The post Why Day-One Circulating Supply is Key for Market Stability appeared on BitcoinEthereumNews.com.

High initial token circulation (65-75%) fosters better market dynamics post-TGE. Memecoins thrive due to immediate price appreciation potential compared to traditional tokens. Regulatory changes could level the playing field for early-stage decentralized token access. Tokenomics, the economic design of a cryptocurrency’s token, shapes a project’s market performance and an appeal to retail investors. Traditional models featuring extended vesting schedules and low initial token circulation have become the norm, but some experts argue this approach is outdated. Andrew Kang, Co-Founder of Mechanism Capital, stated in response to a tweet by prominent crypto figure Cobie that long investor lockups and limited token circulation at launch hinder true price discovery and can impede a project’s growth. This revelation has ignited calls within the industry for greater immediate circulation on Day 1, potentially fostering a healthier investment environment and attracting more committed participants. It’s counterintuitive, but the best tokenomic design for a project (and retail) is to not have investor lock ups and have as much tokens to be as circulating as possible on Day 1 (except team, treasury) One year cliff and 3-4 year vests are a poor standard that came about from a… pic.twitter.com/nZXBjUxKsu — Andrew Kang (@Rewkang) October 27, 2024 Why Extended Vesting Schedules May Hinder Growth In the past, lengthy lockups in token vesting became a template in crypto simply because projects replicated previous models, not because of proven effectiveness. Instead of fostering ongoing investor contributions, long vesting schedules may attract passive investors who often sell after the token generation event (TGE), creating a wave of sell pressure as tokens unlock. Experts now recommend high initial circulation – 65-75% of tokens at TGE – arguing this benefits market dynamics more than delayed unlocks. Memecoin Success and the Power of High Initial Circulation The popularity of memecoins demonstrates this perspective. Cobie…

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Filed under: News - @ October 29, 2024 6:24 am