Vesting and Unlocks

A cliff, commonly a year, during which nothing vests, followed by linear or periodic vesting over a further two to three years. Team, advisers and investors often vest on parallel schedules so that no class can exit ahead of the others. Some designs add performance or milestone conditions. The schedule is fixed in the instrument and, where tokens exist, enforced by a vesting contract on-chain.

The fund’s own unlock is one line in a table that includes the team, earlier and later investors, the treasury, ecosystem and incentive allocations, and any public sale. The aggregate schedule is what matters: months in which large tranches unlock for several classes at once are months in which supply can overwhelm demand. Wesvel models the full schedule before investing and again as it changes.

Where a liquid market exists for the unlocked token, a locked position can sometimes be hedged with derivatives, at a cost that reflects funding and the difficulty of borrowing the token. Where it cannot, the position is held at a discount to the liquid price that reflects the lock and the expected supply. Locked positions are held in side pockets so that liquid investors are not exposed to these marks.

A vested tranche moves from the venture book’s treatment to the liquid book’s: it is marked to market, may be hedged or sold under the venture policy, and leaves the side pocket. Decisions about disposal are made on a written rule that considers liquidity, other holders’ unlocks and the fund’s remaining exposure, not on the day.