Private token sales with long-term vesting schedules: DAOs can raise cash by entering long-term partnerships with investors such as VCs or angel investors exchanging native tokens for a fixed price for cash following a long-term vesting schedule. Similarly, a DAO could raise cash from its community members following similar deals.

Many crypto startups raise traditional venture capital to fund product/market fit discovery, often under a Simple Agreement for Future Tokens (SAFT), a structure developed by Protocol Labs and Cooley that’s similar to Y Combinator’s SAFE, except that it converts into tokens instead of equity should the company issue tokens in the future.

This paper presents a model of token distribution that allows token holders who are subject to vesting agreements to exercise the full power of their future governance rights, while also incentivising their long-term interests in the protocol.