Token Vesting

Definition ∞ Token Vesting is a process by which newly issued cryptocurrency tokens are locked up and released gradually over a predetermined period. This mechanism prevents large quantities of tokens from flooding the market immediately after a launch, which could depress prices. Vesting schedules are commonly applied to team members, early investors, and advisors to align their long-term interests with the project’s success. It promotes stability and reduces speculative selling pressure.
Context ∞ The discussion surrounding token vesting often involves its role in fostering long-term commitment from project stakeholders and mitigating market manipulation. A key debate centers on optimizing vesting schedules to balance early liquidity needs with sustained price stability. Future developments will likely see more sophisticated vesting contracts, potentially with performance-based release conditions, to further align incentives.