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Some L1 protocols, such as #Bitcoin, rely on Proof-of-work (PoW) mining for network operation and security.
The creator of a PoW token can set a pre-mine. This means they can create a number of tokens immediately before PoW mining starts.
#tutorial #tokenomics #powmining
The creator of a PoW token can set a pre-mine. This means they can create a number of tokens immediately before PoW mining starts.
#tutorial #tokenomics #powmining
Back in the day, this was a standard procedure to ensure the creators could cash in at a later time when their token gained some traction.
If a pre-mine is too large compared to the total supply of the token, this was a strong indicator not to invest in the project.
The creators could dump large amounts of tokens on the market and the price would tank.
The creators could dump large amounts of tokens on the market and the price would tank.
