What is Token Allocation?

Token allocation is how a project distributes its total token supply among different stakeholders. It's typically presented as a pie chart showing percentages for team, investors, community, treasury, etc.Why it matters: Allocation reveals incentive alignment. If insiders (team + early investors) hold 60%+, retail investors may be exit liquidity. Healthy projects prioritize community allocation.Typical allocation categories:Team: Founders, employees (10-20% is reasonable)Investors: Seed, private, public rounds (15-25%)Community: Airdrops, rewards, farming (20-40%)Treasury: Development, partnerships (10-20%)Ecosystem: Grants, incentives (10-15%)Red flags: Team + investors > 40%, no community allocation, vague 'other' categories.Reading allocation charts: A healthy allocation typically reserves 30-40% for community incentives, 10-20% for the team with long vesting, and 15-25% for investors. When evaluating a chart, look at the combined insider percentage first. If founders and private investors together exceed 50%, the community has limited influence over supply. Watch for unlabeled categories like 'ecosystem' or 'strategic reserve' that may serve as hidden team wallets. Transparent projects publish wallet addresses for each allocation bucket so holdings can be verified on-chain.