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Vesting Period Meaning

The vesting period is the length of time over which a person earns full rights to tokens, stock options, or other benefits. During this period, ownership is typically released incrementally; if the individual leaves or fails to meet certain obligations before the vesting period ends, the unvested portion is forfeited.

Vesting periods align incentives by rewarding long-term commitment and preventing rapid liquidation of tokens. In token economies, vesting periods for founders and early investors help stabilise the price by staggering token distribution over months or years.

The specifics of vesting periods vary by organisation and are often combined with cliffs or milestone-based vesting to tailor the incentive structure.

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