SAFT Agreement

SAFT Agreement

Governance Layer • Legal Frameworks • Token Distribution

pre-launch investment contract for future token delivery

SAFT Agreement — Simple Agreement for Future Tokens — is a legal contract between a blockchain project and an accredited investor that grants the investor the right to receive tokens at a future date, typically upon network launch or a triggering event. It was designed as a compliant fundraising mechanism that allows projects to raise capital before their token exists or their network is live — without selling an unregistered security on the open market. The SAFT framework was created to navigate the tension between crypto fundraising and U.S. securities law. The logic is that the SAFT itself is a security — sold only to accredited investors under Regulation D — but the tokens delivered later are intended to function as utility tokens, not securities, once the network is operational. Whether that legal theory holds has been tested, debated, and challenged by regulators, but the framework remains one of the most widely used pre-launch fundraising instruments in the industry. For retail investors, SAFT agreements matter because they represent locked supply that will eventually enter circulation. Every SAFT token has a vesting schedule. Every vesting schedule has an unlock date. And every unlock date is potential sell pressure from investors who entered at a fraction of the current market price. Understanding who holds SAFT allocations, at what price they entered, and when their tokens unlock is essential due diligence — because SAFT investors are not long-term holders by default. They are early-stage capital seeking liquidity events. The gap between SAFT entry price and current market price is the gap between their profit and your risk.

Use Case: A Layer 1 project raises $30 million through SAFT agreements with venture funds at $0.02 per token before mainnet launch. Two years later, the token trades at $0.80. The SAFT vesting cliff expires and 1.5 billion tokens unlock over six months — creating sustained sell pressure that retail buyers who never checked the vesting schedule absorb at a loss while early investors exit at 40x.

Key Concepts:

• Token Unlock Structures — Vesting schedules that govern when SAFT tokens enter circulation
• Cliff Vesting — Initial lock period before any SAFT tokens are released
• Linear Vesting — Gradual token release after the cliff expires
• Backloaded Vesting — Vesting that delays the largest unlocks to later periods
• Token Vesting Models — The design frameworks governing SAFT distribution timing
• Investor Tranches — Tiered allocation structures separating early from late investors
• Tokenomics — The economic architecture that SAFT allocations sit within
• Tokenomics Audit Checklist — Evaluation framework that flags SAFT-related dilution risk
• Circulating Supply — The metric most directly impacted by SAFT unlock events
• Token Devaluation — Price erosion when SAFT supply floods the market
• Institutional Traders — The entities most commonly holding SAFT positions
• Derivatives — Instruments used to hedge SAFT positions before unlock

Summary: SAFT agreements are the invisible supply events that most retail investors never see coming. They fund the projects that build the networks — but they also create the vesting cliffs, unlock floods, and early-investor exits that reshape price action months after the hype cycle fades. Knowing where the SAFT supply sits is knowing where the sell pressure lives.