Colony’s linear vesting definition

Published on: 12.03.2022

Colony’s linear vesting is based on a timescale of “seconds”, meaning there are unlocks every second for a certain period of time. Thanks to this mechanism, Colony’s tokens can be staked regularly as users claim them, without affecting the token price.

Let’s take the private sale vesting as an example:

The investors received 10% at TGE, and after 90 days cliff, there will be unlocks every second of the 90%, left for 12 months.

There are about 77,361,953 CLY (of private sale) to be released during the coming 12 months, which represents almost 2.45 CLY released each second. Therefore avoiding large unlocks and the selling pressure associated to them.

Why token vesting is crucial?

Vesting restricts market price manipulation, supply fluctuations and creates a commitment of investors to the project. Accordingly, those who buy tokens will devote their interest to the project and continue to support its development to maintain the value of the token.

Usually, in practice, after TGE events, there are massive selloffs of tokens by the original investors that end up selling their tokens in the secondary market when they hit higher valuations. The excess supply causes the token to rapidly decrease in value. This makes vesting an integral part of the token economics. It protects both public and seed/private sales participants. Above all, it ensures the stability of a project and viability of the ecosystem for the long run. It secures not only a project’s future but also the interests of those who participated in its early sales.

Thus, Colony’s linear vesting was designed to mitigate selling pressure and promote alignment of the interests to protect Colony’s community and investors as the protocol continues to develop and deploy a set of innovative DeFi features.

About Colony

Colony is a community driven accelerator, evolving into an inclusive DAO, to boost Avalanche’s ecosystem growth. Powered by a governance token: $CLY.

Colony will deploy capital within Avalanche on early stages projects, provide liquidity to DeFi protocols, maintain an Index on top Avalanche projects, and validate networks through stacking capabilities. The true sustenance and value generated by Colony’s investments is routed back to the Community through airdrops, a buyback mechanism, and staking rewards.