A “pre-mine” is the extraction of a certain portion of a Proof-of-work crypto assets total supply prior to the public launching of the network.
As in the name may hint, Pre-mine’s apply exclusively to PoW projects, because the crypto-assets are extracted though the process of mining. The assets that are extracted are typically dealt with in two ways:
1). Distributed across the founding team members as an incentive/reward.
2). Put aside for public bounties and incentive campaigns.
example:
Project ZEED is a PoW network with a predefined maximum supply of 100,000,000 tokens that will be extracted over the course of 20 years. At launch the team behind it pre-mines 5% or 5,000,000 tokens. That means that once the network is public, it will begin counting the circulating supply and issuing from token number 5,000,001. The first 5,000,000 tokens will be allocated to social media campaigns and incentive for developers to join the project.