Pre-Mine

Pre-mining happens when a cryptocurrency's creators generate coins or tokens on the network before it opens to public mining, staking, or trading, so the supply already exists and sits in specific wallets on day one rather than emerging gradually through the protocol's normal issuance process.

The practice sits opposite a "fair launch," where nobody holds tokens ahead of the public and everyone competes for coins under the same rules from the first block. Bitcoin is the reference example of a fair launch: its entire supply has always been earned through mining, with nothing set aside for its creator in advance. Ethereum, by contrast, pre-mined roughly 72 million ETH, distributed to contributors of its 2014 initial coin offering and to the Ethereum Foundation before the mainnet went live. Ripple's XRP went further still: all 100 billion XRP were created at launch in 2012, with large portions retained by the company and its founders rather than released through mining at all.

Projects usually justify pre-mines as a way to fund ongoing development, compensate the founding team, or reward early backers ahead of a public token sale. The main risk is concentration: if insiders hold a large, undisclosed share of supply, they can sell in ways that move the market against retail buyers. Reputable projects manage this with published lockup or vesting schedules, on-chain proof of allocations, and clear disclosure in their tokenomics documentation, letting investors judge how much of the circulating supply insiders actually control.