@harris354
The “bad money drives out good money” effect occurs when token distribution disproportionately rewards speculators or participants with minimal engagement. This can lead to high turnover and instability, as committed users are crowded out or incentivized to sell. Proper mechanisms, such as staged vesting, merit-based allocations, and staking rewards, encourage long-term retention and active contribution. By carefully calibrating distribution, projects can ensure that high-quality participants—developers, creators, and loyal community members—maintain influence and ownership. This strengthens network stability, supports sustainable growth, and prevents speculative dynamics from overwhelming the ecosystem.
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