Who gets tokens? Unpacking DeFi distribution models

Token distribution and rewards drive incentives, engagement and long-term stability in DeFi.

In DeFi, token distribution - also called token allocation - is a fundamental part of a protocol’s design. It determines who receives the project’s native governance or utility token, how many they receive and on what schedule. Well-designed distribution can help bootstrap liquidity, attract users, fund development, align incentives and gradually decentralize control.

By 2026, DeFi tokenomics patterns have matured compared with the early “liquidity wars”: projects tend to balance community incentives, team commitments and investor support while protecting token value over the long term.

Who typically gets tokens?

Most DeFi protocols divide their token supply among a small number of recurring stakeholder groups. While exact percentages vary by protocol type (DEXes, lending markets, staking or restaking platforms), the same categories appear across most designs.

Community / users / liquidity providers

This category typically receives one of the largest allocations, often 30-50% of total supply, and in some cases more for fair-launch or emission-driven protocols. Tokens are distributed to users who provide liquidity, stake assets, borrow or lend, validate the network or otherwise participate in the protocol. These incentives help bootstrap liquidity, encourage adoption and sustain decentralized usage over time.

Team / founders / advisors

Protocol teams and early contributors commonly receive 10-25% of the total token supply. These allocations are usually subject to multi-year vesting schedules and cliffs to align long-term incentives and reduce short-term sell pressure. Well-designed vesting ensures that founders benefit primarily from durable protocol growth.

Investors / early backers

Tokens allocated to private investors, venture funds or strategic partners often fall in the 10-30% range, depending on the number and size of funding rounds. These allocations provide early capital for development, audits, liquidity provisioning and ecosystem expansion, and are typically locked or vested over time.

Ecosystem / treasury / DAO

Many protocols reserve 10-30% of supply for a DAO-controlled treasury or ecosystem fund. These tokens are used for grants, partnerships, future development, governance initiatives and long-term strategic objectives. In some designs, treasury funds and community incentives overlap, with token emissions managed directly through on-chain governance.

Other allocations

Smaller portions of the supply may be allocated to partnerships, liquidity support, insurance or reserve funds or specific token-economic mechanisms such as buybacks or burns. These allocations reflect protocol-specific goals around sustainability, risk management, and incentive design.

Most common DeFi token distribution models

As DeFi has matured, token distribution designs have evolved beyond purely high-emission yield farming. Today’s protocols emphasize sustainability, long-term participation and incentive alignment. Below are the dominant distribution models in active use.

Liquidity mining / yield farming

This model rewards users for supplying liquidity (e.g., to decentralized exchanges) or participating in lending markets. While it was central to early DeFi growth, it remains an effective way to bootstrap TVL and engagement when carefully designed. Modern implementations typically refine emission schedules using caps, decay curves or duration-based incentives to reduce inflationary pressure and favor long-term providers.

How it works: Users earn tokens proportionate to their contribution. More liquidity, longer duration or higher-quality participation generally leads to higher rewards.

Airdrops (retroactive / points-based)

Airdrops distribute tokens to users based on prior or ongoing participation. Retroactive airdrops reward early adopters for contributions made before a token launch, helping decentralize ownership and build community trust. Increasingly, protocols use points-based systems to delay token issuance while measuring meaningful engagement.

How it works: Users accumulate points based on usage, activity or contributions, which may later convert into tokens or governance rights once the program launches.

Staking / restaking rewards

Tokens are emitted to participants who stake assets for security, yield, governance or incentive alignment. In liquid staking and restaking systems, users lock tokens while retaining liquidity through derivative assets. Many protocols incorporate vote-escrow or lockup-based mechanisms that increase rewards or governance power for longer commitments.

How it works: Locking tokens for longer durations increases reward rates and/or voting influence, encouraging long-term engagement.

Vesting with linear or cliff schedules

To limit immediate selling pressure and align incentives over time, tokens allocated to teams, advisors and in some cases community incentives typically vest over extended periods. Common designs include multi-year linear vesting, often preceded by a cliff (e.g., 6-12 months before any tokens unlock).

This approach ties rewards to sustained contribution and discourages short-term extraction.

Governance and value capture mechanisms

Governance tokens grant holders the ability to vote on protocol parameters, including upgrades, incentive structures and treasury usage. Some protocols also introduce indirect value-capture mechanisms such as fee switches, token buybacks or burns, linking governance participation with economic outcomes while avoiding excessive inflation.

Hybrid and emerging models

As tokenomics continues to evolve, many protocols blend multiple approaches:

• Points-to-Token systems: Users earn points that may convert into tokens later, reducing early sell pressure and encouraging sustained activity.
• Restaking and dual utility tokens: Tokens serve both governance and security or yield-related roles.
• DAO-driven allocations: Community governance determines future emissions, treasury usage and reward strategies over time.

Key trends in DeFi tokenomics 

By 2026, tokenomics in DeFi has shifted toward sustainability, long-term alignment and real-world value capture. Several clear trends have emerged:

 Measured incentives over high-emission farming

Definition: Instead of offering massive, short-term token rewards, protocols now emphasize controlled emissions linked to usage, revenue or long-term participation.

Why it matters: This reduces inflationary pressure, protects token value and encourages more sustainable growth.

Rewarding long-term participants

Definition: Mechanisms like locking tokens or vote-escrow systems give more rewards or governance power to users who commit their tokens for extended periods.

Why it matters: Long-term alignment discourages quick “pump-and-dump” behavior and builds a stable, engaged community.

Significant community allocations

Definition: Projects increasingly dedicate meaningful portions of token supply to community participation, early users and ecosystem contributors.

Why it matters: Broad allocations help decentralize ownership, improve engagement and create a sense of shared stake in the protocol’s success.

Greater scrutiny of tokenomic design

Definition: Tokenomics is no longer an afterthought. Market participants, auditors and communities closely examine allocation, vesting and emission schedules.

Why it matters: Poorly designed distributions can lead to price volatility, governance conflicts and loss of community trust. Thoughtful design strengthens credibility and long-term sustainability.

Balance is key

The most effective token distribution strategies balance decentralization, long-term incentives, funding needs and sustainable growth. There’s no one-size-fits-all model, but understanding these trends helps both builders and participants set realistic expectations and evaluate tokenomics thoughtfully.

Stay tuned for upcoming guides designed to shed light on how DeFi works!