A vesting period, also called a token lockup period, is when a user’s tokens are locked up for some time and eventually enter a vesting schedule. The vesting schedule is how the project can distribute the tokens to the contributors and individuals vested with their tokens. Typically, the vesting schedule distributes tokens at set intervals.
The vesting period is essential regarding the health of a project and its tokenomics. If a project does not have a vesting period or a vesting schedule, then tokens are immediately given to individuals. When that happens, projects risk having all their tokens dumped on the open market and for their token prices to experience significant volatility. A vesting period can help projects mitigate the major price fluctuations of their token.
