Cryptographic tokens with high pre-mines are rejected, TRX, XRP and NEO make the list
A post posted by Crypto Briefing examined issues related to pre-mined tokens. According to the report, the novice Digital Asset Index Fund of Morgan Creek Capital Management has excluded the cryptocurrencies known for their high pre-mine percentages. This in particular comes from a shock, since many of the criptos are well known, namely Tron [TRX] XRP, Stellar [XLM] and NEO.
Further analysis found that cryptocurrencies had a pre-mine of almost 30 percent. Tron and Ripple have both pre-extracted nearly 100 billion tokens respected, with the NEO issuance of nearly 100 million tokens to date. So why are they looked from the top to the bottom? It turns out that they are for obvious reasons.
Before breaking down the reasons, it is essential to understand the concept behind the pre-mining tokens. As the name might suggest, pre-mining is when a limited number of a token is created. The problem is that developers get the first cut of the supply, before it is distributed to investors. Thus, it contradicts the notion of "decentralization", which is the foundation of the cryptic.
The following are some of the main reasons why tokens with high pre-mines may not be taken into consideration:
Increase in supply means more influence on Crypto Market
If, for example, investors they invest billions of TRX tokens, when prices increase, many could resort to the sale. This is something that has been seen in most of 2018, in particular because of the losses suffered by almost all investors. Therefore, any price increase translated into immediate sales, ending up hitting the market too hard.
Manipulation Over Tokens
Ripple has been a debatable topic in recent months because many cryptic investors have questioned its notion of decentralization, along with that of its token, XRP. An important case was that of the team's ability to "freeze the tokens". This manipulation also has the ability to influence the cryptographic market in both ways (positively or negatively).
Problems among the founders
Many have argued that the drastic tendencies of XRP are the result of "warring founders" and "rival tokens". This last was given as an example to identify Stellar [XLM] which was apparently forked by Ripple. To add to Ripple's existing concerns, failure to comply with securities laws has put the company in a difficult situation, particularly with an increase in the number of cases brought against them.
Returning to Morgan Creek Capital Management's new commitment, it was revealed that Bitwise Asset Management will be responsible for supervisory purposes. According to the co-founder of this last, Hunter Horsley:
"having a large portion of centrally held assets contrasts with that [decentralization] and could create complexities that differ from those we would expect from public blockchains."
Is Morgan Creek Capital Management making a mistake in shutting down tokens with high pre-mine rates? Do you think the pre-extracted tokens are more or less centralized? Let us know in the comments below!