Cliff vs Linear Vesting Calculator
| Time Period | Cliff Vesting | Linear Vesting |
|---|---|---|
| Months 0-12 | 0 Units | 0 Units |
| Months 13-48 | 0 Units | 208.33 Units/Month |
| At Cliff Date (Month 12) | 2500 Units | 0 Units |
| After Cliff (Month 13-48) | 0 Units | 208.33 Units/Month |
All equity vests at once after the cliff period.
Employees receive zero equity during the cliff period.
Provides strong retention incentive at the end of the cliff.
Equity is released gradually over the vesting period.
Employees receive predictable increments of equity.
Encourages ongoing commitment and alignment with company goals.
When you hand out equity - whether tokens, RSUs, or stock options - the timing matters as much as the amount. Two timing models dominate the conversation: Cliff Vesting a binary release where no equity is earned until a pre‑set period ends and Linear Vesting a steady, evenly‑spaced accrual of equity over the entire schedule. Understanding how each works, where they shine, and how they can be blended will keep your talent motivated and protect your company’s cap table.
What Is Cliff Vesting?
Cliff vesting is the simplest form of equity timing. New hires sign a contract, but they see zero equity until they survive the “cliff” - typically one year. After the cliff, the entire grant (or a large chunk) becomes available instantly. The model is popular in early‑stage startups because it forces a minimum commitment before anyone walks away with a slice of the pie.
Key attributes:
- Duration: most common is 12 months, though 18‑month and even 36‑month cliffs exist.
- Trigger: a timestamp comparison in the company’s payroll or smart‑contract system.
- Risk mitigation: prevents “quick‑flip” hires who leave after a few months.
Because the equity release is binary, administrative effort spikes at the cliff date - HR must verify each employee’s start date, calculate any prorated adjustments, and push the token or RSU grant.
What Is Linear Vesting?
Linear Vesting an even‑distribution schedule that credits a fixed fraction of the grant each month or quarter spreads the equity reward across the whole vesting period. A classic four‑year schedule without a cliff would vest 25% a year, or roughly 2.08% each month. Employees see a small, predictable increase in ownership every pay‑cycle.
Key attributes:
- Granularity: monthly, quarterly, or even daily accruals are possible.
- Transparency: participants can model exactly how much they own at any point.
- Motivation: continual “tiny wins” keep the incentive alive over the long haul.
The math is precise - a 10,000‑unit grant over 48 months translates to 208.33 units each month. Smart‑contract platforms automate this calculation, issuing the exact amount to the employee’s wallet at each interval.
Head‑to‑Head: Cliff vs Linear
| Feature | Cliff Vesting | Linear Vesting |
|---|---|---|
| Equity release pattern | All‑or‑nothing at cliff end | Evenly spread over entire period |
| Retention focus | Strong early‑stage retention | Steady motivation throughout |
| Administrative load | Concentrated at cliff date | Distributed across each vesting interval |
| Employee perception | High payoff after wait | Predictable, incremental gains |
| Typical use case | Early‑stage startups, high‑risk roles | Mature companies, low‑turnover teams |
When to Choose Cliff Vesting
If your company is still proving its product‑market fit, you want to protect yourself from people who join, learn the business, and then jump ship. A 12‑month cliff aligns the first year’s learning curve with a tangible reward. It also simplifies financing conversations - investors see a clear barrier before dilution spreads.
Roles that benefit most:
- Founders and early engineers who are critical to product development.
- Salespeople hired on a “hit‑hard‑first‑year” basis.
- Advisors who commit to a multi‑year advisory agreement.
In practice, many startups pair the cliff with a subsequent linear schedule, creating a hybrid that keeps early protection while delivering regular incentives after year‑one.
When to Choose Linear Vesting
When your team is already stable and you want to reward ongoing performance, linear vesting shines. Employees see a small slice of equity every month, which encourages them to stay for the long haul and to align daily decisions with shareholder goals.
Ideal scenarios:
- Series‑B or later companies with predictable cash flow.
- Roles where continuous output matters more than a single milestone (e.g., product managers, QA leads).
- Geographies where labor laws favor regular accrual over lump‑sum grants.
Because the equity is predictable, finance teams can model dilution month‑by‑month, making board reporting smoother.
Hybrid Models - The Best of Both Worlds
The industry standard today is a four‑year schedule with a one‑year cliff followed by monthly linear vesting. Imagine a 10,000‑unit RSU restricted stock unit used by many US‑based startups grant:
- Month 0‑12: no equity released.
