To be a successful altcoin investor, you must understand how to analyze a project's tokenomics.
By understanding the token’s utility, initial allocation, and token vestings. You can get a sense of the price action of this token in the short to long term. Let’s understand more about these concepts.
For this article, we’ll discuss token vesting. To summarize, it’s the process of locking up crypto tokens for a set amount of time. During this lock-up period, the token holder cannot access, transfer, or trade said tokens. Usually, this is set by the team behind the project and enforced by smart contracts.
To start, let’s look at why blockchain project teams need to launch their token. There are many reasons, but the main one is that they need to raise funds. The truth is, they need to sell their tokens to fund the development of the project. If this selling is not controlled, it will drive the price of the token down.
What about VCs and private sale investors? These parties secure their token allocations way before the token launch. Without token vesting, they can sell all their tokens upon launch (usually when it’s at the peak of its hype). As an intelligent retail investor, buying into such selling pressure would be unwise. In the long term, the crypto space will lose faith in the project since the token price fails to recover.
With token vesting, both the team and pre-launch participants will align their interests for the project’s long-term growth. Moreover, potential investors will have the confidence to join the project after the launch too.
Let’s use the recently launched $BLAST token as an example. You can view its vesting in detail here. FYI – to check a project’s token vesting schedule on Cryptorank is a great resource.
Under the “Vesting” section, you’ll see the terms below:
Let’s use the above allocation for the investors of $BLAST as an example. Here, the Blast Foundation allocated 16.5% of the total $BLAST supply to them. It has a TGE unlock of 0% and a cliff of 1 year. This means no tokens for investors will unlock at TGE (June 2024). They’ll have to wait till June 2025 for the vesting period to start.
Looking to the right, the vesting period lasts for three years, from June 2025 to June 2028. In June 2025, investors receive 25% of their tokens. Then, they’ll receive 2.08% of their tokens monthly for three years. So, how can I use my knowledge in token vesting to improve my altcoin research?
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Now, let’s switch over to the “Chart” view. Here, you can see the entire vesting schedule of $BLAST’s supply. Knowing when and how the vesting is managed lets you know when the supply will spike.
For example, take a look at the chart above. We can see that in June 2025, there’s a large supply spike. This is because 25% of investors’ and core contributors’ tokens will unlock. As an altcoin investor:
Of course, the above scenarios may not always play out. A large supply unlock may not equate to price dumping. Early token holders may choose not to sell their tokens. Many other factors are at play, such as token demand, market conditions, etc. However, understanding token vesting allows you to refine your strategy, better your odds as an altcoin investor, and maximize your profits.
The information discussed by Altcoin Buzz is not financial advice. This is for educational, entertainment, and informational purposes only. Any information or strategies are thoughts and opinions relevant to the accepted risk tolerance levels of the writer/reviewers and their risk tolerance may be different than yours. We are not responsible for any losses that you may incur as a result of any investments directly or indirectly related to the information provided. Bitcoin and other cryptocurrencies are high-risk investments so please do your due diligence. Copyright Altcoin Buzz Pte Ltd.
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