Allocation in Crypto Trading and ICOs
Allocation is the allocation of shares or tokens that can be earned, bought or reserved for a specific team, group, investor, institution or other similar entity.
What is allocation?
Allocation is a term commonly used when managing cryptocurrency portfolios. For example, allocating a certain percentage of your portfolio to bitcoin and a mix of altcoins is considered a crypto-asset allocation.
When applied to the world of blockchain, to ensure the long-term profitability of the business model, crypto projects must decide on their token allocation and their budget, which usually includes marketing, software development and operating expenses. Many blockchain projects also have their own funds and treasuries, each of which is allocated a different token. It is also typical for blockchain firms to allocate a certain share of tokens to early team members with the caveat that they cannot sell them for a certain period. If the team has an organization or foundation in charge of money/funds, the team can set aside money in a treasury of tokens that can be used at the discretion of the team or community.
As a reward for their efforts, team members working on a particular currency, protocol, or project may receive a certain portion or amount of tokens to be distributed among team members prior to the sale. For example, this distribution can be staggered according to a set schedule, or given out at once on a certain day, such as at a token generation event (TGE).