Vesting
Schedule on which team and investor tokens unlock.
Project founders and early VC investors get their tokens at much lower prices. To stop them from dumping immediately, their tokens are locked and unlock gradually. E.g. 25% after a year (cliff), the rest linearly over 3 years. Every big unlock increases market supply and often causes price drops. Check the unlock calendar at cryptorank.io before buying.
In plain words
Founders and early investors get tokens at much lower prices than retail. To stop them dumping right after listing, their tokens are locked and unlock gradually (e.g. 25% after a year, rest linearly over 3 years). Every big unlock increases supply and often causes price drops. Check the unlock calendar at cryptorank.io BEFORE buying.
Example
Arbitrum (ARB) March 2024: 1.1B token unlock ($1.5B) caused a -22% weekly drop.
Also known as: cliff, unlock