What is Allocation?
Allocation is the distribution of tokens or ownership to a specific investor, team, group, organization, or other relevant entity that can be earned, acquired, or set aside.
For a crypto team in the early phases of development, the executive team or community may work on determining how token allocations should be divided up among various initiatives and departments, such as development, marketing, operating costs, and so on. If a team has a foundation or other body that controls funds, it may elect to create an allocation for a token treasury to be used how the team or community specifies.
Investors can also earn allocations in investment rounds. In a private sale round, for example, a team may sell allocations of a certain “ticket size,” or maximum amount, to early investors. In this situation, each of these individual investors would possess a portion of the total amount offered in that round of sales. An individual entity may be able to keep allocations from many rounds of sale, implying that they may eventually participate in successive stages of an Initial Coin Offering (ICO) or token sale event, with a predefined allocation for each stage.
As a reward for their efforts, team members working on a certain currency, protocol, or project may receive a portion of a team allocation. These allocations, for example, could be paid out all at once on a specific day – such as the date of a token generation event (TGE) – or spread out over time according to a preset timetable.
In other cases, the allocations are spread out over time as part of a block reward, or over a vesting term or cliff.
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