Distribution Models

Distribution Models

Governance Layer • Validators • Protocol Control

token allocation strategy

Distribution Models define how tokens are initially and continuously allocated across various stakeholders in a blockchain ecosystem. This includes allocations to the founding team, early investors, community rewards, public sales, liquidity incentives, and treasury reserves. A balanced distribution model promotes decentralization, aligns incentives, and avoids centralization risks or sudden supply shocks.

Use Case: A protocol launches with a distribution model allocating 10% of tokens to the team (with a 2-year vesting lock), 15% to strategic investors, 50% to community rewards and liquidity mining, and 25% to the treasury and DAO governance. This ensures that active participants gain the majority share over time while maintaining reserves for development and sustainability.

Key Concepts:

• Team Allocation — Reserved tokens for founders and core contributors, often time-locked
• Community Rewards — Mining, staking, airdrops, or gamified incentives for active users
• Investor Tranches — Pre-sale or seed round allocations with vesting terms
• Treasury & DAO — Funds controlled by governance for future development or ecosystem growth
• Tokenomics — Economic design governing token supply, demand, and distribution
• Token Supply Models — Frameworks for managing total token issuance
• Supply Structure — Predefined rules governing token creation and distribution
• Token Unlock Structures — Scheduled release of locked token allocations
• Token Vesting Models — Framework for structured token release
• Cliff Vesting — Tokens locked until a specific date, then released
• Linear Vesting — Tokens released steadily over a defined period
• DAO — Decentralized autonomous organization using token-based governance
• Governance Token — Token granting voting power over protocol decisions
• Voting Power — Influence weight in governance based on token holdings
• Minting — Process of creating new tokens on a blockchain

Summary: Distribution Models are crucial for long-term trust and stability. They determine who benefits from token growth, how control is shared, and whether a network truly empowers its users or concentrates power in early hands. Clear, transparent models foster credibility, decentralization, and healthy token velocity.