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Crypto Terms:  Letter A
Jun 19, 2023 |
updated Apr 02, 2024

What is Allocation?

Allocation Meaning:
Allocation - the act of distributing equity or crypto assets that can be earned, bought, or reserved to a certain entity.
2 minutes

Let's find out Allocation meaning, definition in crypto, what is Allocation, and all other detailed facts.

Allocation is the process of proportionally allotting parts of cryptocurrency portfolio assets. The process can take place on a personal level, affecting an individual crypto portfolio when parts of it are distributed towards varying cryptocurrencies, or on a business level.

As part of the blockchain business model, crypto projects typically determine allocations of the token and the budget for aspects like marketing, software development, and operational costs. This helps ensure the long-term profitability of the project. Blockchain projects often set up their own treasuries and foundations with allocated tokens.

Team members who have early access to the project often have tokens allocated to them. These may come with conditions, like not being able to trade the tokens for a set period of time. In some cases, teams can manage a token treasury, from which the tokens can be allocated as they see fit.

Investors may have the opportunity to receive allocated tokens in several investment rounds. This is often beneficial to early investors, as initial investments may be rewarded with a larger token allocation. In such a scenario, the early investors would be allotted the total amount of tokens that were offered during that particular round of investing.

Tokens can also be allotted as team rewards for dedicated work on specific cryptocurrencies or protocols. In this case, tokens are granted prior to the sale launch.

In some instances, allocations may take place over a scheduled period. In others, the full amount can be allotted at a set time. The latter scenario is known as the token generation event (TGE).