Token distribution is a foundational element for every Web3 project. As the core of the ecosystem, tokens represent a new form of equity. They often carry governance rights, enabling community members to become key decision-makers for products, services, or protocols as co-owners of shared treasuries.
Since 2013, blockchain project founders have been deliberating on who should receive token allocations, how to maximize benefits, and what kind of value-added opportunities to provide for different holders.
In this analysis, we comprehensively examine the token distribution patterns of 60 projects (protocols), drawing data from GitHub and Medium posts dating back to 2013. Several significant trends have emerged.
Primary Trends in Token Distribution
Tokens are typically allocated to six main stakeholder groups:
- Community Treasury
- Core Team
- Private Investors
- Ecosystem Incentives
- Airdrops
- Public Sales
Community Treasury
The community treasury retains tokens for future governance. Treasury tokens are often viewed as the project’s “reserve pool,” distributed to various stakeholders through voting proposals.
Treasury allocations have fluctuated but generally increased. In 2016, the average allocation was around 20%, but by 2021, it had grown to over 40%.
Core Team
This portion is reserved for founders, current, and future employees. These tokens are subject to the longest lock-up periods and typically reflect the team’s equity in the token-issuing company.
Team allocations have also trended upward, rising from 5% in 2013 to approximately 20% in 2021.
Private Investors
These tokens are allocated to capital providers who purchased equity later converted to tokens or bought tokens directly. They are also subject to lock-up periods, usually aligned with the core team.
Private investor allocations have declined, dropping from 25% in 2013 to about 15% in 2021.
Ecosystem Incentives
These tokens are designated at launch for growth initiatives. Ecosystem incentives often allow users to earn from pre-defined token pools at launch. Incentives have become alternatives to public sales, including growth programs, liquidity mining, and yield farming.
Ecosystem incentive allocations have surged, increasing from 0% in 2016 to over 20% in 2021.
Airdrops
Airdrops reward past user value-added actions. These tokens are initially liquid and claimable based on pre-set distributions per address, designed by the core team.
Airdrops gained popularity in 2017 and peaked in 2018.
After a brief cooling period, airdrop allocations have risen again, growing from nearly 0% in 2019 to 15% in 2021.
Public Sales
Public sales involve tokens sold to the general public. These tokens are liquid at issuance.
Public sale allocations have plummeted, decreasing from 25% in 2013 to nearly 0% in 2021.
Token Allocation by Project Type
Different sectors tend to have distinct distribution patterns.
Layer 1 and Layer 2
L1 and L2 projects often allocate the largest portion of their token supply to early stakeholders and public sales.
These projects typically emerge from earlier cohorts, meaning they raised funds during periods when public sales were more prevalent.
DApps
For DApps, team allocations hover around 20%, while investor allocations are about 15%. A similar proportion is reserved for ecosystem incentives.
DAOs
DAOs contribute less to teams, averaging around 10%. The lowest allocation usually goes to investors, approximately 5%, while the largest share is dedicated to treasury and ecosystem incentives.
In 2021, a noticeable shift favored the community. Whether through airdrops, ecosystem incentives, or treasuries, DAOs drove this change.
Optimal Token Distribution Ratio
For teams planning token distributions in 2022, we recommend the following allocation ratios:
Note that teams and investors are allocated equal amounts, providing flexibility to allocate more tokens in either direction.
Reserving 50% for the treasury is common practice, though this percentage should adjust relative to airdrop or ecosystem incentive allocations.
0% is designated for public sales. In cases involving public sales, tokens should be drawn directly from the team, investor, and community treasury allocations, in that order.
Crucially, allocating 10% to ecosystem incentives for early profit opportunities is an excellent way to build a value-adding community.
Overall, this distribution serves as a rough benchmark for teams in 2022.
Key Takeaways
While Web3 continues to evolve, this bull market has altered dynamics for all participants.
- Investor allocations are decreasing.
- Team allocations are increasing.
- Airdrops have become a cornerstone of most distributions.
- Public sales have nearly vanished.
- DAOs have shifted majority ownership to community treasuries and ecosystem incentives.
A competitive investor market means teams are raising funds at higher valuations with reduced investor ownership. With over $30 billion in venture capital invested in crypto this year, founders currently hold the upper hand in negotiations.
Several years ago, founders reserved 5% for themselves and early teams. In 2021, founders set aside about 20%, aligning more closely with traditional venture capital models.
While investor ownership has decreased, they still average 15% of the total token supply, down from 25% in previous years.
We’ve observed a direct increase in tokens allocated to the community, particularly through airdrops. Airdrops have gained popularity and become a major turning point in any token launch today.
Amid regulatory constraints, public sales have been replaced by community treasury reserves and designated ecosystem incentives for value-added actions.
The most reasonable explanation is the surge in DAOs, which has sparked explosive interest among crypto natives and newcomers alike.
What’s Next?
As a token founder, it’s essential to recognize that these dynamics will shift with market conditions.
In bull markets, founders have the upper hand. In bear markets, investors dominate.
A common thread is the community. If there’s one constant, it’s that communities often receive over half of token distributions, even when allocations are governance-based.
The focus on contributors highlights those capable of capital allocation and operations, particularly in fund management and diversification.
Beyond direct governance, ownership is flowing to those creating meaningful value for the product, community, or protocol. Instead of optimizing for secondary market liquidity or fundraising, there’s a clear intent to place tokens directly in the hands of those consistently generating value for a given network.
As we move into the new year, we anticipate more distributions favoring active contributors over those merely providing capital.
While the data above isn’t exhaustive, we hope this report offers stronger conviction for project token distributions and signals key trends for industry participants.
Note: This report was published in January 2022 using publicly available information and aggregated, anonymized private data. The authors have not independently verified the accuracy of these distributions today.
Frequently Asked Questions
What is a community treasury in tokenomics?
A community treasury is a reserved pool of tokens managed through governance votes. It funds future initiatives, grants, and ecosystem development, ensuring long-term sustainability and community alignment.
Why have airdrops become more popular?
Airdrops reward early adopters and engage users without monetary investment. They bootstrap community growth and decentralize ownership, fostering loyalty and network participation.
How do ecosystem incentives differ from public sales?
Ecosystem incentives distribute tokens to users contributing value, like liquidity providers or content creators. Public sales sell tokens directly to the public, often with fewer strings attached. Incentives align long-term interests and reduce regulatory risks.
What trends are shaping token distribution in 2025?
Current trends include greater allocations to treasuries and ecosystem incentives, reduced investor shares, and emphasis on community-driven governance. Projects increasingly prioritize active contributors over passive investors.
How can teams balance investor and community allocations?
Teams can allocate equal portions to investors and the core team while reserving significant shares for the treasury and ecosystem incentives. This balance ensures investor returns while empowering the community.
Why are public sales declining?
Regulatory scrutiny and the rise of alternative distribution methods like airdrops and incentives have made public sales less attractive. Communities now prefer models that reward participation rather than mere capital investment.
For teams seeking to optimize their token distribution, explore more strategies and tools for designing sustainable economic models. Additionally, view real-time analytics to compare your allocation against industry benchmarks.