Allocation(Allocation)
Allocation Refers to the share of tokens or equity that a crypto project reserves for specific investors, the team, communities, or organizations. It determines how much of the supply each participant can receive and when they can obtain it, and affects the project's long-term incentives and token supply schedule.
Allocation How It Works
Projects typically describe their allocation plans in a white paper or tokenomics document and distribute tokens through stages such as seed rounds, private rounds, and an initial coin offering (ICO). The same participant may receive different allocations in multiple rounds, and each round may have different ticket size limits, lock-up conditions, and availability dates.
Vesting Period and Cliff
Team tokens are usually not released all at once at issuance, but are gradually unlocked according to a vesting schedule. The schedule may first set a cliff, during which nothing is released; after the period ends, tokens are distributed according to the agreed schedule. This can reduce short-term concentrated selling pressure and align contributors' interests with the project's long-term development.
Common Allocation Categories
The total supply is often divided among the team and founders, investors in each round, the community and ecosystem, the treasury and development fund, and liquidity support. The proportions and unlock conditions vary between projects, so one should not look only at the share assigned to any single category; the lock-up period and initial circulating supply should also be considered.
Key Points for Reading an Allocation Plan
When conducting research, compare the amount circulating at the token generation event (TGE) with the amount that remains locked, and pay attention to the proportion held by insiders, the vesting period, and the release rate. If a project publishes its on-chain vesting arrangements or uses smart contracts to execute distribution terms, participants can independently verify progress, reducing reliance on off-chain promises.
Original Tutorial
https://www.binance.com/en/academy/glossary/allocation
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