Crypto Vesting Explained: How It Works and the Benefits It Provides
Crypto vesting is a process by which employees or investors in a crypto project are given tokens over a set time. Crypto vesting aims to build commitment from team members and investors and stabilize the token's value. Decubate's Vesting product streamlines the investor management experience by providing an all-in-one portal for claims and vesting schedules.
What is crypto vesting, and how does it work?
We’ve got you covered. This article explains crypto vesting, how it works, and the benefits it provides to crypto projects and investors.
What is vesting in crypto?
In the traditional business world, companies often include partial ownership of their business in the form of equity or stock as an incentive to motivate early employees to perform well and increase retention. The process by which employees acquire rewards, like equity or stock options, is called vesting.
Crypto vesting further builds on this “delayed gratification” approach to foster engagement and retention by injecting it directly into the economy of most crypto projects and businesses. This crypto specific economic structure is called tokenomics. Crypto vesting describes the process of releasing project tokens on a set schedule, as defined in the tokenomics, to both project members and investors.
Why is vesting important in crypto?
Vesting allows projects to ensure long term commitment on the part of project team members and investors. It also allows investors to purchase tokens before they hit the general marketplace, thus stabilizing the value of the token and decreasing the chances of a massive initial selloff. These selloffs often diminish the value of the token when it becomes available to the general marketplace.
What is a vesting period?
Also known as a lockup period, a vesting period refers to the time when the sale of tokens is restricted. A vesting period works to promote a healthier token economy by preventing holders from selling off their tokens when they get listed on an exchange(s). The vesting period also promotes token price stability and protects early investors from substantial price fluctuations.
What is linear vesting?
With linear vesting, employees or investors receive an equal number of tokens over a set period of time. For example, if you have a six-month linear vesting schedule with 1,000 tokens, you would receive 166 tokens per month for six months.
What is cliff vesting?
Cliff vesting is similar to linear vesting but with a “cliff” period at the beginning where no tokens are received. With cliff vesting, employees or investors receive all of their tokens at once after the cliff period ends. For example, if you have a six-month cliff vesting schedule with 1,000 tokens and a three-month cliff period, you would receive 1,000 tokens on month four and nothing before that.
How can you distribute tokens to your investors?
There are a few ways to distribute tokens to your investors. One way is to use a smart contract that automatically sends the tokens to investors' wallets after they send ETH to the smart contract. Another way is to manually send the tokens to investors after they send ETH to your wallet. The most advanced way to distribute tokens is using a token claim portal that also provides the project traffic from investors.
What is a token claim portal?
A token claim portal is a web-based application that allows users to claim their tokens. The portal typically requires the user to provide their wallet address, and may also require the user to complete a KYC (know your customer) verification process. Once the user has submitted all of the required information, they will be able to claim their tokens based on the token vesting schedule.
Creating a Custom Token Vesting and Claim Portal
Building a custom token vesting and claim portal will require time and effort from both experienced developers and business managers. Experienced developers must familiarize themselves with blockchain technology and build the necessary smart contracts. Business managers must work closely with developers to ensure that all business requirements are met. In addition, both groups will need to collaborate extensively to test & deploy the system successfully.
How much does it cost to build and audit a token claim portal?
The cost of building a token claim portal will vary depending on the complexity of the system and the number of tokens that need to be vested. Auditor fees will also add to the overall cost. Generally speaking, you can expect to spend thousands of dollars on development and auditor fees.
Risks to building a token claim portal:
Some risks are associated with building a custom token vesting and claim portal. First, if the startup does not have experience developing software, it may not be able to build a robust system with the security it needs. Second, there is always the possibility that something could go wrong during development or launch, which could cause significant delays or even force the project to be abandoned altogether. Third, the token claim portal could be subject to hacks or other security breaches.
The perfect solution for your project: Decubate's white label token claim portal
Another option is to use Decubate's white label token claim portal solution. This solution is developed by experienced blockchain developers and has been battle-tested in production by many projects. Additionally, it comes with a user-friendly interface and can be easily customized to fit the specific needs of your project.
How does Decubate’s vesting product helps crypto projects?
Decubate’s Vesting product streamlines the investor management experience by empowering projects to deliver a highly intuitive vesting portal, fast. Investors can track and manage their token holdings, view their total token allocation, monitor their vesting schedule, and claim available tokens — all in one place.
Decubate Vesting is a highly customizable and secure vesting portal that projects and investors can use to manage their token holdings. Decubate Vesting has been successfully audited by leading smart contract security firms, Haechi, Certik, and Hacken.
Why crypto projects choose Decubate Vesting?
Our all-in-one vesting product makes token distribution extremely easy, enabling projects to build long-term relationships and trust with their investors. Decubate Vesting saves projects time and money by eliminating manual monthly airdrops. The product also supports multiple vesting strategies — linear, monthly and more — enabling projects to have greater flexibility. Projects that have utilized Decubate Vesting include: Sidus Heroes, BattleVerse, Bit Hotel, Ethereum Towers, Animalia and more.
Decubate Vesting is the perfect solution for crypto projects that want to streamline their investor management experience. Our product makes it easy to distribute tokens, claim available tokens, and monitor your vesting schedule — all in one place.