What is Token Lockup?

Token lockups, or vesting periods, represent a specific time period during which a user is unable to trade, sell, or transfer a set of cryptocurrency tokens. Without a lockup mechanism in place, it is not uncommon for investors who may have participated in an Initial Coin Offering (ICO) to sell their assets for a quick profit once the market is active. Lockups are designed to limit the sell side pressure of an asset, so the asset doesn't experience a sudden selloff. These lockups can also release predetermined amounts of tokens according to a schedule rather than all at once.