Initial waiting period where NO tokens vest. If terminated during cliff, recipient gets zero tokens.
Common cliff periods:
Linear (Continuous): Tokens vest every day. Fairest option, common for founders.
Monthly: Equal portions vest monthly. Standard for employees, easier administration.
Quarterly: Vest every 3 months. Good for advisors, reduces administrative overhead.
Yearly: Annual vesting chunks. Rare, used for long-term strategic advisors.
Standard: Unvested forfeited, vested kept. Most balanced and common.
For-Cause Forfeiture: ALL tokens forfeited (even vested) if terminated for fraud, theft, or gross misconduct.
Partial Acceleration: 50% of unvested tokens vest on termination without cause. "Good leaver" provision for founders.
Double-Trigger: 100% vesting only if (1) acquisition occurs AND (2) terminated within 12 months. Most balanced.
Full Acceleration: All tokens vest immediately on acquisition. Generous to team.
No Acceleration: Vesting continues unchanged. Favors acquirer.
Token Generation Event conditions make token delivery conditional on:
Critical for pre-launch agreements to protect against regulatory uncertainty.
Regulatory compliance requirements:
Highly recommended for all agreements to avoid regulatory issues.
U.S. Person: U.S. citizens, residents, or entities. Requires accredited investor status under Regulation D.
Non-U.S. Person: Foreign individuals/entities. Subject to Regulation S (offshore transactions).
Important: U.S. citizens living abroad are still U.S. Persons!
| Role | Duration | Cliff | Vesting Type | Change of Control |
|---|---|---|---|---|
| Founder | 48 months | 12 months | Linear | Double-Trigger |
| Employee | 48 months | 12 months | Monthly | Double-Trigger |
| Advisor | 24 months | 6 months | Quarterly | No Acceleration |
| Consultant | 12-24 months | 0-3 months | Monthly | No Acceleration |
| Investor | 12-36 months | 0-6 months | Monthly | No Acceleration |
Securities Law: Tokens may be securities under the Howey Test. Ensure compliance with federal and state securities laws.
Tax Treatment: U.S. recipients may need to file 83(b) election within 30 days. Failure to file can result in adverse tax consequences.
KYC/AML: Required for regulatory compliance, especially for pre-TGE agreements and regulated token sales.
Sanctions Screening: Recipients must not be on OFAC, UN, or EU sanctions lists.