Vesting is a component provided by DAOSquare Incubator for Venture DAOs, which can be used as an option in the DAO investment stream to release the invested project Token (Payback Token) in investment transactions. It can also be used as a standalone APP to help users manually create Vesting schedules to release tokens for investment or other purposes.
Solved Problems With Vesting
To Ventures
In the traditional token private equity investment, whether it is Simple Token Purchase Agreement (STPA) or Simple Agreement for Future Tokens (SAFT), although the contract stipulates the time, period, and related rules for the invested project to release the tokens to the investor, the contract itself cannot constrain its execution, that is, the contract itself cannot guarantee that the transaction will be executed following the agreed rules within the agreed time. The Vesting component provided by DAOSquare Incubator (combined with the Escrow component) can transform the paper agreement into an executable deal to ensure that investors can receive tokens of invested projects following the agreed rules within the agreed time and period, without relying on any manual procedures. There is no need for third-party intervention, to ensure the rights and interests of investors, but also improve the efficiency of post-investment management.
To Startups
In the traditional token private equity fundraising behavior, a project usually accepts the investment from multiple investment institutions and individual investors. These investment institutions and individual investors are usually distributed in different rounds, and each round of investment may have a different Vesting Schedule. When the invested project needs to start releasing tokens to investors, it is usually a heavy manual task, and it may cause problems such as missed or wrong issuance. Vesting component can make this part of the work easier, leaving the heavy work to smart contracts to perform automatically, more securely, and efficiently.
Introduction Of Key Parameters
Parameters | Description |
Vesting Start Date | Vesting schedule Start time. |
Vesting End Date | Vesting schedule end time. |
Cliff End Date | End time of the lockup period. |
Claimable At Cliff End Date | Percentage of tokens that can be claimed at the end of the lock-up period. |
Vesting Interval | The interval during which the tokens can be claimed. |
An example. Let's assume an Vesting used to release a total amount of 10,000 RICE to Jack and Rose, where Jack receivables total 2,000 RICE and Rose receivables total 8,000 RICE. Vesting Schedule Settings are as follows:
Parameters | Setting |
Vesting Start Date | 08:00 AM 09/10/2024 |
Vesting End Date | 08:00 AM 09/10/2025 |
Cliff End Date | 08:00 AM 12/10/2024 |
Claimable At Cliff End Date | 10% |
Vesting Interval | 30 Days |
It can be seen from the above parameters: The total duration of the Vesting is 1 year (08:00 AM 09/10/2024-08:00 AM 09/10/2025). The lock-up period is about 3 months (08:00 AM 09/10/2024-08:00 AM 12/10/2024). At the end of the lock-up period (08:00 AM 12/10/2024), both Jack and Rose can receive 10% of their total receivables in one lump sum, i.e. Jack can receive 200 RICE and Rose can receive 800 RICE. The remaining 80% (Jack 1,800 RICE, Rose 7200 RICE) will be allowed to be claimed every 30 days for the remaining nine months, and each claim will be approximately 1/9 of their remaining receivable amount.
How It Works
In DAOSquare Incubator, Vesting can be used in two scenarios: token investment proposals and manual Vesting creation.
Token Investment proposal
In a Token investment proposal, if the investment has Escrow enabled (see Escrow chapter for details), when the investment proposal is voted through and executed, Investee tokens (Payback tokens) hosted in Escrow contracts can be called by Vesting to perform token release. All investors who participate in the investment can claim Payback Tokens by Vesting themselves within the period agreed in the investment proposal.
Vesting Manual Vesting creation
Many uses can be achieved by manually creating Vesting, and the ones related to investment are highlighted here. Due to many objective reasons, when a token investment transaction occurs, the invested project cannot put the project token to the Escrow contract (for example, the project token has not been deployed). The invested project can then release the token to the investors participating in the investment by manually creating vesting in the future. In the process of manually creating vesting, the creator needs to fill in the vesting key parameters described above, but also needs to fill in the vesting total and enter the recipient data, there are two methods:
- manually enter each recipient (investor) wallet address and share proportion.
- By enabling the NFT component in the investment proposal. When the NFT component is enabled for an investment, each investor participating in the investment will be eligible to receive a NFT that records the amount and share % of the investment when the investment transaction is completed. In the process of manually creating vesting, the creator only needs to enter the relevant information of the NFT, and all investor data participating in the investment (including wallet address, and share %) will be automatically identified and written.
When vesting is created successfully, the vesting recipient can receive the invested project token (Payback Token) according to the agreed Vesting Schedule. For details on how to use Vesting in an investment and how to manually create Vesting, please see the relevant section.
Conclusion
Vesting simplifies the investment agreement, investment payment delivery, token release and other things in the traditional token private investment process into an automatically executable smart contract, and ensures that all transaction agreements can be executed and must be executed through smart contracts, thus ensuring the interests of both investors and financing parties. At the same time, reduces the management and operating costs of both parties.