@feliciana

“Bad money drives out good money” occurs when poorly incentivized token allocations dominate circulation, causing committed participants to hold back or exit. This effect can arise if early or large holders liquidate tokens quickly, leaving long-term contributors with reduced influence and value. To counteract this, projects may implement vesting, tiered rewards, or merit-based distributions that reward active engagement rather than passive accumulation. Ensuring a balanced mix of recipients, aligned with ecosystem goals, helps preserve utility, liquidity, and participation. By carefully managing token distribution, projects maintain fairness, reduce speculative dominance, and create an environment where active, committed participants drive growth instead of opportunistic behavior.

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