Tokenomics: how much founder-benefitting premine would you accept?

[wheelz1200]

No premise at all.  There was a time back in 2013, 2014 when altcoins were made the first thing people would do is look at the premise, if there was anything even close to 1% it was shunned and nobody bought nor mined it.  For some reason, most likely greed, that level of scrutiny is not around anymore and premises are common place.  It facilitates scamming much easier.  Would never buy nor spend time on anything with a premine.

[d5000]

Recently I read an article about a related Tokenomics problem: Crypto Needs to Radically Rethink Token Distribution

The article is probably sponsored content, but the problem it describes is real: Many crypto projects launch with most of its value locked, releasing only a small part to the market in the initial stages. The low available supply at the start ensures a relatively high price (if the demand is there), and allows the "fully diluted value" (FDV) indicator to fastly reach high numbers. This is of course bad for the investors: the token will get diluted with time and eventually the price will very likely lower - and the incentives for the founders to stay active get lower and lower while their tokens unlock and they can sell them.

One can argue of course: Bitcoin did it exactly the same way! The supply was initially low, but then grow fastly.

Well, yes and no. Bitcoin (and LTC, XMR, Doge and other coins with the same model) had no premine, the coins are distributed in exchange for a kind of "work", the PoW of the miners. This is very different to the most common case where premined tokens are "locked" to a foundation for example, and then thrown on the market in relatively big chunks once they unlock. The incentives are radically different: the development has to be done either for free or sponsored by the ecosystem (e.g. miners, service providers like Blockstream ...), but this is true from the start on. If there is development 15 years later then it means the model works and it is sustainable.

In the case of premined coins, instead, once the founders are gone -- which is very likely once all their tokens are unlocked -- it is likely the project will be largely abandoned. The incentives for other actors to maintain the coin are very small. With one exception: The coin crashes so deep that another developer group buys it up and takes it over.

The "launch all coins at once" proposed in the Coindesk article has benefits for investors in heavily premined tokens, as long as the founders don't sell everything in the first months. So if I invested in a premined coin, I would prefer one where only a small part or nothing is locked. To gamble, one could risk some coins at the start if there are no red flags. But to invest seriously: Around 6 months later it becomes clear if the project is serious or not.

(no investment advice, this is only personal opinion as always )