- Month 12: 2,500 units (25%) vest instantly.
- Months 13‑48: remaining 7,500 units vest at 208.33 units per month.
This design gives the early‑stage protection of a cliff while keeping the morale boost of regular vesting afterward. Companies can also tweak the back‑loaded version - smaller initial amounts that increase over time - to reward senior talent who stay longer.
Implementation Tips - From Spreadsheets to Smart Contracts
Whether you track equity in an Excel sheet or a blockchain, the mechanics stay the same:
- Define the trigger: for cliffs, a simple date check; for linear, a periodic calculation.
- Automate calculations: most equity platforms (e.g., Carta, Pulley) handle monthly pro‑rata math out of the box.
- Leverage smart contracts: on chain, a Smart Contract self‑executing code that enforces vesting rules can compare the current timestamp with the cliff date, then release tokens automatically.
- Document clearly: every grant should state the cliff length, total duration, and linear interval (monthly, quarterly).
- Provide statements: quarterly vesting reports let employees see exactly how much is vested, unvested, and taxable.
For startups that issue Token cryptographic representation of equity or utility, the on‑chain approach eliminates manual reconciliations and offers full transparency to investors.
Common Pitfalls and How to Avoid Them
Pitfall 1: Over‑long cliffs. A 24‑month cliff can feel like a penalty, leading top talent to look elsewhere. Keep the cliff at 12‑18 months unless the role is truly high‑risk.
Pitfall 2: Too granular linear schedules. Monthly vesting is fine, but daily vesting creates unnecessary processing overhead and can confuse employees. Choose the coarsest interval that still feels regular.
Pitfall 3: Not aligning with legal requirements. Some jurisdictions treat each vesting event as taxable income. Work with a tax advisor to time statements correctly.
Pitfall 4: Ignoring communication. Employees often misinterpret cliffs as “no equity at all.” Explain the full schedule upfront and provide a visual timeline.
Choosing the Right Path for Your Company
Ask yourself three quick questions:
- Is my team in a high‑risk, high‑growth phase? If yes, prioritize a cliff.
- Do I need ongoing motivation or is the first‑year retention the biggest challenge? If ongoing, lean toward linear.
- Can I afford the administrative overhead of monthly calculations? If not, a simple cliff‑only or cliff‑plus‑quarterly linear schedule may be smarter.
Most founders end up with the hybrid four‑year/one‑year‑cliff model because it satisfies investors, protects early equity, and keeps employees happy after the first year.
Frequently Asked Questions
What happens to unvested equity if an employee leaves before the cliff?
All unvested equity is forfeited. The company can re‑allocate those shares or tokens to a new hire pool.
Can I have multiple cliffs in one grant?
Yes, some companies use a “double‑cliff” (e.g., 6‑month and 12‑month) to stagger rewards for different milestones.
Is linear vesting better for tax purposes?
It depends on local tax law. In many regions, each vesting event triggers taxable income, so more frequent events can mean more filing work but spread tax liability.
How do smart contracts enforce a cliff?
The contract stores the grant start timestamp and the cliff length. It checks the current block time; if the elapsed time ≥ cliff, it releases the full amount to the beneficiary’s wallet.
Can I mix cliff and linear for different employee levels?
Absolutely. Senior leaders often get a shorter cliff (6 months) and a faster linear rate, while junior staff stick with a 12‑month cliff and standard 4‑year linear schedule.

Comments (9)
emmanuel omari
October 1, 2025 AT 17:18 PMCliff vesting is a blunt instrument that forces a startup to weed out the flaky hires early, and that’s exactly what we need in high‑growth markets where talent turnover is a real threat to product continuity. By setting a 12‑month cliff you make the cost of quitting steep – you walk away with nothing, and the team keeps its equity intact. It also simplifies the cap table because you only have to calculate dilution after the cliff has passed, not every month. In my experience, African tech firms that skip the cliff end up with a bloated shareholder base that scares off investors. The binary nature of a cliff also sends a strong signal to early backers that the founding team is committed for the long haul. So, if you’re building something that needs deep technical expertise and you can’t afford to lose that expertise after a few months, lock in a cliff and watch the retention metrics improve. This isn’t about being harsh; it’s about aligning incentives with survivability in a competitive ecosystem.
