I’m not going to QT anyone on this token vesting debate because I’ve yet to see a sophisticated + honest take.

First, it’s silly if vesting for teams (including founders) doesn’t come with a strike price. At least make these options that are worthless while price is < strike, and give teams more control over deferring exercise. This doesn’t happen enough.

Second, any vesting for team members (unlike investors) is a compensation expense. Imagine saying “let’s pay our CEO all their options at $0 strike on Day 1.” Recipe for checking out and going to the Bahamas.

If you are not booking these team vestings as non-cash expenses, you may be committing fraud, depending on if you report results to anyone and misrepresent this expense. Usually, it is comms that get people into trouble more than actions.

So… the real discussion should be around whether *investors* need to have restricted tokens. Generally, yes, this is good practice but really is up to the fundraising negotiations.

Team allocations (unless from investing rather than compensation) probably make the most sense to have over multiple years. Otherwise you have a massive loss-making expense to recognize for the issuing company and massive income (and thus taxes) for founders very early in the project’s lifecycle.

All of this is with the caveat that if you’re dead set on a specific formula, you can probably make it work as long as that priority informs design of the rest of the capital structure and team incentives. But a lot of this seems oversimplified in public discussion.