2021-03-27 14:22:11
Coin Allocation - How many coins of your crypto do the whales have ?
The US dollar would have some of the worst tokenomics in the crypto space if it were a cryptocurrency, that is for sure. It has a year-on-year inflation rate of about 3%. It has no supply limit and can be printed by central banks at any time. A limited number of people control the majority of the circulating supply. As a result, it is a terrible long-term investment.
In the crypto space, on the other hand, it's incredible that almost every single crypto coin has its own tokenomics. Furthermore, the open-source aspect allows everyone to see exactly what is happening with their favorite tokens. However, the tokenomics of cryptocurrencies, are not invulnerable.
Token allocation is an important tokenomic aspect to keep an eye on. At the begin, a genesis block was mined by one or more parties without any special token distribution. This is referred to as a reasonable launch, which is sadly quite uncommon in the crypto world. This typically means allocating a fixed percentage of a token's initial or complete supply to particular parties or reasons.
Some of these tokens are given to the project's creators, while others are given to early investors, with the rest of them going to the ICO and mining or staking rewards for all who would participate in the crypto's ecosystem.
First and foremost, make sure that those tokens have been distributed in the manner that was originally outlined in the ICO documentation.
After all, your goal is to find out which wallets have a large number of tokens and if those tokens could be sold quickly if the price rose dramatically. You can do this by using the block explorer.
Therefore, If you see a single wallet with, let’s say, more than ten percent of its total supply, be careful. For instance, coins like Ripple, for which the team holds 60% of the total supply. This kind of distribution is a major danger for decentralization and hence all the token holders.
Said that, several cryptocurrency ventures have vesting schedules in place for tokens that have been allocated. What this means ?
The tokens given to investors or creators will not be available immediately, but will be available over time or at a later date. You should consider selling your tokens earlier rather than later if you see a vesting schedule like that.
With regard to the case of selling, consider the staking mechanisms. Despite crypto’s potential, is it considered profitable for these whales to hold their coins?
Last but not least, Coin allocation is just one aspect in the field of tokenomics, while tokenomics is considered along with other other factors during your fundamental analysis. Critical thinking is vital here
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