Blockchain & Cryptocurrency Glossary

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Token Allocation

1 min read
Pronunciation
[toh-ken al-uh-kay-shun]
Analogy
Token allocation is like slicing a pie into portions designated for guests, organizers, and leftovers for later.
Definition
The distribution plan of a token’s total supply among categories such as team, investors, community, and ecosystem incentives.
Key Points Intro
A clear allocation aligns stakeholder incentives by:
Key Points

Category breakdown: Percentages for sale, team, advisors, reserves.

Vesting schedules: Timelocks to prevent immediate dumping.

Incentive design: Allocations for liquidity mining and grants.

Transparency: On‑chain minting and vesting contracts for auditability.

Example
A project issues 1 billion tokens: 50% public sale, 20% team (4‑year vesting), 15% ecosystem grants, 10% reserve, 5% advisors (2‑year cliff).
Technical Deep Dive
Allocation logic often enforced via vesting smart contracts: `TokenVesting` holds tokens in escrow and releases tranches per timetable. Initial mint function mints category pools to designated addresses. Unlock events emit logs for off‑chain monitoring.
Security Warning
Poorly designed vesting can enable early sell‑offs; ensure cliff and linear release parameters align with project milestones.
Caveat
Over-allocation to team/advisors can discourage community participation; balance long‑term incentives.
Related Terms
Vesting
Token Generation Event
Smart Contract Library
Token Holder
Supply Shock

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