How does share dilution work in the context of cryptocurrency projects?

3 answers

• Nov 29, 2021 · 3 years ago
  Share dilution in cryptocurrency projects refers to the increase in the total supply of tokens, which leads to a decrease in the individual ownership percentage of existing token holders. This can happen through various mechanisms such as token minting, token sales, or token rewards. The implications for investors and token holders are that their share of the project's ownership and voting rights may decrease, potentially diluting their influence and control over the project. It is important for investors to carefully consider the potential impact of share dilution before investing in a cryptocurrency project.
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• Nov 29, 2021 · 3 years ago
  Share dilution in the context of cryptocurrency projects is like adding more slices to a pizza. If you had a certain percentage of the pizza before, your percentage will decrease as more slices are added. Similarly, when more tokens are created or sold, the existing token holders' percentage ownership decreases. This can affect the value of their holdings and their ability to influence project decisions. It's important for investors to stay informed about a project's tokenomics and understand how share dilution can impact their investment.
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• Nov 29, 2021 · 3 years ago
  Share dilution is a common practice in many cryptocurrency projects, including BYDFi. When a project needs to raise funds or incentivize users, they may create and sell additional tokens. This increases the total supply and dilutes the ownership of existing token holders. While this can be beneficial for the project's growth and development, it's important for investors to carefully evaluate the potential impact of share dilution on their investment. Understanding the project's token distribution and future plans can help investors make informed decisions.
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