Understand what a long-term lock-up period and a vesting period are, and how these mechanisms help analyze the potential of a project. The long-term lock-up period, referred to as Cliff in English, is a specific time period that must pass before the release of tokens begins. The vesting period represents the gradual release of project tokens to holders after certain conditions are met. During this time, investors cannot trade or transfer these locked tokens. This mechanism aims to increase project stability and avoid severe price fluctuations caused by market manipulation or token dumping.

So, how does this gradual release mechanism work specifically? At the launch of a new project, Tokens are allocated to developers, founders, and early investors. Sometimes, liquidity providers also receive Token rewards. Different people may have different expectations for the project; some hope for long-term development, while others may be seeking quick profits. To accommodate the interests of all parties, the gradual release mechanism has emerged.

In fact, these Tokens are released gradually. For example, early investors and founders may receive their Tokens gradually over a long period of time, which can prevent them from being anxious to dump a large amount of Tokens in the early stages of the project, harming the interests of long-term investors.

What are the benefits of a gradual release mechanism? It can stabilize the Token price, promote decentralization through the distribution of Tokens, and increase the loyalty of the team, founders, and investors to the project, motivating them to work towards long-term goals.

For example, I previously saw a case involving dYdX. On December 1, 2023, a large number of dYdX tokens will reach the end of their long lock-up period, releasing them to investors and employees. Clearly, this may put some pressure on the market.

If you want to remember this information for a long time, share it quickly! Please note that this content represents third-party views and does not constitute any investment advice. It may also contain sponsored content.