In the crypto world, how a project distributes its tokens is a huge deal. It impacts the project’s funding, community, and ultimately, the value of the token itself.
What is Token Distribution?
It’s basically the plan for who gets the project’s tokens, and how:
- Investors: Tokens are sold to raise money (public sales, private sales, etc.)
- Team Members & Advisors: Tokens can be part of their compensation
- Community: Projects may give away tokens to build a user base (airdrops, contests, etc.)
Why This Matters to Investors?
A good distribution plan means:
- Fairness: Is the project giving away too much to insiders, leaving little for regular investors?
- Long-Term Thinking: Are team tokens locked up for a while, so they have an incentive to make the project succeed?
- Community Focus: Does the project have plans to get tokens into the hands of people who will use them, not just speculators?
What Investors Should Look For?
- Transparency: The project should clearly explain its distribution plan in the white paper.
- Balance: Is the allocation between investors, team, and community reasonable?
- Vesting: Are there lock-up periods for the team’s tokens to ensure their interests are aligned with investors?
The Big Idea: A well-structured token distribution plan shows that a project is serious about building a sustainable ecosystem, not just making a quick buck. This can be a major sign of a project with long-term potential.
