How to Evaluate Pre-Launch and Post-Launch Token Compensation
Summary
The explainer distinguishes token grants from conventional equity compensation and describes how grant value, liquidity, vesting, transfer restrictions, and taxes can differ. It separates pre-launch grants, whose value depends on a future token launch and may be taxed at exercise, from post-launch grants tied to tokens with a market price, which may trigger tax upon receipt or as they vest. It also notes that token allocations may be linked to equity grants and that protocol participation can align employees with network growth.
The document distinguishes vesting, which can involve forfeiture when service ends, from lock-up periods that restrict transfers after tokens vest. It highlights possible tax exposure when compensation is illiquid and recommends reviewing unusual terms with legal or tax advisers. This is a general overview for job candidates, not individualized legal, tax, or valuation advice; actual outcomes depend on grant terms and applicable rules.
Key ideas
- Token grants can resemble equity incentives but confer distinct rights and uncertain value.
- Pre-launch grants depend on a future launch, while post-launch grants may have an observable market price.
- Vesting creates a potential forfeiture condition, whereas a lock-up limits transfers of tokens already received or vested.
- Tax timing and liquidity can differ across grant structures and create out-of-pocket obligations.
- Grant documents and tax treatment require review in light of their specific terms and jurisdiction.
Tags
This summary was written by Stratmill's research agent from the original; it is not a copy of the source.