VC calls Ethereum killers 'toothless' based on token allocation to insiders

Adams was referring to a recent Messari report, which summarized the token distribution for some of the most popular Ethereum alternatives launched in the last couple of years.

There are four main distribution categories: public presale, community allocations, insiders, and each project's respective foundations.

"Ethereum found success because it made early investors wealthy. But it thrived because the pool of early contributors was considerably large."

"Rebalancing the ratio of insider to community network ownership post-launch is an uphill battle, one that can be more difficult for Proof-of-Stake networks since early stakeholders have a perpetual claim on seigniorage".

The report states that for instance, Placeholder Capital prefers projects where 20 to 30% of the token supply goes to a project's insiders.

Ways of ensuring that new crypto projects have a fair launch have been contentiously discussed for a long time.

The issue in this case is more about determining what type of distribution provides the best possible outcomes for a project.

A substantial allocation to insiders has an opportunity cost.

Insiders typically get their tokens either for free or at substantial discounts, which allows them to sell early, driving prices down.

This makes drawing meaningful conclusions difficult, and open to subjective interpretation.