Vesting or locking tokens, using smart contracts, is an important part of any IDO/ICO to make sure there is no dump by one or certain holders and also to keep the team motivated so it can contribute efficiently towards the development of the project.
Most projects lock 99% of coins at the time of launch, to ensure that it’s investors and team members stay focused on long term development without worrying about token’s market value.
Unlike an IPO, an ICO/IDO is usually launched before the project is fully developed. Which means that investors are invested based on an innovative idea and a promise to achieve the same. Similarly, team members will invest their time based on the future value of the project’s token. To benefit both investors and team members, projects use vesting as a preventive measure to maintain a stable value for the token till the product is developed.
So what exactly is token vesting?
Token Vesting means locking a certain percentage of investors and team tokens and releasing them on decided intervals. The tokens are locked under a time based smart contract for a given duration so no one, including team members, can access those tokens before the duration is over. A transparent vesting schedule brings in a positive sentiment for investors and the team to stay invested in the project.
Most projects release tokens over a period of 3–5 years. For eg. A private sale investor is given 10% on TGE and then 15% every 6 months. This way only 10% of the coins bought by an investor can be traded on TGE and 90% will only be released on said intervals, ensuring there is no massive sell off by big bag holders. Same example goes for the project’s team members and this will ensure that the team will come up with a great product to maximise its profits.
An invulnerable and audited smart contract is the first and foremost requirement for vesting tokens securely. A smart contract should be designed to prevent any hack or unscheduled unlock of tokens so project’s investors and team members can stay focused on product development.
Why Ebisu Finance?
Ebisu Finance will provide a smart and decentralized way to vest/lock your tokens, available on multiple chains, without taking the custody of tokens. Tokens, on any chain, can be placed in audited and well designed smart contracts to only be accessible after a given duration. Our trusted services ensure investors of a secured and timely distribution of tokens, increasing investor’s and team member’s interest in the project. Vesting schedule and distribution information will be displayed on project’s profile page on Ebisu and is accessible by all, for a transparent and trustable communication.
But that’s not it. Ebisu Finance will also introduce a way to unlock the potential value of these locked tokens with its very own Marketplace for Unvested Tokens. Stay tuned, we will share more information on this very soon!!
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