Many crypto tokens do not release their full supply when trading begins. A large share is often held back for founders, staff, early investors and community programs.
These tokens are released over time under a plan called a vesting schedule. The plan sets when each group can get access to its tokens.
Vesting matters to investors because it shapes how much supply reaches the market. A token might start trading with only 15% of its total supply in circulation, with the rest arriving over several years.
CoinGecko lists vesting schedules as a core part of tokenomics, which is the study of how a token’s supply and distribution work. This article uses worked examples to show how vesting affects supply, value and risk.
All figures below are hypothetical examples taken from published guides. They show how the math works and are not forecasts for any real token.
| Measure | Example figure |
|---|---|
| Share of supply circulating at launch | 15% |
| Example team vesting period | 4 years |
| Example cliff length | 12 months |
| Share vesting when a 12-month cliff ends (4-year plan) | 25% |
| Supply growth from a 40M unlock on 200M circulating | 20% |
| Implied price drop if market cap stays flat | 16.7% |
| Supply added by 12 monthly unlocks of 10M on 200M | 60% |
What a Crypto Vesting Schedule Does
A crypto vesting schedule is a set plan for when allocated tokens become available. Projects use it to hand out tokens in stages instead of all at once.
For example, a project might give 20% of its total supply to founders and staff. Instead of handing over those tokens at launch, it could spread them across four years.
This is why many tokens trade with a small “float,” which is the share of supply that can actually be bought and sold. In the example below, 85% of supply is still locked when trading starts.
Locked tokens are not gone. They are scheduled to arrive later, and each release adds to the supply that buyers must absorb.
Why Projects Use Vesting
Vesting serves a few purposes. The main one is keeping founders and staff involved while the product is being built.
Say an employee is granted 100,000 tokens over four years. If they leave after one year, they may lose the part that has not vested, depending on their agreement.
Vesting also stops early investors from selling their whole stake on day one. These investors often bought tokens at a low price before public trading began.
Other uses include making supply changes easier to predict and spreading governance voting power out over time. Coinbase lists founders, employees, advisers and investors as the usual groups covered by vesting and lock-up plans.
How vesting is enforced
Some projects enforce vesting with smart contracts, which are programs that run on a blockchain. OpenZeppelin’s VestingWallet is a widely used example that releases tokens on a set schedule.
Other projects rely on custody firms, internal controls or legal contracts. A public smart contract with limited admin powers gives buyers more ways to check the plan than a promise from the team.
How Cliff Vesting Works
A cliff is a waiting period at the start of a schedule. No tokens vest until it ends.
In one common setup, a founder receives 120,000 tokens on a four-year plan with a 12-month cliff. Nothing vests in the first year, and then 25% of the grant vests at once at month 12.
The other 75% vests monthly over the next 36 months. That works out to 2,500 tokens a month until month 48.
| Month | Cumulative vested | Share of grant |
|---|---|---|
| 0 to 11 | 0 | 0% |
| 12 | 30,000 | 25% |
| 24 | 60,000 | 50% |
| 36 | 90,000 | 75% |
| 48 | 120,000 | 100% |
Cliffs discourage people from joining a project briefly and leaving with tokens. The downside is that the cliff date can bring a large release on a single day.
Coinbase defines a cliff as a waiting period before vesting starts, with a possible larger release at the cliff date. Tokenomist uses the word “cliff” more broadly for lump releases, including weekly or monthly ones, so it helps to check what a data site means by the term.
How Linear Vesting Works
Linear vesting releases tokens in equal steps over a set period. Releases can happen each day, week or month, or flow continuously.
Take an early investor who receives 240,000 tokens over 24 months with no cliff. Dividing 240,000 by 24 gives 10,000 tokens each month.
| Month | Tokens released | Cumulative released |
|---|---|---|
| 1 | 10,000 | 10,000 |
| 3 | 10,000 | 30,000 |
| 6 | 10,000 | 60,000 |
| 12 | 10,000 | 120,000 |
| 18 | 10,000 | 180,000 |
| 24 | 10,000 | 240,000 |
Linear plans spread potential selling pressure more evenly. Small releases still add up over time.
A token that unlocks 500,000 units a day releases about 15 million tokens over 30 days. Investors need to look at both single releases and the running total.
OpenZeppelin’s vesting contracts support linear release math. Coinbase’s token tools also allow equal periodic grants and custom schedules.
Cliff and Linear Vesting Compared
Both methods control when tokens arrive, but they change supply in different ways. The chart below puts a four-year cliff plan next to a four-year straight linear plan.
