Token Vesting Explained: Cliffs, Linear Unlocks and TGE

Token vesting explained: how TGE unlocks, cliffs and linear releases work, with a worked schedule and three numbers to check before trusting a supply chart.

Most tokens do not enter the market all at once. A slice trades from day one, while the rest sits in contracts or agreements that release it to the team, investors and treasury over months or years. That schedule is called vesting, and it quietly determines how much new supply reaches the market while you hold.

This guide explains the vocabulary, shows how two schedules that sound identical can behave very differently, and walks through a full unlock schedule with every step of the math. All tokens and figures here are hypothetical.

What is token vesting?

Token vesting is a schedule that controls when allocated tokens become transferable. A project typically creates a fixed supply and splits it into allocations, such as the team, early investors, a treasury, ecosystem incentives and a public sale. Each allocation gets its own release rules.

Vesting exists to align incentives. A founder whose tokens release over four years has a reason to keep building for four years, and an early investor who bought at a discount cannot sell everything on the first trading day. The rules can be enforced by a smart contract or only by a legal agreement. CoinMarketCap’s methodology refers to tokens locked “via smart contracts or legal contracts,” and only the first kind can be checked on-chain.

For holders, vesting matters because it drives the gap between the tokens trading today and the tokens that will eventually exist. One major data aggregator calculates circulating supply for smart contract tokens by deducting locked tokens, such as foundation, investor and team holdings, from total supply. As those tokens vest, the circulating number grows. Our guide to circulating vs total vs max supply covers the three supply figures, and FDV vs market cap shows how the gap appears in valuations.

Vesting is also different from emissions. Vesting releases tokens that already exist; emissions mint new ones, for example as staking or mining rewards. Both grow the supply in circulation, which makes token inflation and emissions the natural companion to this guide.

Key vesting terms: TGE, cliff, linear unlock and more

CoinMarketCap’s glossary defines a TGE simply as “the time at which a token is issued.” In practice it is day zero for most schedules, so “a 6-month cliff” normally means six months after TGE unless the documents name a different start date.

Monthly steps vs continuous vesting

“Linear” can mean two things. Many schedules release equal tranches on a fixed date each month or quarter. Others vest continuously: OpenZeppelin’s VestingWallet, for example, releases tokens in proportion to the time elapsed, so the claimable amount grows with every block.

The total is the same either way. A 200 million token allocation vesting over 36 months releases about 5.56 million per monthly step, or roughly 182,600 a day if it vests continuously over 1,095 days. The difference shows up on unlock calendars: stepped schedules create dated events that are easy to track, while continuous schedules add supply quietly every day.

How does a cliff work?

A cliff is the part of vesting that surprises people most, because the same words can describe two different release patterns. Take a hypothetical team allocation of 200 million tokens, with a 12-month cliff and full vesting at month 48.

Style A: catch-up at the cliff. Vesting accrues from TGE, but nothing can be claimed until the cliff passes. At month 12, the accrued 12/48 of the allocation, 50 million tokens, releases at once. After that, 200 million ÷ 48 ≈ 4.17 million release each month. This is how OpenZeppelin’s open-source VestingWalletCliff contract behaves: it returns zero before the cliff, then follows the linear curve measured from the start.

Style B: vesting starts after the cliff. Nothing accrues during the cliff. From month 13, the allocation releases in 36 equal monthly steps of 200 million ÷ 36 ≈ 5.56 million.

Both schedules end at 200 million on the same date, but Style A makes a quarter of the allocation transferable on a single day. When you read “one-year cliff, four-year vesting,” find out which style the contract or agreement actually uses.

Worked example: a full unlock schedule for Token X

Now combine several allocations. Token X is a hypothetical token with a maximum supply of 1,000,000,000, all created at TGE. Locked allocations sit in vesting contracts, and those with a cliff use Style B.

At TGE: 100M + 15M + 35M = 150M tokens are unlocked, a 15% float.

Monthly releases: months 1 to 6 add 4.17M + 6.56M ≈ 10.73M a month. From month 7, investors add 7.5M, lifting the pace to about 18.23M. From month 13, the team’s 5.56M joins, for about 23.78M a month until investor vesting ends at month 24. After that, the pace drops to about 16.28M.

Running totals: 323.75M unlocked at month 12 (32.4%), 609.17M at month 24 (60.9%) and the full 1B at month 48.

