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Team Token Locks
Locking team tokens allow projects to lock their team-allocated tokens in a time-locked decentralized smart contract vault. The project team or founders allocated to the team tokens cannot withdraw or change these tokens until the end of the locked period(s). This way, the community and investors are at less risk of scams. Using a third-party locking service is a crucial innovation compared to most token offerings, where projects may avoid fulfilling their promises and maliciously sell off all their tokens, leaving holders, stakers and investors with a close to $0 token price.
Crypto projects may use Team Finance Team Token Locks to show proof of vesting schedule and interest in the project, build credibility and reduce the risk of scams to benefit the community and investors.
When it comes to allocating your token supply, it is important to consider the various stakeholders and how to distribute the tokens among them. One key factor to consider is the circulating supply or the number of tokens that will be actively traded on the market. This can impact the liquidity of your project or the ease with which its tokens can be bought and sold. Make sure to consider the percentage breakdown of your tokens in circulation, like team tokens, lp (liquidity pool) tokens, and more. There is no one-size-fits-all approach, and it may be helpful to refer to recommended structures or best practices in the industry. The following graphic from Lauren Stephanian at Pantera Capital illustrates a recommended optimal token distribution structure:
For the 'Team' portion of the token allocation, at least initially, you're likely to want to consider locking these tokens. Not locking your team's tokens for a period of time after the launch of the project can potentially affect the token volatility and project confidence.
- 1.Help to manage the overall supply of tokens in circulation and maintain the token's value.
- 2.Help to prevent insider trading and ensure that the team is not profiting unfairly from early access to information.
- 3.Signal to the market the team's confidence in the project's long-term potential and that they are not just looking to sell their tokens for a quick profit.
Around ~20% of the token supply should be distributed to the team. If you want to raise money from investors, the expectation is that your team tokens will be locked for a certain period.
The length of the lockup period can depend on various factors, such as the nature of your project, the stage of development, and the expectations of investors and the wider community. It can be helpful to consult with advisors, investors, and other experts in the industry to determine an appropriate lockup period for your project.
In addition to the length of the lockup period, you may also want to consider implementing a staggered lock, in which the tokens are released over time rather than all at once. This can help provide more stability and predictability to the market and ensure that the team is incentivized to continue working on the project over the long term. According to data sourced after analyzing 150 different data points by Lauren from Pantera Capital, the average lockup period for team tokens is 2.3 years:
Projects can use Team Token Locks after they supply the liquidity of the pair(s) to the DEX (decentralized exchange).
1. Under "Create New Lock," select the chain where the token you are locking is built and Continue.
2. In step 2, select: "Project Tokens" to lock team tokens on your desired blockchain (e.g. Ethereum supports ERC-20 tokens) and continue connecting your private wallet by selecting "Connect Wallet."
Make sure you connect using a Team Finance-compatible wallet such as Metamask or Coinbase Wallet to complete the above steps.
3. Once connected, enter the token address for the token you would like to lock. Continue.
4. Confirm the token you wish to lock up liquidity for by reviewing the information in step 3 and selecting 'Continue.'
5. In step 4, type in the amount of your token you wish to lock in the 'Lock Amount' box. Set the duration for your lock period by selecting the unlock date (month, day, year) and time of unlock.
Pay the service fee for your appropriate blockchain. Please view our Team Finance Pricing table if you don't know the cost. Select Approve & Lock to continue.