Thinking of launching a Token in the crypto market? Or will future tokens be awarded to employees and investors? We have some analysis on the latest token economics benchmarks and trends to help you plan your key token decisions.
“Give me motivation and I’ll give you feedback”;
Clarifying who receives your Tokens and how they are distributed will affect the perception and performance of Tokens.
This helps determine if the core team and early backers have the right incentives in place.
Many projects have failed due to core team members and early backers “dumping to the community” either simply wanting to “make quick money” or failing to implement attribution and lock-in to prevent early sell-offs.
So how can cryptocurrency founders and operators prevent this from happening?
To this end, we have compiled a report on key benchmarks and insights on token attribution and distribution, using this data:
(a) plan a cap on the size of your team or investors that you can grow;
(b) Fundraising strategy;
(c) Participation thresholds and budgets for community incentives;
Before we start, let’s understand some definitions and methods. For a detailed explanation of this, visit the article linked at the end of the thread.
1 / Used to plan future Token distribution benchmarks
Overall token distribution since 2021.
2 / Token distribution has changed from “public sale” to “community and ecosystem incentives”
The most notable difference between 2017 and 2022 is the change in token distribution from public sales to community incentives to guide and fund project development.
The project no longer sells Tokens directly on the public trading platform, but distributes Tokens for participation rewards (similar to Uber or Doordash giving users points rewards to incentivize usage).
The end result of this shift is that governance or utility tokens with no initial value end up being traded on DEXs and gain natural price discovery as demand for these tokens increases.
Through corporate reserves or the Treasury, you can use these tokens to pay for operating expenses, or continue to use community incentives and distribution pools to fund ongoing participation and enhance product value/usage.
3 / When the project raises funds from private investors, it will allocate about 19% of the tokens to investors
Earlier we mentioned that investors own about 11% of tokens. However, this average includes projects without investors, which increases to 19% when removed.
Not all projects raise capital from investors, especially with the rise of alternatives, or even not at all (eg, ENS). Certain types of projects, such as games or NFT projects, use in-game asset or NFT sales to guide initial development.
4 / Due to the different needs of the business, the project needs to create different token allocations
Due to industry-specific needs, we observe higher “community incentives or allocations” for DeFi and gaming.
DeFi projects need liquidity and funding to launch, and incentivizing community members to bootstrap TVL is the most common strategy.
Gaming projects are also actively investing in early player growth and community engagement activities, as the quality of a project depends heavily on the number of players in the ecosystem.
Infrastructure projects (e.g. ENS, Biconomy, Radicle and API3) tend to allocate more tokens to core team members and corporate/treasury funds, probably because without relying on sufficient liquidity or gamers, Teams are the key to providing immediate utility.
5/ Tokens are distributed widely, but tend to be shared by certain stakeholder groups
6 / The vesting/locking period of core team members is 3-4 years, and 0-12 months is a thawing phase
The most common is a 1-year thaw period plus a 4-year lock-in period.
Surprisingly designed with a 0 thaw period, but this may be due to the early liquidity needs of Crypto/DAO.
Other trends in core team unlocking include: Weighted unlocking (non-linear unlocking schedule, pre-weighted, post-weighted), this design is used in 7% of projects, and 5.7% of projects are unlocked immediately.
Investors usually have a 2-year lock-up period and a 0-12-month unfreeze period;
Investor lock-in helped ease selling pressure and price declines. Most commonly, there is a lock-up period of at least 1 year after the token is released, so that neither team members nor investors sell immediately.
Kudos to Lauren Stephanian and Coopahtroopa for their original excellent analysis of the optimal token distribution that inspired this post.
There are many details that cannot be detailed here, see the full report .
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/how-to-sort-out-the-5-year-trend-of-the-encrypted-token-economy-how-is-the-token-distribution-iterated/
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