tl;dr: Companies like Carta and Shareworks sit in the cross-hairs of blockchain-driven disruption.

When you work in an early-stage start-up, one of the “perks” of the job is the opportunity to earn the right to buy stock in the future via an option.

Vesting Today

Typically, when you begin employment, you are granted a certain number of options which “vest” over time.

Usually, there’s a “cliff” meaning that you don’t vest any options until that timeframe is met (say 6 or 12 months) and then, after that, you earn an additional fraction every month (or some other period of time).

Managing all of this for multiple employees can be a hassle, which is why there are companies like Carta and Shareworks (owned by Morgan Stanley) which will do it for you.

Generally these work well, but they obviously come at a cost since they involve an intermediary.

Vesting Tomorrow

Recently, I was invited to become an advisor to a really innovative project called PrimeDAO, which aims to extend the benefits of DeFi to far more people and projects than is currently possible.

I’ll save a post about PrimeDAO for another day, because the point of this one is how vesting works.

As an advisor, I also have the opportunity to vest tokens over time, provided I fulfill my duties to the DAO.

In the early days of crypto projects (say 3-5 years ago), an advisor would either receive all of her tokens upfront or at the end of the vesting period.

This is obviously far from ideal as it reduces incentive for the advisor to actively participate on the one hand and puts the advisor at a disadvantage on the other because she needs to trust that the owners of the token (usually the project creator) will deliver upon the promise.

PrimeDAO is doing it differently, using the blockchain itself to serve as the vesting mechanism.

So instead of a fixed period of days/months, it is a fixed period of blocks.

In this way, the vesting schedule is known and transparent, with the interests of both parties met. While there is still a way to revoke the contract (can be handled the DAO), it’s a lot cleaner….and a lot cheaper.

While rudimentary today, this is a glimpse into how incentives can be aligned more effectively and more transparently in the future.