Vesting schedules limit stakeholder pressure to sell and are essential to the growth of any project.
Understand Crypto Vesting
Vesting is an essential strategy in the crypto industry. The concept has a major impact on the price of crypto assets. Protocols that use the strategy well have a better chance of sustaining and managing the price fluctuations of their native assets.
Crypto projects lock part of their token supply before distribution. Crypto vesting is the process of holding, locking and distributing tokens from an Initial Coin Offering (ICO).
Vesting schedules
The vesting schedule is announced by projects using crypto vesting. It defines the period during which the tokens purchased during the ICO cannot be sold by stakeholders and the intervals during which they can sell the tokens. Tokens released by the project according to the vesting schedule are referred to as vested tokens.
The length of vesting schedules varies for each project, and the percentage of tokens released at each interval is designed to ease selling pressure. Sometimes lengthy vesting plans can be daunting for early-stage investors.
To better understand vesting schedules, let’s look at one of BNB Chain’s top platforms, PancakeSwap. The network’s number one decentralized exchange (DEX) uses crypto vesting for its Initial Farm Offerings (IFO).
PancakeSwap IFO Vesting Schedule
PancakeSwap IFO gives investors early access to new tokens that the DEX will add to its platform. Similar to some ICOs, PancakeSwap IFOs have a vesting schedule. Let’s check out the platform’s latest IFO for Meta Apes ($PEEL), which starts on August 4th.
The table below shows that $PEEL tokens are allocated to the team, community rewards, staking rewards, and more. However, for this article we are interested in the IFO allocation.
source
The overall percentage for IFO is set at 5% ($50M PEEL) of the total supply ($1B PEEL) and 30% will be unlocked at the Token Generation Event (TGE). Thus, according to the IFO, only 30% of stakeholder investments are distributed. At this time, $PEEL token holders can only sell 30% of their total allocation. This way, holders cannot throw away all their tokens at launch, which negatively impacts the price.
The remaining 70% is scheduled to be released in blocks over 90 days. This means PancakeSwap distributes 1/90th of $PEEL holdings to each stakeholder every day.
Linear Allocation: In this case, the team will receive the same amount of $PEEL tokens every month for the next five years. The 6-month cliff is the lock-up period during which the team cannot sell tokens.
Monthly linear award for the team after 6 month vesting period. source
In summary, when $PEEL IFO launches, PancakeSwap will unlock 30% of tokens purchased by IFO investors. The remaining 70% are released in blocks for 90 days. Meanwhile, $PEEL’s allocation to the team will be on hold for six months and then spread out over a five-year period.
Read PancakeSwap’s $PEEL IFO document for more details on the IFO sale.
Final Thoughts
A good crypto vesting schedule is important for the growth of any project. As shown in this article, PancakeSwap’s IFO for $PEEL includes an unlock plan that aims to reduce initial selling pressure and increase the token’s value over the long term.
What is PancakeSwap:
PancakeSwap is a decentralized exchange (DEX) built on top of the BNB chain. It offers users various features like Liquidity Pools, Swaps, Yield Farming, Syrup Pools, Automated Market Maker, Initial Farm Offering (IFO), NFT Profile System and many others.
Additionally, the protocol helps users get the most out of their crypto assets by trading, earning through yield farming, and winning via lottery, prediction, and NFT collectibles. With the highest trading volume in the market, PancakeSwap is the leading DEX on the BNB chain.
Where to find PancakeSwap:
Website | Twitter | Medium | GitHub
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