Token unlock and vesting explained: cliff vs monthly tranches

The information provided in this article is for informational purposes only and does not constitute financial advice. Cryptocurrency investments carry a high degree of risk. Always conduct your own research.A token unlock frees tokens that have existed all along but sat locked in a contract. How a cliff differs from linear vesting, which four numbers make a vesting schedule readable, and what counts for tax when the tokens land with you. A token unlock is the date on which a project's locked tokens become tradable. Nothing is created in the process: the supply has existed all along, it was simply held in a contract that would not release it before a given date. What matters, then, is how that figure compares with circulating supply and the schedule under which it comes free, not the headline with the big number. Two patterns shape that schedule: the cliff, a single large release after a lock-up, and linear vesting, where the same supply trickles out in instalments over months. The difference is not a technicality. With a cliff, the entire supply hits the order book on one day. With linear vesting, the same supply spreads across twelve or twenty-four dates, none of which stands out ...