Vesting refers to a process in which tokens of a new project are locked up and periodically released to the market. Most crypto projects handle vesting differently, but the end goal is usually to protect the token from crashing. When a project is listed on exchanges, investors may see this as an opportunity to dump their tokens. Vesting counteracts this.

Vesting can be applied to both investors and the project’s team. It offers several benefits as it protects early investors from volatility. Vesting also ensures that the core team remains committed to the project as it is in their best interest to contribute towards its growth – and by extension, the appreciation of the tokens they are holding. The tokens are released to the team based on a predetermined vesting schedule.

By locking up the token, investors can have enough time to evaluate the project and decide if they will sell it or not. Introducing a vesting period for the team tokens inserts a level of legitimacy, as it may help convince investors that the project is not a pump-and-dump scheme.