Vesting Periods

Within the process of creating an offer, you'll encounter a section labelled “Vesting”. If you're browsing offers, you might come across phrases like “X days of vesting.” This is an optional setting that users can choose to apply or leave blank, in which case, there will be no vesting involved.

Now, let's delve into the details of vesting...

Put simply, when you create an offer, you have the option to implement a vesting schedule for the assets you're selling. This means that the buyer won't be able to claim all the tokens immediately; rather, they will become claimable based on the number of days you specify during the offer creation process.

Vesting periods are measured in days, and the claimable assets increase linearly as the number of days passes. For instance, if you set a 100-day vesting period, 1% of the assets will become claimable each day for 100 days. Similarly, if you choose a 50-day period, 2% of the assets will become claimable each day over 50 days.

From the perspective of the buyer (Taker), if you fully or partially fill an offer with a vesting period, you can simply navigate to the “Claim” tab and collect your assets there. Importantly, the smart contract handles the vesting according to the user's input when creating the trade. Hence, you need not worry about whether the seller will release the assets or not; the smart contract takes care of this for you.

To be clear, if you apply a vesting period to your trade offer, it does NOT delay your receipt of payment; you (as the Maker) will be paid immediately. The buyer is the one who needs to claim their assets either all at once after the vesting period concludes, or at intervals of their choosing (hourly, daily, weekly).

If you've participated in an Initial Coin Offering (ICO), you might already have some familiarity with vesting, which leads us to why users might choose to implement vesting schedules for their offers.

Advantages of Vesting

Traders can leverage vesting for various reasons, either in combination with a Premium/Discount (the third and final special setting) or independently. The choice is yours.

Let's illustrate the benefits of vesting through practical examples:

Example 1 - Bob the Strategic Seller

Bob is an astute investor who accumulated a substantial holding of a small-cap token that experienced significant price growth. He intends to realise some profits while retaining the rest, anticipating further gains.

Observing the liquidity dynamics on Uniswap, Bob realises that liquidating 50% of his holdings will trigger a substantial price drop, impacting the value of the tokens he wishes to hold onto which is obviously counter-productive for him. What's his solution?

Bob decides to create a sell offer on Eve Exchange with a vesting schedule. This strategy allows him to sell without impacting the price or enabling immediate resale by the buyer. By using this tool, Bob maximises his selling price, somewhat safeguards the value of his remaining tokens, and concurrently maintains stability in the token market. Everyone benefits.

Example 2 - Project XYZ's Calculated Sale

Project XYZ conducted an ICO two years ago, launched a successful product, and is witnessing gradual growth of its token. However, the market's resilience isn't strong enough to absorb the impact of the foundation selling a substantial amount of tokens. Yet, Project XYZ wishes to sell foundation tokens to bolster its marketing efforts. How can they proceed?

Much like the previous example, Project XYZ can create an offer on Eve Exchange, implement a vesting schedule, and execute token sales without causing price disruptions.

Summary

Vesting periods are a powerful tool, offering users the flexibility to strategically manage their token trades.

When creating an offer, the option to apply vesting schedules empowers sellers to ensure controlled token distribution over a specified time frame. This mechanism benefits both sellers and buyers, enabling greater price stability and fostering more optimal market conditions.

With vesting, buyers can confidently engage in trades knowing that their assets will become claimable gradually, aligned with the vesting period set by the seller. This safeguards against sudden market impacts resulting from large token releases. The automated nature of the process, managed by the smart contract, assures buyers that their claims will be honoured as agreed upon.