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Vesting Meaning

Vesting describes the mechanism by which individuals accrue ownership rights over tokens, stock options, or other assets according to a predetermined schedule. It is commonly used by startups to motivate employees to remain with the company: unvested shares are forfeited if the employee leaves before the vesting schedule completes.

In the crypto sector, vesting schedules are applied to founders and early investors to prevent immediate dumping of tokens that could crash the price. Vesting can occur linearly over time, at predetermined milestones, or via a cliff, where a bulk amount vests at once after a certain period.

The specifics of vesting arrangements are usually outlined in employment contracts or token sale agreements and are enforced by smart contracts in some blockchain projects.

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