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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
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.
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