In this example, the two plans match exactly after month 12. The only difference is the first year, when the cliff plan holds everything back and then releases a full year’s worth at once.
| Feature | Cliff vesting | Linear vesting |
|---|---|---|
| Release pattern | Delayed, then a lump release | Gradual release |
| Initial waiting period | Common | Optional |
| Supply changes | Large on set dates | Spread over time |
| Selling-pressure risk | May be concentrated | May build up slowly |
| Typical recipients | Founders, staff, private investors | Teams, investors, ecosystem funds |
| Main thing to check | Size of each unlock | Total released over time |
Neither method is better for public investors by default. What matters most is how many tokens arrive compared with current supply and buyer demand.
Milestone-Based Vesting
Some plans tie releases to goals instead of dates. A team might receive tokens after launching its main network or passing a security audit.
In the example below, a project sets aside 10 million tokens for its development team. Each block is released only when a goal is met.
| Milestone | Tokens released |
|---|---|
| Mainnet launch | 2 million |
| Security audit completion | 2 million |
| Major protocol upgrade | 3 million |
| Final development milestone | 3 million |
| Total | 10 million |
This links rewards to real progress. The weak point is who decides when a goal has been met.
If insiders set and judge the goals, they have a lot of control over releases. Investors should check who approves each release and whether outsiders can verify it.
Vesting, Unlocking and Inflation Are Not the Same
These terms are often used as if they mean the same thing. They describe different steps.
Vesting is when a person earns the right to tokens. Unlocking is when those tokens can be moved, claimed or sold.
An employee might hold 50,000 vested tokens after two years but face a six-month lock-up before they can transfer them. Coinbase’s Token Manager tracks vested, unlocked and claimable amounts as separate figures.
Inflation is different again. It means creating new tokens, such as rewards paid to validators on a proof-of-stake network.
In the example, releasing 100 million locked tokens raises circulating supply from 500 million to 600 million. Total supply stays at 1 billion.
Issuing 100 million new tokens lifts total supply to 1.1 billion. Tokenomist separates unlock schedules from inflation in its methods, which helps investors read supply data correctly.
Circulating Supply, Market Cap and Fully Diluted Valuation
Circulating market cap is the token price multiplied by the supply now in circulation. Fully diluted valuation, or FDV, is the price multiplied by the full or maximum supply.
The gap between the two shows how much supply is still to come. Data providers do not all define “full supply” the same way, so it is worth checking the method.
| Example | Price | Circulating supply | Maximum supply | Share circulating | Market cap | FDV |
|---|---|---|---|---|---|---|
| Example A | $2 | 100M | 1B | 10% | $200M | $2B |
| Example B | $4 | 50M | 500M | 10% | $200M | $2B |
| Low-float example | n/a | n/a | n/a | 5% | $100M | $2B |
In Example A, the market cap is $200 million but the FDV is $2 billion. In the low-float example, the FDV is 20 times the market cap.
A high FDV is not always a bad sign. It may reflect expected growth in use of the network.
The risk is that early prices can reflect scarcity that fades as more tokens unlock. Demand may need to grow a lot just to hold the price steady.
When few tokens are available to trade, buying can push the price up quickly. The same small float can also make prices swing more in both directions.
How to Measure Dilution From an Unlock
A simple formula estimates how much an unlock could grow supply. Divide the new circulating tokens by the current circulating supply, then multiply by 100.
If 40 million tokens unlock on a supply of 200 million, supply could grow by 20%. The table shows what that means for a token priced at $1.
| Measure | Before unlock | After unlock |
|---|---|---|
| Circulating supply | 200 million | 240 million |
| Market cap if price stays at $1 | $200 million | $240 million |
| Implied price if market cap stays at $200 million | $1.00 | $0.83 |
The higher market cap does not mean $40 million of new money came in. Market cap is just price times supply.
If market cap stayed flat, the implied price would fall about 16.7%. This is a math example, not a forecast, and a 20% supply increase does not cause a 20% price drop by itself.
Monthly unlocks add up
Now take 360 million investor tokens unlocking evenly over 36 months. That is 10 million tokens a month, worth $5 million at a price of $0.50.
With 200 million tokens circulating, the first release equals 5% of supply. Each later release is a smaller share because supply keeps growing.
By month 12, the releases have added 120 million tokens. That equals 60% of the original 200 million supply.
Unlock Size, Trading Volume and Selling Pressure
An unlock gives holders the chance to sell. It does not mean they will.
Early investors may have large gains. An investor who paid $0.05 for a token now trading at $1 holds 20 times their cost.
