Written by: Huang Wenjing, Chen Haoyang
Everything happens on the eve of the TGE
In the world of Web3, the most dramatic moments often occur in the weeks just before the TGE (Token Generation Event).
Mankun has recently received numerous inquiries from employees of cryptocurrency projects: complaining that project parties retract token options during the TGE, dismiss core team members, and so on. Such phenomena are common;
Developers have been working hard for months, just as the token is about to go online, suddenly losing all incentives due to 'organizational adjustments';
Some early advisors were promised 'token rewards and co-investment shares', but after the project's popularity soared, they were told 'model undecided' and 'compliance pending approval', leading to repeated delays;
Some people refer to the clearly stated 'team incentive pool 10%' in the white paper, but when the vesting period arrives, they end up with nothing due to reasons like 'performance not met' or 'triggering non-compete clauses'.
These stories sound like rumors, but they are played out in almost every bull market.
In these events, the passive party is often not the investor, but the incentive participants—those who truly make the project land.
Token rights incentive ≠ equity incentive: the fundamental difference in contract logic.
Many people, when first encountering token incentives, simply compare them to 'Web3 version of equity incentives'.
But in fact, the two are fundamentally different in terms of rights nature, legal regulation, and contract design.
In equity incentive contracts, the subject matter is the company's shares, which fall under the jurisdiction of company law.
Share transfers are often subject to shareholder preemptive rights, so the company usually needs to clearly state in the incentive agreement:
'This incentive grant will not affect the rights of the incentive recipient due to preemptive purchase rights restrictions.'
In the token incentive contract, the subject matter is cryptocurrency, which does not involve the concept of shareholder rights and does not require business registration or share transfer procedures.
But it faces another type of risk: financial regulation and compliance issuance issues.
Therefore, the token incentive contract needs to clearly specify:
'The company guarantees that the tokens have been legally issued and are not prohibited financial products in the jurisdiction; if regulatory policy changes prevent the issuance of tokens, the company shall provide equivalent compensation or other alternatives.'
In addition, the token incentive contract should also clarify:
Whether the tokens on which the incentives are based have trading attributes;
Whether it may be considered a security (Security Token);
Whether the project has the qualification for issuance and a legal TGE path.
In simple terms:
Equity incentive contracts focus on the constraints and circulation of internal company rights;
Token rights incentive contracts focus on external compliance, regulatory risks, and performance feasibility.
Though both are 'incentive tools', the logic of a good contract is fundamentally different.
To obtain your own Token, you must first get the commitment 'on paper'.
To truly safeguard your rights, the first step is to have the project party put commitments in writing. The following items are necessary 'actions in place':
Sign written (token incentive agreement) (Token Grant / Option / RTU / Warrant, etc.)
Include token quantity, vesting schedule, cliff, lock-up period, unlocking methods, etc. Without written documents, all commitments are merely 'airdrop verbal candy'.
Clearly state termination and acceleration (acceleration) conditions
Clearly state: If due to 'termination without cause' or 'change of company control' you can retain the vested portion, and whether it triggers 'accelerated vesting'. This will determine if you can still receive tokens after being laid off before the TGE.
Confirm delivery mechanism
Including token issuance time, delivery methods, on-chain wallet address, whether it is hosted by smart contracts or released by third-party escrow. Avoid the situation where 'the project is online, but no tokens are issued'.
Handling compliance and tax issues
Different jurisdictions have different restrictions. If you provide services in mainland China, you should require the contract to state 'if tokens cannot be issued due to regulatory reasons, the company must compensate in fiat or other equivalent forms.'
In regions like the United States, it should also clarify whether the 83(b) election applies, tax timing, withholding plans, and other details.
This part sounds 'tedious', but it determines whether your Token can truly enter your wallet. If these terms are missing, risks often concentrate and explode at the project's most critical moments:
Without a written agreement, it means you will have difficulty proving any incentive commitments, and legally you may not even qualify as a 'rights holder'.
Without a clear vesting mechanism, the company can suspend distributions at any time for reasons such as 'performance not met' or 'goals not achieved'.
Without clear delivery terms, if the project party delays the transfer after the TGE, you can neither recover nor lock down responsibility.
Without compliance and tax arrangements, the tokens may be prohibited from being distributed due to regulation, and at that time you will receive neither the tokens nor compensation.
In other words, the simpler the contract is written, the more complicated your path to safeguarding rights becomes.
Only when all key conditions are clearly written into the agreement can token incentives shift from 'verbal trust' to 'legal rights'.
The 'seemingly small print' key points in the contract
A qualified token incentive agreement should not just be a template, but should clearly specify the following key details:
Number and type granted: Token Grant, Option, RTU, etc., must be accurate and traceable.
Vesting rules: start date, cliff, linear release rhythm, must match TGE timing;
Lock-up and unlock: Clearly specify the lock-up period after the TGE to prevent 'unlocking before listing' as a false realization.
Termination and acceleration mechanisms: Define Good Leaver / Bad Leaver; protection of rights during changes in control;
Tax liabilities and compliance declarations: Avoid touching the virtual currency payment bans in your area;
Dispute resolution clause: Should include mechanisms for 'emergency arbitration' or 'temporary injunctions', which remain valid right before the TGE.
Risk disclosure: Declare token price volatility and regulatory risks, to prevent project parties from disclaiming liability on the grounds of 'risks not disclosed'.
These seemingly 'legal clauses' actually correspond to painful real-life cases.
Written at the end
In a truly mature Web3 world, code is responsible for execution, and contracts are responsible for trust.
Do not let your efforts and contributions ultimately become an 'air incentive'.
Written commitments, signed agreements, and on-chain evidence are your certainty in this volatile world.
When the next TGE arrives, may your wallet contain not just screenshots and regrets, but the real value that belongs to you, written into the contract and realized on the chain.
