Post
Topic
Board Altcoin Discussion
Merits 1 from 1 user
Re: Why most premined coins (>90% of all altcoins) will eventually fail
by
d5000
on 09/07/2023, 20:28:05 UTC
⭐ Merited by icopress (1)
I subscribe to the idea of having all the tokens released at launch and maybe include a tax system that will be used to fund the project, I believe with time what you describe happens to most of these Altcoins, Ethereum and XRP too will face it, Ethereum Foundation allocated alot of Ethereum to themselves like wise BNB and XRP, in the next five year if the price of these tokens stopped increasing they will likely suffer thesame fate as the remaining Altcoins.
The "developer tax" (a mandatory fee which is either taken from transaction fees or from block rewards, and goes to the developers) you mention is implemented in various altcoins already, also in some which were initially not premined (for example PIVX).

Such a developer tax, if it's mandatory, can however lead to problems which impact in the competitive situation:

- If it's taken from transaction fees, then adoption can be harmed, because the coin would then be more expensive to transact than competitors.
- If it's taken from block rewards, then it's simply additional inflation, which does not bring more security (like increased mining or staking rewards would do) but only dilutes the coin supply.

There are however also models which don't have these problems. For example, in Signum (originally Burst), some big pools agreed to pay regularly a small fee to fund development activities and nodes which are always online. As this is completely voluntary, it's similar to a donation and thus does not impact decentralization at all. If problems for the competitive situation arise, the "tax" can simply be reduced or eliminated completely.