Coins pre-mined a problem for index funds – Coindoo


A fund indexed by Morgan Creek Capital Management has decided to exclude any 30% pre-encryption due to the potential problems it poses. This means that cryptocurrencies like Ripple (XRP), Tron (TRX), Stellar (XLM) and NEO are also excluded.

Pre-mined cryptocurrencies are tokens that do not require mining blockchain. A premise is when a developer assigns a number of coins to a given address before making the source code available to the open community. This is presumably done to pay for certain characteristics such as stock exchange prices and the development of key features.

Regarding the reasoning of the currency exclusion fund, Cryptobriefing said the following:

"Morgan Creek Capital Management has more than $ 1.5 billion in assets, so its Digital Asset Management Fund is significant, as is the decision to exclude any cryptocurrency with more than a 30% premine.This is bad news for Ripple, which essentially pays all 100 billion XRP tokens.This is a problem for Morgan Creek . "

" Tron has adopted the same approach and awarded 100 billion TRX coins.It is said that the founder and CEO Justin Sun contains billions of coins, NEO has issued 100 million tokens at the same time. It will start and there will be no mining process, which is a simpler version of the same problem with regards to the digital index fund. "

Since there are so many crypts in circulation from projects ICO, can generate major problems for trades when they are listed, which results in huge fluctuations in prices that alter the markets. This type of "manipulation" can be avoided simply by leaving out premature projects. Moreover, the risk increases if we take into account the degree of control of these investors with respect to these tokens when it comes to "pump and dump" schemes

"It does not take a huge leap of logic to see that 62 billion of XRP or TRX coins that affect trade could massacre the price.While it might seem counterproductive for a company to sabotage its product, it could happen.If the coins are at historic highs and the main holders simply want to cash out, this could have a real impact on the price and on the progress of the currency.This type of landfill could also come from outside.The risk, for Morgan Creek analysts, clearly exceeds any potential reward. " = – declared Cryptobriefing.

Despite this exclusion, this will not be a major problem for XRP and other major currencies, but rather for those cryptographic projects that struggle to get awards and funding.

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