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What Are Vesting Schedules in Cryptocurrency??
Manage episode 340147653 series 3381606
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Unfortunately, it seems like we are constantly hearing about "pump and dump" scams in cryptocurrency where a project will create a token out of thin air and promise that it will change the world, empower the poor, and bank the unbanked. With no intention of actually delivering on these promises, the founders offload their cryptocurrency to unwary buyers and they enrich themselves while average investors are left holding the bag of a now worthless cryptocurrency. Although the secrecy of many cryptocurrency projects makes preventing such scams virtually impossible, a concept known as a "vesting schedule" aligns founders' interests with that of investors by making it impossible for them to sell their cryptocurrency before a specific time. In theory, this is designed to incentivize the founders to focus on the long-term sustainability of the project because they know their tokens will only be valuable if the project is still viable once their vesting schedule is complete. As always, my videos are not financial advice and should be taken as my best effort to provide crypto education. #defi #crypto #cryptocurrency
References
https://coinmarketcap.com/alexandria/glossary/vesting-period
https://token.unlocks.app/
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