What Is the Importance of Vesting?
💵Vesting is a tool that entitles founders and employees to earn their shares over some time. In crypto or DeFi, during the pre-sale period of crowdfunding events like ICO (Initial coin offering), a percentage of a project’s token supply is usually put aside in a cold wallet and held for a specific period. The process or method used in holding, locking, and releasing those tokens is called vesting.
🪙Tokens that are set for vesting are mostly locked up using a smart contract, and access to them is locked until a set of prerequisites written into the smart contract are met.
🏦The vesting process is comparable to the central bank’s reserve fund. The bigger the reserve usually means, the stronger the fiat currency is. And if the market has an over-supply of banknotes, their value becomes less.
📈Vesting is a vital part of a crypto project’s tokenomics. By vesting, public and private investors can be protected from the price volatility caused by massive sell-offs that often follow initial coin offerings.
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