premining

Premining, also known as premine, is the practice of allocating a portion of a cryptocurrency’s initial supply to specific addresses or entities before the token is widely distributed to the public or mined. This allocation is typically handled in the genesis block or during an early issuance phase and may be accompanied by vesting schedules or conditions for unlocking.

Implementation can take several forms. A project might reserve a development fund or founder’s wallet that is funded at launch, or allocate a certain share of tokens to a foundation or team. In some cases, the premine is complemented by a governance mechanism that gradually releases additional tokens from a reserve. Whitepapers, economic models, and roadmap documents usually describe the premine terms, including what portion is reserved and under what conditions it becomes available.

Purposes cited for premine include funding ongoing development, paying for security and infrastructure, supporting marketing and ecosystem initiatives, and aligning incentives among founders, early investors, and the project’s long-term goals. Proponents argue that a funded reserve can stabilize a network’s early growth and enable rapid iteration.

Criticism centers on centralization and fairness. Premine can concentrate economic power in a small group, raise concerns about control over network decisions, and undermine trust in a truly decentralized, fair-launch protocol. Regulatory scrutiny may also apply, particularly if premine arrangements resemble securities offerings or raise investor protection issues. Some projects strive for “fair launches” with no premine, or implement highly transparent, time-locked allocations to mitigate concerns about governance and accountability.