Two things stand out. Unlocked supply more than doubles in the first year, from 150M to 323.75M. And the insiders’ share grows: team and investor tokens are 10% of unlocked supply at TGE (15M of 150M) but 35.6% by month 24 (216.67M of 609.17M).

Here is why that matters. Market cap equals price × circulating supply. If Token X’s market cap stayed exactly where it was at TGE, the price would have to fall to 150 ÷ 323.75 = 46.3% of its starting level by month 12, a 53.7% decline, just to absorb the new supply. Market caps are not fixed, and demand can grow or shrink, but the arithmetic shows how much work new demand must do. A low price per token does not change this, as market cap vs price explains.

Three numbers that summarize any vesting schedule

You don’t need a spreadsheet for every token. These three ratios capture most of what a schedule tells you.

1. Float at TGE = unlocked supply at TGE ÷ max supply. Token X: 150M ÷ 1B = 15%. A low float means most of the supply is still ahead.
2. 12-month unlock ratio = tokens scheduled to unlock over the next 12 months ÷ supply unlocked today. Token X at TGE: 173.75M ÷ 150M = 115.8%. At month 12: 285.42M ÷ 323.75M = 88.2%.
3. Largest single unlock = the biggest one-time or one-month release ÷ supply unlocked just before it. Token X peaks at 8.5% in month 7 (18.23M ÷ 214.38M). Had the team used a Style A cliff, month 12 would have released 68.23M, or 22.3% of the 305.52M unlocked the month before.

These bands are a rough heuristic, not a verdict on any token. Growing demand can absorb a high ratio, and a low ratio does not make a project sound. Our explainer on why token unlocks matter to holders looks at individual unlock events in more detail.

Where to find vesting data, and how to verify it

Start with the project’s own documentation. The tokenomics page, whitepaper or allocation announcement should list each allocation with its TGE share, cliff and vesting period. Then cross-check:

• On-chain contracts. If tokens sit in a vesting contract, a block explorer shows its balance and past releases. Compare them with the published schedule.
• Distribution charts. A pie chart shows who gets what, not when. Pair it with the schedule, as covered in how to read a token distribution chart.
• Airdrop terms. Airdropped tokens often carry their own vesting or claim windows, explained in airdrop allocations and vesting.
• Data trackers. Price-tracking sites publish circulating supply, but their methods differ. CoinMarketCap excludes team, foundation, treasury and private-sale holdings from circulating supply even after they unlock, treating it like a public float. “Unlocked” and “circulating” can therefore be two different numbers.

If a schedule is only promised in a blog post rather than enforced by a contract, treat it as a statement of intent. Allocations kept in an ordinary wallet, or in contracts an admin can change, offer weaker guarantees than immutable vesting contracts.

Common mistakes when reading vesting schedules

• Reading only the headline. “Team: 20%, four-year vesting” says nothing about the cliff style or the TGE unlock.
• Confusing unlocked with sold. An unlock gives holders the ability to sell; it does not mean they will. The reverse also holds: a quiet unlock calendar does not remove selling from tokens already unlocked.
• Ignoring non-insider pools. In Token X, the treasury and ecosystem pools release 50M + 78.75M = 128.75M tokens in months 1 to 12, far more than the investors’ 45M over the same months.
• Forgetting new issuance. A fully vested token can still inflate through rewards; see where staking yield comes from.
• Assuming burns cancel unlocks. A burn offsets unlocks only if it is large enough and removes tokens that were actually circulating, as token burns explained shows.
• Skipping the red flags. Very short insider vesting, a tiny float next to a huge fully diluted valuation, or a schedule an admin can rewrite all belong on a tokenomics red flags checklist.

Model a schedule yourself

Our token vesting calculator takes an allocation, a TGE unlock percentage, a cliff, an optional cliff release and a vesting period, then lists every release date. For example, 1,000,000 tokens with 10% at TGE, a 12-month cliff and 24 monthly releases gives 100,000 tokens at TGE and (1,000,000 − 100,000) ÷ 24 = 37,500 tokens a month from month 13 to month 36.

The bottom line

Vesting turns a token’s supply into a timeline. Before relying on any market cap, find the TGE float, the next 12 months of unlocks relative to today’s supply and the size of the largest single release, and check whether a contract actually enforces the schedule. The math won’t tell you where a price goes, but it shows how much new supply the market has to absorb.

This content is for education only and is not financial, investment, tax or legal advice. Crypto assets are volatile and you can lose money. Examples use hypothetical numbers. See our disclaimer and editorial policy.