressure on the market. People who monitored the vesting schedule could anticipate this wave of sales. Vesting is a tool that needs to be analyzed to understand price dynamics.

In general, vesting is not an enemy of investors, as it might seem. It’s a balance between the interests of different ecosystem participants. Without it, projects would be much less stable.