What is encryption attribution? What are the benefits of cryptocurrency ownership?
What is encryption attribution? What are the benefits of cryptocurrency ownership? New cryptocurrency projects often emerge, each seeking funding. Now, these projects are increasingly common to provide tokens in crowdfunding or coin issuance activities. The value of these tokens fluctuates over time and is determined by various factors, including supply and demand. Cryptocurrency attribution is used as a way to stabilize this value. But what exactly is the attribution of encryption?
What is encryption attribution?
When the tokens of project members and early investors are locked for a specific period of time and released later, encryption attribution will occur.
In the traditional financial field, it is common for companies to provide equity to employees. However, if these employees acquire or cash out their shares at the same time, there will be selling pressure and drag down the stock price. Therefore, the Company usually uses the exercise to delay the ownership and use of the committed assets. The encryption belongs to the encrypted version of this.
It can be compared to a temporary reward package. Once it has a firm foothold, it will be given to the first batch of contributors to the encryption project.
How does cryptocurrency ownership work?
When the project reaches certain predefined milestones, the cryptocurrency ownership uses smart contracts to release the tokens held. Milestones are defined by the founding members of the project and can be based on duration (how long since the project started) or phase (completion of a specific phase of the project).
The attribution schedule is used to complete the time limited release of tokens held. The schedule details the duration and percentage of tokens paid to each early investor, and the time they can sell their tokens from the initial token issue (ICO).
The time range of release is called token lock period or vesting period. After the token is introduced into the market, the period can vary from six months to several years. The vesting schedule allows for the release of a certain percentage of the token holdings every six to eighteen months or more.
In the simplest terms, encryption attribution is achieved by locking tokens within a predetermined time. During this period, you cannot get the waiting amount until the waiting period ends.
Cryptocurrency attribution schedule: how to issue tokens
The cryptocurrency attribution schedule is an integral part of the project roadmap, allowing investors, employees, and other stakeholders to plan when to receive their tokens. A typical vesting schedule starts with a vesting start date and several vesting periods of different lengths.
After the attribution start date, each period will end on the corresponding attribution end date. At the end of each vesting period, you have access to the assets assigned to you, depending on the terms of the agreement. After the specified period, you will receive the agreed percentage of tokens in your cryptocurrency wallet. These released tokens can now be traded, sold, exchanged or held as you wish.
Depending on frequency and size, the attribution schedule can be linear, hierarchical or cliff like. Now there are even third-party programs for automatic attribution.
Cliff ownership schedule
The cliff is the period from the attribution period to the transfer of the first group of tokens. Although not every token project uses the cliff ownership plan, it is often used in conjunction with linear or hierarchical ownership plans to release ownership tokens.
No tokens were released in the cliff ownership schedule. In fact, the extended time frame is the normal state of the cliff ownership schedule. Moreover, if you withdraw the funds before the agreed date, you will lose all rights to the acquired tokens.
This reduces the possibility of pushing up the delivery attack. In this case, people who buy tokens at an early stage only withdraw suddenly, thus collapsing the value of the tokens.
Grading exercise schedule
As the name implies, the acquired tokens are issued by level, and each level is higher or lower than the previous one. Clear intervals between releases are placed in the hierarchical attribution schedule.
Each grade and each time interval will add a certain percentage. For example, 20% of the acquired tokens can be paid after the first six months; 35% after one year. An additional 25% will be paid within 18 months. The final 15% will be paid at the end of the second year to complete the issuance. This form of staggered issuance slowly introduced tokens into the market, manipulated and reduced volatility risk. Here, if you exit, you will only get a percentage commensurate with your waiting time.
Linear attribution schedule
The linear vesting plan is to distribute vesting tokens equally over a predefined period of time. Here, we can pay 20% in the first quarter, and then pay another 20% in the next three months. In this way, the full distribution will be paid within one year and three months.
Who are the parties involved in the cryptocurrency ownership plan?
When it comes to the ownership of cryptocurrency, three key parties are involved: the company providing the ownership, the investor and the transferee.
The company providing the attribution is responsible for setting the attribution schedule and making applicable rules and regulations. They also need to develop a plan to ensure that the transferee fulfills its obligations and receives the promised return.
Investors are usually individuals or groups that invest in projects and provide tokens. They can also provide additional funding, guidance and support for the project.
Finally, the beneficiary is the individual or group that obtains the vested interest. They are responsible for fulfilling their obligations under the attribution agreement, such as completing specific tasks or milestones, and must be willing to comply with all relevant rules and regulations.
Each of these parties plays a crucial role in a successful cryptocurrency ownership plan, and working together can help ensure that all relevant people can get what they want from the agreement.
5 Benefits of Encryption
Cryptographic attribution exists because it brings a series of benefits to investors, token projects and token developers.
1. Reduce the risk of market manipulation
Attribution ensures that early investors or project developers will not rush into the market after the crowdfunding period. They can not disturb the supply of tokens by hoarding tokens, thus creating extreme scarcity of human beings. The reduction of market manipulation risk makes it easier to identify the scams that generate worthless coins after obtaining funds from investors.
2. Training commitment
The working principle of cryptocurrency ownership is to deliberately delay the release of project tokens to owners, and establish flexibility and commitment to ensure that the project develops into its design. It provides the motivation to stay and play for a long time, and promises to be rewarded after a long wait.
3. Promote the decentralization of tokens
Cryptocurrency ownership aims to create a secure decentralized cryptocurrency network, which takes time. It provides developers with much-needed time to further develop tokens with intrinsic value.
4. Reduce the risk of market fluctuation
Attribution helps to allocate tokens, so that most tokens of the project will not be held excessively by one person or a few people. If left unchecked, this individual or small group will easily cause fluctuations in market supply. These market fluctuations are not conducive to the value of tokens and cause losses to retail investors.
5. Huge investment opportunities
Cryptocurrency ownership allows you to invest in cryptocurrencies while retaining ownership until you sell or exchange them. Once you participate in the ICO of tokens that you think have potential, you will become an early investor who has the right to obtain the tokens you have acquired. These tokens can be sold later, providing you with a substantial return on investment.
In a word, for cryptocurrency investors, cryptocurrency ownership has many advantages, and this process is expected to become a standard part of cryptocurrency issuance. By understanding the practices, benefits, and characteristics of cryptocurrency ownership, you can ensure that you make informed financial decisions when you have the opportunity to invest in cryptocurrency projects.