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Today we are excited to announce our Token Distribution schedule, which will commence June 26th 2017 at 13:00 UTC.
 
## EOS Token Distribution Process

The EOS token distribution is run entirely on the Ethereum blockchain over a period of 341 days. A total of one billion (1,000,000,000) ERC-20 compatible tokens will be distributed during that time. Two hundred million (200,000,000) or 20% of the total number of EOS tokens will be distributed during the first 5 days and an additional seven hundred million (700,000,000) EOS tokens will be distributed in two million (2,000,000) increments every 23 hours thereafter. Lastly, one hundred million (100,000,000) or 10% of the total EOS tokens to be distributed will be reserved for block.one as the developer of the EOS.IO software and cannot be traded or transferred on the Ethereum network for the entire distribution period.
 
The EOS token distribution approximates an auction where everyone gets the same price and that price is equal to the highest price anyone is willing and able to pay within a given period. At the end of the 5 day period and at the end of each 23 hour period referred to above, the respective set number of EOS tokens set forth above will be distributed pro rata amongst all authorized purchasers, based on the total ether (“ETH”) contributed during those periods.
 
## Principles 

The structure for the EOS token distribution was created using the following set of logically consistent principles:
 
1. Nobody should get something for nothing 
2. Everyone should receive a market determined price
3. Everyone should have an equal opportunity to participate  
4. Developer incentives should be aligned 
5. Economic disincentives for buying more than 50 percent of a distribution 
6. Minimize transaction costs (mining, fees, etc.)
 
Let’s dive into each of these principles a little deeper.
 
### Something for Nothing 
 
In a free market, two people make a trade when both parties are satisfied that the trade is fair. If either side finds the trade “unfair” then the trade would not occur. If one side of the exchange provides nothing then it is considered a hand out or free lunch.  Unfortunately, there is no such thing as a real free lunch. Someone has to pay for that lunch which means for everyone who gets something for nothing, someone else gets nothing for something.
 
When token distributions attempt to simultaneously sell 90 percent of the tokens at a price below market value, someone is getting something for nothing and someone else is getting nothing for something. A token distribution that is truly fair is one that enables the market to determine the price, ensuring that parties on both sides of the transaction are content with their trade. This also minimizes the potential for extreme losses to the buyer and extreme opportunity cost to the seller. 
 
### Market Prices
 
Unfortunately, it is impossible to guess a cryptographic token’s market price. It can only be discovered with reasonable trade volumes on a public market. These markets can take the form of exchanges or auctions so long as they are public, transparent and open to many. Furthermore, even if the price could be accurately determined at the beginning of a token offering, it could change the very next day.
 
A market price for something is a balance between supply and demand and falls between the price no one is willing to sell at and the price no-one else is willing to pay.  In effect, the market price is a unanimous market consensus as demonstrated by the spread of disagreement among all buyers and all sellers. 
 
### Equal Opportunity to Participate
 
Giving everyone ample time and opportunity to participate means utilizing a widely used platform and allowing sufficient time for people to learn about the project. 
 
A token distribution structure should show minimal bias for or against those with time, money, or technical skills.  For example, mining favors those with technical skills, time, and money while capped distributions favor those with money and technical skills to automate a fast order. 
 
### Developer Aligned Incentives
 
When you support a community, you want everyone to have aligned interests. This is true regardless of the nature of your participation - whether it be by building an app, purchasing a service, investing directly in a business or by purchasing a cryptographic token. 
 
A developer who sells 100 percent of tokens at the very start of a project does so at the lowest possible value and then has “no skin in the game” to motivate him/her to continue to add value or add value in a timely manner.  A developer who commits to selling 90% of the tokens over the course of almost a year has  incentive to make as much progress as possible as early as possible. It also allows token holders or potential token holders to see the software being developed over time. The remaining 10% of the tokens keeps the developer aligned for the long-term.
 
By distributing tokens over a long period of time developers have extra alignment of incentives develop quickly and complete as early as possible because the market is watching.
 
### Economic Disincentives for Buying 50% or More
 
Cryptographic tokens have the most value when they are held by a wide range of people who support the growth and use of the blockchain. If the majority of tokens are held by a single person or entity and the tokens are not well distributed, this leads to centralization risks.
 
Token sales with fixed prices and/or caps quickly sell out generally to a small number of (usually wealthy) speculators and leave little room for anyone else. 
 
It takes time and competition to encourage wide distribution. Furthermore, the EOS token distribution makes it cost prohibitive for any one individual to buy the majority of the tokens.  
 
### Let’s see how this works.
 
If we assume that everyone but one rich guy contributes a combined $1 million dollars, the rich guy would have to contribute $99 million dollars to acquire 99% when he could acquire 50% for $1 million dollars, 66% for $2 million, 75% for $3 million, etc.  In other words, buying the second 49% costs 99x as much as it cost to buy the first 50%. 
 
The EOS token distribution structure has been devised so that the more small contributors there are, the more expensive it gets for any individual or entity to acquire the majority of the tokens. 
 
### Minimize Transaction Costs 
 
The original crypto currencies were distributed using proof of work or by mining, which represents a large economic loss in electricity consumption. More recent token sales experience losses in the high fees people will pay to be first.  These economic losses can cause a potential loss of value in the cryptographic token for both the buyer and the seller. 
 
EOS tokens have no pre-determined price; rather price is set by market demand. This mimics mining without using electricity.
 
## Conclusion 
 
These principles are in stark contrast to the expectation that token distributions be capped at a valuation based upon the expected cost of development. Valuation capped distributions force below market pricing based upon the economic fallacy of the [“Cost Theory of Value”](https://mises.org/library/problems-cost-theory-value). This below market pricing causes a race where the first buyer gets something for nothing when they flip the tokens at market prices all while giving advantages to those who can buy large quantities all at once. 
 
The EOS Token distribution has been designed to hopefully create a distribution that is widely perceived to be fair based upon what we believe to be logically consistent principles. 
 
 
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We would also like to thank @rubenalexander for providing the art derived from the shapes in our logo!