vesting period

The lock-up period, also known as the period of acquiring rights, refers to a specific time during which investors are not allowed to sell their shares or crypto assets after purchase. This practice aims to protect against excessive selling of assets immediately after acquisition, which could have a negative impact on the market and cause the asset prices to plummet.

Purpose of the Lock-up Period

The main purpose of the lock-up period is to safeguard the interests of investors and stabilize the market. By imposing time restrictions on the sale of purchased assets, companies have the opportunity for development and implementation of their business strategy without sudden changes in shareholder structure.

How the Lock-up Period Works

During the lock-up period, investors are not allowed to sell their assets, even if the price increases significantly. This is often a requirement imposed by the company before going public to prevent market speculations and manipulations.

Types of Lock-up Periods

The types of lock-up periods may vary depending on the specific terms of the agreement. They can include both short-term periods lasting a few days after going public, as well as long-term periods lasting even several years.

Significance for Investors

For investors, the lock-up period can be both a restriction and a benefit. On the one hand, the inability to sell assets for a certain period of time can limit their financial liquidity. On the other hand, the lock-up period can also signify investors’ trust in the company’s long-term strategy.

It is worth noting that the lock-up period is a standard practice among companies planning their debuts on the stock market and can be a significant factor influencing investment decisions.