Understanding token unlock schedules before buying presales

If you’re thinking about getting in early on a new cryptocurrency project by buying tokens during the presale event, it’s important to understand the project’s token unlock schedule before investing. The token unlock schedule refers to the release plan for the total supply of tokens over a set period. Many projects use unlock schedules to prevent dumping and promote long-term price stability.

Unlock schedules matter

Token unlock schedules can have a major impact on token price and project sustainability. If the founders and team members hold a majority of the tokens initially, releasing all of their tokens at once could tank the price. This is why project structure releases over months or years, allowing portions of the founders’ and advisors’ tokens to unlock gradually. However, if too much of the supply is held by insiders at the outset, even gradual unlocks could negatively impact investors. In some cases, scammers use complicated vesting schedules to make huge returns by dumping sequentially on unassuming buyers. That’s why assessing the token distribution and unlock structure ahead of your purchase is vital.

Look for in a token release schedule

When evaluating a presale token’s unlocking schedule, consider:

  • Total percentage unlocked at launch
  • Cliff before initial unlocks start
  • Release frequency (daily, monthly, etc.)
  • Release amounts per period
  • Final unlock date when all tokens are released

How many presale stages are there in Retik?  Buy tokens from projects that have structured their unlocks thoughtfully to balance investor protection with team incentives. Beware of projects unlocking an excessive portion of total supply to insiders early on without reasonable cliffs and vesting periods in place.

Safer schedule

  1. Total Token Supply: 100 million
  2. Initially Unlocked: 10 million (10% of total)
  3. Unlock Cliff: 1 year
  4. Unlock Frequency: 2.5 million per month (2.5% of total per month)
  5. Length to Final Unlock: 4 years

The safer schedule initially unlocks only 10 million tokens at TGE – a reasonable 10% of the total supply. Insiders then must wait a full year before the first unlocks trigger. Once the cliff expires, a modest 2.5 million tokens unlock monthly over 4 years. This structured release promotes long-term price stability and project growth. As this comparison illustrates, taking the time to analyze token vesting schedules before buying presale tokens saves you from investments primed to dump hard. It pays to research thoroughly before purchasing!

Presale considerations

In addition to assessing the token unlock schedule, make sure to perform other due diligence before investing in crypto presale events. Reputable projects provide transparency regarding:

  • How Presale Contributions Will Be Used (Development, Listings, Marketing, etc.)
  • Team Members and Advisors (Are They Experienced? KYC Verified?)
  • Vesting Terms for Team/Advisors
  • Supply Breakdown Across Various Functions
  • Future Exchange Listings

Contribution uses, team details, and additional vesting and supply specifics can provide greater context on the unlock schedule itself and the legitimacy of the project overall. Don’t forget to manage investment risks as well by only allotting an affordable portion of your portfolio to new presales. Even promising-looking projects carry uncertainty at the early stages. Limiting yourself to 2-5% of your crypto holdings per speculative investment can prevent major losses. Diversification across multiple early-stage opportunities helps further mitigate risks while still allowing outsized returns if one investment pans out.