Token Allocation
The planned division of a token supply among users, investors, teams, treasuries, ecosystems, or incentives.Definition
The planned division of a token supply among users, investors, teams, treasuries, ecosystems, or incentives.Why it matters
Tokenomics describes how token supply, distribution, incentives, and utility influence a network economy.How it works
Founders draft an allocation table detailing the distribution percentages. These are often managed by multi-signature wallets or timelock contracts that release specific portions of the supply to the designated parties according to a schedule. Transparency in this process is high, as the distribution is usually recorded on-chain or audited by third parties.Real-world example
Many projects allocate 20% to the team, 20% to the treasury, and 60% for community incentives to ensure long-term ecosystem viability.Advantages
- Outlines project governance structure
- Ensures fair distribution planning
- Aligns incentives for key stakeholders
Limitations
- Subject to founder bias
- High insider allocation causes distrust
- Plans can change if not locked
Common misconceptions
- Allocation plans are always followed strictly.
- Large team allocations are always predatory.
Related knowledge
- Circulating Supply — term
- Token — term
- Total Supply — term
Canonical knowledge ID:
glossary:token-allocation