Every Web3 project is inseparable from the distribution of tokens. As the core of the ecosystem, tokens are a new form of equity. Tokens usually have governance rights and allow community members as co-owners of shared funds to become key decision makers for products, services, or agreements.
Since 2013, the founders of blockchain projects have been considering who to allocate tokens to, how to maximize benefits, and what kind of “value-added” space is provided for holders of different roles.
In this article, we summarized and comprehensively analyzed the token distribution of 60 projects (protocols) (from GitHub and Medium data since 2013), and we also found significant trends.
The main trend of token distribution
Tokens are often distributed to 6 main actors:
- Community fund bank;
- core team;
- Private investment by;
- Ecosystem incentives;
- Public sale.
The community treasury reserves the tokens for future governance. Treasury tokens are usually regarded as the “reserve pool” of the project and are distributed to different stakeholders through voting proposals.
The allocation of the fund bank has been fluctuating, but overall it has increased. In 2016, the average allocation ratio of the treasury was about 20%, but by 2021, this ratio had increased to more than 40%.
This part of the token is reserved for the founders, current and future employees. These tokens are subject to a maximum lock-up period and usually reflect the team’s equity in the company that issued the token.
The team’s token distribution ratio has also been on an upward trend , from 5% in 2013 to about 20% in 2021.
This part is distributed to capital providers who convert into tokens after purchasing equity or directly purchase tokens. These tokens are also affected by lock-ups, usually in line with the core team.
The allocation of capital token distribution by private investors has been on a downward trend , from 25% in 2013 to about 15% in 2021.
This part of the tokens was designated for growth plans at launch. The ecosystem incentive mechanism usually allows users to earn income from a pre-designated token mining pool when it is started. Incentives have become an alternative to public sales, including growth plans, liquidity mining and revenue mining.
The proportion of tokens incentivized by the ecosystem has increased significantly , from 0% in 2016 to more than 20% in 2021.
This part of the token rewards past user value-added actions. The airdrop is liquid at the beginning, and can be applied for according to the pre-set allocation of each address designed by the core team.
Airdrops became more and more popular during 2017 and peaked in 2018.
After a short cooling period, the proportion of tokens distributed by airdrops has increased in recent years , from nearly 0% in 2019 to 15% in 2021.
This part of the token is for the general public. Public sale tokens are sold at the time of issuance, and the initial ratio is liquid.
The proportion of publicly sold tokens has dropped sharply , from 25% in 2013 to nearly 0% in 2021.
Allocate tokens by project type
Items on different tracks often correspond to different distribution ratios.
Layer 1 and Layer 2
L1 and L2 tend to dedicate the largest portion of their token supply to early stakeholders and their public sales.
These projects usually come from earlier similar projects, which means that these projects usually raise funds during a period when public sales were more popular.
For DApps, the team’s allocation is around 20%, while the investor’s allocation is around 15%. Approximately the same proportion of tokens are reserved for ecosystem incentives.
DAO contributes less to the team, about 10% on average. The lowest is usually allocated to investors of about 5%, while the largest part is used for treasury and ecosystem incentives.
In 2021, we will see a clear shift in tokens in a direction that benefits the community. Whether it is airdrops, ecosystem incentives or treasury, DAO is the driving force behind this change.
The best ratio of token distribution
For teams planning to distribute tokens in 2022, the following is our recommended token distribution ratio:
Note that the team and investors are allocated the same amount, which gives the project flexibility to invest more tokens in another direction.
It seems common practice to set aside 50% for the treasury, although this percentage should be increased or decreased relative to the allocation of airdrops or ecosystem incentives.
0% of tokens are designated for public sale. In the case of a public sale, these tokens should be withdrawn directly from the team, investors, and community funds pool in this order.
The key point is that through the ecosystem incentive mechanism, 10% of the tokens are used for early profit opportunities, which is a good way to build a value-added community.
In general, this distribution ratio can be used as a rough benchmark for your team in 2022.
Although Web3 is constantly evolving, this bull market has changed the dynamics of all participants.
- The distribution ratio of investors is decreasing;
- The proportion of the team is increasing;
- Airdrops have become the cornerstone of most distributions;
- Public sales have almost disappeared;
- The DAO has transferred most of its ownership to the community treasury and ecosystem incentive mechanism.
A fiercely competitive investor market means that teams are raising funds at higher valuations, while investor ownership is declining. This year, more than $ 30 million in venture capital investment to encrypt currency areas, in terms of the negotiations, the founder currently dominating the scene.
A few years ago, the founder set aside 5% of funds for himself and the early team. In 2021, the founders set aside about 20%, which is more in line with the traditional venture capital model.
While investor ownership has decreased, they still account for an average of 15% of the total token supply, down from 25% a few years ago.
We have noticed a direct increase in the proportion of tokens distributed to the community, especially through airdrops. Airdrops began to be loved by people and have become a major turning point for any token issuance today.
Under the constraints of the law, public sales have been replaced by community treasury reserves, and ecosystems have been designated to incentivize value-added actions.
The most reasonable reason is the proliferation of DAOs, which have witnessed the explosive growth of interest among original users and newcomers of encryption.
What will be next?
As a token founder, it is important to realize that these dynamics will change as the market develops.
In a bull market, the founder has the upper hand. In a bear market, investors have the upper hand.
One thing in common is community. If one thing is correct, it is that we often see the community taking more than half of the token distribution, even if the distribution is based on governance.
Expectations for contributors will focus on those who can carry out capital allocation and operations, that is, in terms of capital management and diversification.
Beyond direct governance, we see ownership flows to those who create meaningful value for products, communities, or agreements. In addition to optimizing liquidity or financing in the secondary market, we have noticed a clear intention to directly deliver tokens to those who continue to create value for a given network.
As we enter the new year, we expect that more token distributions will be biased towards active contributors, rather than those who just provide funds.
Although the above data does not cover all situations, we hope that this report can provide a stronger belief for the project’s token distribution and also provide a signal for the insiders.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/78309-2/
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