Richard Herman
October 2, 2025 AT 21:04 PMBoth cliff and linear vesting have their place, and the best approach often mixes the two. A cliff gives early‑stage teams a safety net, while linear vesting keeps morale high after the initial hurdle. Think of it like seasoning a dish – you add a pinch of cliff for structure and then let the linear portion simmer to bring out the flavor over time. This hybrid model also speaks well to investors who like to see clear retention mechanisms without overly punitive cliff‑only structures.
Sophie Sturdevant
October 5, 2025 AT 04:38 AMWhen structuring equity compensation, the distinction between cliff and linear vesting is not merely tax jargon; it's a strategic lever that impacts founder dilution, employee motivation, and investor confidence. A cliff, typically set at twelve months, acts as a binary trigger that converts the grant from an unvested liability to a vested asset in a single event, thereby consolidating dilution at a predictable inflection point. This mechanism is especially valuable in early‑stage ventures where runway is limited and you need to ensure that only contributors who survive the initial product‑market fit phase reap the upside. Linear vesting, on the other hand, spreads the equity accrual over the entire vesting horizon, often four years, delivering a steady flow of incremental ownership that aligns employee decision‑making with long‑term shareholder value creation. From a cap table perspective, linear vesting provides a smoother dilution curve, which can be modelled month‑by‑month to forecast post‑money equity distribution. The hybrid approach-combining a twelve‑month cliff with monthly linear vesting thereafter-offers the best of both worlds: it preserves the high‑retention incentive of a cliff while mitigating the morale dip that can occur when employees see zero equity for an entire year. Additionally, you can fine‑tune the cliff length (e.g., six months for senior hires) and the vesting cadence (quarterly vs. monthly) to reflect role‑specific risk profiles. For investors, clarity on vesting schedules reduces due‑diligence friction because the dilution events are transparent and predictable. In jurisdictions with aggressive tax treatment of vesting events, front‑loading vesting can increase immediate tax liability, so a monthly linear schedule may be preferable to spread tax exposure. Conversely, in regions where tax events are triggered only upon actual exercise, the cliff’s lump‑sum vesting can be advantageous from a cash‑flow standpoint. Ultimately, the decision should be data‑driven: analyze turnover rates, capital efficiency metrics, and regulatory constraints to select a vesting architecture that aligns with both operational goals and shareholder expectations.
Somesh Nikam
October 8, 2025 AT 15:58 PMThe practical side of implementing a hybrid schedule is surprisingly straightforward once you have the right tooling. Most equity platforms let you define the cliff date as a timestamp and then automatically calculate the monthly linear tranche thereafter. This eliminates manual spreadsheet errors and gives employees a clear, real‑time view of their vested balance. 😊 For startups using smart contracts, you can encode the cliff check directly into the contract's logic, ensuring that no human oversight can accidentally release equity early. Just remember to audit the contract for edge cases, like early termination or promotion, to keep the vesting logic aligned with HR policies.
Jan B.
October 12, 2025 AT 03:18 AMLinear vesting feels fair because you earn a little each month it aligns pay with work
MARLIN RIVERA
October 15, 2025 AT 14:38 PMThe data shows that cliffs create hidden toxicity. Employees who survive the cliff are often just staying for the money, not the mission, which leads to disengagement and lower productivity. A purely linear schedule, on the other hand, encourages continuous contribution and eliminates the artificial ‘all‑or‑nothing’ mindset that cliffs propagate.
Debby Haime
October 19, 2025 AT 01:58 AMHey founders! If you want a team that’s pumped every month, go with linear vesting after a short cliff. It keeps the excitement alive and makes every paycheck feel like a win. Trust me, the morale boost is real and it shows up in your product velocity.
Andy Cox
October 22, 2025 AT 13:18 PMHonestly, I think the whole cliff vs linear debate is overblown. Most people just need clear communication and a schedule that matches their cash flow. Keep it simple and let the team do the work.
Courtney Winq-Microblading
October 26, 2025 AT 00:38 AMConsider equity vesting as a river- the cliff is the dam that holds the water until it’s time to release, while linear vesting is the gentle flow that nourishes the landscape over years. When the dam finally opens, the surge can revitalize a dry valley, but a constant stream ensures that every patch of soil stays fertile. If you imagine a startup as an ecosystem, both the sudden flood and the steady drip have roles to play in sustaining growth.