The What And Why of Vesting Schedules
Here at PAID we are committed to being as transparent as possible. It should go without saying but transparency is vital for a platform committed to introducing great projects for the crypto sphere to invest in. It is this transparency that helps us secure the faith of you, our community.
With that in mind, we will be sharing a vesting schedule calendar for all of our previously launched projects. This list will serve as a great reference for all those interested to know the exact token economics of a project before participating in their launching.
The Importance of Vesting
But what is vesting? And why is it so prevalent across the crypto sphere? In traditional markets, a company might offer you equity as part of an employment deal. However, your stock will have to go through a vesting period first. This means you will have to wait a certain amount of time before you get access to the shares. This encourages you to stay involved in the company longer. Essentially, vesting is the process of delaying an owner’s access to an asset.
Vesting in crypto is similar although it is implemented in a broader fashion. Vesting is the process of locking and releasing tokens after a given time. Usually vested tokens belong to team members, advisors, partners, others who contributed to the development of the project, but also investors who purchased tokens before they went on general sale. It is very common for tokens to be released gradually over the vesting period, sometimes once a month, once a week, or even daily as the project progresses.
Just like in traditional finance, vesting in the crypto world is often used to ensure long-term commitment to a project from team members. It ensures that a team has a financial interest in continuing to develop the project which, in turn, establishes faith in the project for would-be investors.
Vesting For Private Investors
However, vesting is also applied to early investors a lot more in the crypto world than it is in traditional finance. In crypto, after an Initial Coin Offering (ICO), an Initial DEX Offering (IDO), or a crowdfunding period there are often massive sell offs as early investors or perhaps the project team sell their tokens as soon as they hit the market. This, of course, creates a huge surplus supply of the token and can cause massive drops in the token price.
Crypto is different from other markets because of the incredibly high volatility. These massive sell-offs are usually a result of a huge price increase that’s created by the hype that surrounds a new project. Retail investors create a huge spike in the price that early investors and team members can then sell into, thus crashing the price and leaving the retail investors at a huge loss.
Another thing that makes crypto unique is that, unlike an IPO, ICOs are usually conducted before a project is fully launched. Once the ICO is conducted, the team invests the raised funds into the project. This means that upon launch a lot of projects are invested in based on the promise and inventiveness a project has demonstrated.
Developers will be hard at work before launch to provide the use cases that will give the token intrinsic value long term. This requires patience from the investors and massive sell-offs are detrimental to this goal. The time allowed by a vesting period can be invaluable for the developers looking to build a decentralized world.
Without vesting, a single or very few entities can control a large proportion of the project’s tokens from the date of the token generation event. This gives a small group of people the power to easily create supply fluctuations that can be ultimately damaging to the token’s ecosystem and price. This would represent a massive risk for the token’s stability. In effect, vesting allows the given token to be properly distributed before any entity has this power.
This makes vesting an integral part of token economics. It protects both public and private sale participants. Above all, it ensures the stability of a project and viability of the ecosystem for the long run. It secures not only a company’s future but also the interests of those who participated in Initial Coin Offerings which include IDOs.
Ternoa And The Benefits Of A Great Vesting Schedule
To better understand the benefits of a vesting period, let’s look at a great IGNITION project, Ternoa. Built for the Polkadot blockchain, Ternoa is an NFT-based decentralized data transmission blockchain. NFTs are utilized to store data in time capsules giving users a myriad of different protocols to transmit it. Data can be transmitted at a predetermined point in time, after a recipient requests access from the holder, or even via a countdown which can be reset at any time at the holder’s discretion. It is a project that utilizes blockchain to dynamically store and distribute data.
Participants in Ternoa’s private sale received 10% of their native $CAPS tokens at listening, followed by equal parts of 11.25% over the next eight months. In addition to that, the Ternoa team voluntarily set a lock up period of 2 years on their token plus a 5 year vesting period. This is a great example of a team showing their belief in the long-term viability of their project. In the crypto world, where many projects are built for short-term gains, demonstrating this belief is invaluable to investors and to the crypto ecosystem as a whole.
Ternoa was valued at a market cap of $200,000 before its IDO. This was followed by a very successful launch which saw it reach a total valuation of $4 million. Obviously, volatility is to be expected within the crypto market and this goes doubly so for a project that’s newly launched. However, since its launch at the end of May, Ternoa has shown remarkable stability. After the volatility of the first couple of weeks post launch, the value has quickly stabilized with a market cap of approximately $10 million.
Despite the volatility in the overall crypto market, the market cap of Ternoa is still roughly the same as it was 3 weeks ago. This shows incredible stability for a new project and vindicates the vesting schedule and also the team’s faith in the project. This stability facilitates the long term growth of the project and also protects both retail and private investors.
Vesting In a Decentralized World
Vesting is likely to be a key component of most crypto launches for the foreseeable future. The protection it affords a token’s value in an incredibly volatile market is invaluable. The stability it provides gives a team the time to properly develop platforms that provide the token with real use-cases. As the vesting period expires the downward pressure on the price created by more tokens being released is counteracted because the team have had the time to successfully launch key products and platforms as part of their project. This benefits both IDO participants and the public investors.
With the release of our vesting schedule we’re providing would-be investors with a great tool to properly time their entry point. More importantly than that though, we want people to have absolute faith in the projects that we’ve launched. These are the projects that are building a decentralized world, technology that can change our way of life forever and they need your support.
For more information on the Ignition launch vesting schedules check this sheet.
By clicking this link, you can add our PAID Vesting Schedule to your Google Calendar and have all information when needed.
For more information about the launch of our different projects check out this article that will give you everything you need to know.
IGNITION is a featured product of PAID Network, operating as a decentralized swapping protocol that allows blockchain-based token projects to offer their private and public auctions. The platform features Ethereum, Binance Smart Chain (BSC), and here shortly, Polkadot functionality.
Ignition is different from other auction platforms in that it properly vets and selects only top-tier cutting-edge projects. Its multi-level incentivization mechanisms for participants of published projects will encourage HODLing that supports both the project founders and the community. It isn’t just a trading platform; it FUELs projects and takes fundraising to the next level.
Ignition brings quality projects, fixed swaps, and equitable lottery participation to the PAID community.
PAID Network seeks to redefine the current business contract, litigation, and settlement processes by providing a simple, attorney-free, and cost-friendly DApp for users and businesses to ensure they #GetPAID wherever they are in the world.
PAID technology leverages Plasm to operate on both Ethereum and Polkadot ecosystems. PAID makes businesses exponentially more efficient by building SMART Agreements through smart contracts to execute DeFi transactions and business agreements seamlessly.
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