Token Lockup / Vesting
A schedule that restricts when project insiders can sell their token allocations, used to signal commitment but often manipulated to deceive investors.
Also known as: token vesting, token lock, founder lockup
Last reviewed: 10 June 2026
Token lockup and vesting schedules are contractual or smart-contract restrictions that prevent founders, advisors, and early investors from selling their token allocations immediately after a project launches. The intent is to align incentives: if developers cannot sell for 12-24 months, they should be motivated to build a long-term successful project.
Fraudulent projects subvert vesting in multiple ways: announcing vesting schedules that exist only in a whitepaper with no on-chain enforcement; structuring token allocations so a large percentage is 'community rewards' not subject to vesting; using short cliff periods followed by rapid linear release; or retaining contract upgrade powers that allow vesting to be modified after launch.
Verifying that vesting is enforced by an immutable smart contract (not a company promise), checking the allocation breakdown, and examining cliff and linear release timing against the project roadmap are core due-diligence steps for any token investment.