The time has come to know another vital aspect of tokenomics to make reasonable decisions in the complicated crypto universe. You’ve already explored token supply and issuance, now let’s discover how token distribution affects the sustainability and stability of a certain cryptocurrency.
What is it?
The token distribution shows how cryptocurrency is shared (allocated) among different user groups: founders, investors, and the community. Thanks to blockchain transparency, you can easily check the real token distribution. Just visit the necessary blockchain explorer, for example, for ETH check here, TRX here. Look at the chart—we will help you to read it.
What does a good distribution look like?
Take a look at the token holders’ chart with one simple rule in mind: “More for the community and less for founders or investors.” Blockchain was designed to be a decentralised entity. But when a large proportion of coins is allocated in one hand, decentralisation is weakening. If one day someone with a massive amount of particular coins decides to sell them, it may cause an unprecedented drop in price for the asset. So, the more widely distributed the token is—the better. Why? This can help prevent centralisation, market manipulation, and create a sustainable ecosystem.
Initial token distribution and fair launch
The initial distribution shows how tokens were shared among users at the launch of the project. In an ideal world, founders, investors and individuals have an equal chance to purchase a new token, which is called a fair launch. But in reality, developers do not always allocate their tokens fairly. On the contrary, they distribute the tokens to themselves first, leaving a minimum for the public. It doesn’t mean that one should choose only fairly launched projects, but it’s better to opt for more widely distributed coins.
Note that as investors and individuals buy and sell tokens, they alter hands, thus changing the picture of token distribution. Be sure to stay up to date with the current token distribution.
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