Written by: Huang Wenjing, Chen Haoyang

Everything Happened on the Eve of TGE

In the world of Web3, the most dramatic moments often occur in the weeks leading up to a project's TGE (Token Generation Event).

Mankun has recently received numerous inquiries from employees of cryptocurrency projects: complaints about the project party reclaiming Token options during TGE, dismissing core team members, etc. Such phenomena are not uncommon:

• Some developers have worked hard for months, only to see their tokens about to launch, but suddenly lose all incentives due to "organizational adjustments";

• Some early advisors were promised "token rewards and co-investment shares," but after the project's popularity surged, they were told "the model is not finalized" and "compliance is pending approval," leading to repeated delays;

• Others refer to the white paper clearly stating "team incentive pool 10%," 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 play out in almost every bull market.

In these events, the passive party is often not the investors, but the incentive participants—those builders who truly bring the project to fruition.

Token Incentives ≠ Equity Incentives: The Fundamental Difference in Contract Logic

Many people, when first encountering token incentives, simply compare them to "Web3-style equity incentives."

However, the two have essential differences in the nature of rights, 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 companies usually need to clearly state in the incentive agreement:

"This incentive grant will not affect the rights of the incentive recipients due to preemptive rights restrictions."

In token incentive contracts, the subject matter is cryptocurrency, which does not involve the concept of shareholder rights and does not require business registration or share transfer procedures.

However, it faces another type of risk: financial regulation and compliance issues.

Therefore, token incentive contracts need to clearly state:

"The company guarantees that the token has been legally issued and does not fall under prohibited financial products in the jurisdiction; if regulatory policy changes prevent the token from being issued, the company shall provide equivalent compensation or other alternative solutions."

Additionally, token incentive contracts should clarify:

• Whether the tokens on which the incentives are based have trading attributes;

• Whether they may be considered securities (Security Token);

• Whether the project has the qualifications to issue and a legitimate TGE path.

In simple terms:

• Equity incentive contracts focus on the constraints and transfers of internal company rights;

• Token incentive contracts focus on external compliance, regulatory risks, and feasibility of performance.

• Although both are "incentive tools," the logic of a good contract is entirely different.

To Obtain Your Own Tokens, First Ensure Promises Are "Written Down"

To truly protect your rights, the first step is to have the project party put their promises in writing. The following items are essential "actions to be taken":

• Sign a written Token Incentive Agreement (Token Grant / Option / RTU / Warrant, etc.)

This should include the number of tokens, vesting schedule, cliff, lock-up period, unlocking method, etc. Without a written document, all promises are merely "verbal airdrop candy."

• Clarify termination and acceleration conditions

It should be clearly stated: if due to "no-cause termination" or "change of company control," whether you can retain the vested portion and whether it triggers "acceleration." This will determine whether you can still receive tokens after being laid off before TGE.

• Confirm delivery mechanism

This includes the token issuance time, delivery method, on-chain wallet address, and whether it is managed by a smart contract or released by a third-party escrow. Avoid situations where "the project is live, but no tokens are issued."

• Address 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 currency or other equivalent forms."

In regions like the United States, it should also clarify whether 83(b) elections apply, tax points, withholding arrangements, and other details.

This part may sound "tedious," but it determines whether your tokens can truly end up in your wallet. If these terms are missing, risks often concentrate and explode at the most critical moments of the project:

• Without a written agreement, it means you may find it difficult to prove that there was an incentive promise, and legally you may not even qualify as a "right holder";

• Without a clear vesting mechanism, the company can terminate issuance at any time citing "performance not met" or "goals not achieved";

• Without clear delivery terms, if the project party delays the transfer after TGE, you cannot reclaim it or hold them accountable;

• Without compliance and tax arrangements, tokens may be prohibited from issuance due to regulation, leaving you without tokens and no compensation route.

In other words, the simpler the contract is written, the more complicated your path to protecting your rights becomes.

Only when all key conditions are clearly written into the agreement can token incentives transform from "verbal trust" into "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:

• Grant quantity and type: Token Grant, Option, RTU, etc., with quantities that are precise and traceable;

• Vesting rules: Start date, cliff, linear release pace, which should match the TGE timing;

• Lock-up and unlocking: Clearly state the length of the lock-up after TGE to prevent "unlocking before listing" from being a false realization;

• Termination and acceleration mechanisms: Define Good Leaver / Bad Leaver; protect rights during changes in control;

• Tax liabilities and compliance statements: Avoid triggering virtual currency payment bans in the jurisdiction;

• Dispute resolution clauses: Should include "emergency arbitration" or "temporary injunction" mechanisms, ensuring rights protection remains effective before TGE;

• Risk disclosure: State token price volatility and regulatory risks to prevent the project party from disclaiming liability on the grounds of "risks not disclosed."

These seemingly "legal clauses" correspond to painful real-world cases.

In Conclusion

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 turn into "air incentives."

Written promises, signed agreements, and on-chain evidence are your certainties in this high-volatility world.

When the next TGE arrives, may your wallet contain not just screenshots and regrets, but the real value that belongs to you, already written into contracts and realized on-chain.

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