Staff may sell to pay bills, and treasuries may pay contractors who then sell. Some recipients will hold, stake or move tokens into storage instead.
| Measure | Figure |
|---|---|
| Circulating supply | 250 million tokens |
| Token price | $2 |
| Circulating market cap | $500 million |
| Scheduled unlock | 50 million tokens |
| Value of unlock at current price | $100 million |
| Unlock as share of circulating supply | 20% |
| Value if 10% of unlocked tokens are sold | $10 million |
One quick check compares the value of an unlock with daily trading volume. An unlock worth $30 million against $10 million of daily volume gives a ratio of 3.0.
This ratio has limits. Volume measures past trades, not how many buy orders sit near the current price.
Some exchanges also report inflated volume. A fuller check compares the unlock with circulating supply, real volume and order book depth together.
Why unlocks do not always lead to price drops
Large unlocks are often known years in advance. Traders may have already factored them into the price.
Demand can also rise if a project gains users, and deep markets can take in large sales with less price impact. The same unlock may play out differently in a rising market than in a falling one.
For these reasons, an unlock is best treated as a risk factor rather than a trading signal.
How to Read a Vesting Chart
Vesting charts usually come in two forms. A cumulative chart shows the total released to date, while a periodic chart shows how much is released in each period.
| Period | New tokens unlocked | Total unlocked |
|---|---|---|
| Launch | 100 million | 100 million |
| Year 1 | 150 million | 250 million |
| Year 2 | 200 million | 450 million |
| Year 3 | 250 million | 700 million |
| Year 4 | 300 million | 1 billion |
The cumulative line shows progress toward full release. The bars show that the heaviest releases in this example come in the later years.
Tokenomist offers both views for this reason. It also labels whether release dates were checked on-chain, supplied by the project or estimated, so unlock calendars are not always exact.
Where to find a vesting schedule
A good place to start is the project’s whitepaper or tokenomics page. It should list total supply, who gets each share and when it is released.
Tracking sites such as Tokenomist show unlock calendars and allocation breakdowns. CoinGecko and CoinMarketCap list circulating and total supply, and blockchain explorers such as Etherscan let users inspect vesting contracts directly.
Projects sometimes change their plans through governance votes. It is worth cross-checking major unlock dates across more than one source.
Investor Risks and What to Check
Vesting brings several risks for public buyers. The main one is dilution, where added supply weighs on price if demand does not keep up.
Insiders often paid less than public buyers, which can make selling tempting. A small float can also make a token look cheaper than its FDV suggests.
Other risks include concentrated ownership, insider control of governance and thin trading. Published schedules can also be estimates or go out of date.
Contracts matter too. Some can be upgraded by admins, and OpenZeppelin notes that ownership of certain vesting wallets can be transferred, so the rights to locked tokens may change hands before release.
A token with 8% of supply circulating, a $5 billion FDV and large insider cliffs ahead carries more supply risk. A token with 80% circulating and open vesting contracts faces less uncertainty about future supply.
| Check | Why it matters |
|---|---|
| How much supply circulates now? | Shows the current float |
| What share is still locked? | Shows future supply |
| When is the next large cliff? | Flags lump releases |
| Who receives the tokens? | Hints at selling motives |
| What did early investors pay? | Shows possible gains |
| How liquid is the market? | Shows if sales can be absorbed |
| Are vesting contracts public? | Allows outside checks |
| Can admins change the schedule? | Flags governance risk |
After an unlock, investors can watch whether tokens are claimed, held or moved. Transfers to wallets linked to exchanges may deserve a closer look, though a transfer alone does not prove a sale.
Three questions cover most of the risk. How much supply could arrive in the next 12 months, who gets it, and is there a real reason for demand to grow enough to absorb it?
Final Thoughts
Vesting schedules decide when founders, staff and early investors can reach their tokens. They can support long-term work on a project, but they also set up future supply that public buyers must absorb.
An unlock is not a sale, and it does not always lead to a price drop. Results depend on who receives the tokens, how deep the market is and how strong demand is.
Investors can get a clearer picture by looking at circulating supply, FDV, ownership and the full release timeline. A strong project with heavy future unlocks can still be a weak investment if demand does not keep pace.
Sources
- OpenZeppelin: VestingWallet Smart Contract Documentation
- Coinbase: Token Manager Stakeholder Glossary
- Coinbase: Creating Token Grant Templates
- CoinGecko: What Is Vesting in Crypto?
- Tokenomist: Token Page Overview
- Tokenomist: Vesting and Supply Methodology
- Tokenomist: Cliff, Linear and Emission
- Tokenomist: Token Unlocks and Release Charts
- CoinMarketCap: What Does Vesting Mean in Crypto?
This article is for information only and is not financial advice. Crypto assets carry risks including price swings, low liquidity, token dilution and loss of capital. Check a token’s distribution plans and your own situation before investing.
