1: Justifying why your blockchain-based platform needs a token at all
Of all the questions that you eventually ask yourself before announcing a token sale, this is perhaps the most important one.
Token offering does not equal venture capital
Some people find themselves in a position where the project that they have worked on and developed is in dire need of capital to fund further progress. After some consideration, they usually decide that the best decision would be to attract a large number of individual investors though a token sale.
Although they fail to realize that using an ICO, as a means to only generate capital, is quite fallacious and guaranteed to fail at some point.
In a world where a great number of new blockchain-based entities are cropping up every day, it is important to understand the purpose of tokens before being consumed by the idea.
A token must have utility
The general rule of thumb to keep in mind is that tokens must have some purpose, some utility in your project. Without utility, there is no differentiating factor between what you’re offering and a stock. If investors wanted to purchase a small stake in companies, they’d probably be better suited doing so without cryptocurrency after all.
Your token must be demonstrated as an integral part of your project and should be used as a method of payment in your system once your vision is fully functional and live. One person, or a group of people, believing in the utility of the token is not sufficient. It is necessary to approach the topic from a wider perspective, from the point of view of the several thousands of people you want to participate in your token’s ICO.
Even if you are able to support your token with a future use case and utility, it is not guaranteed that people will be climbing over each other to purchase it during the sale period. For that, you need to convince potential investors, the general public and most importantly, the media that your ICO is not a blatant cash grab. If you fail in any of the above criteria, the cryptocurrency community will, in all likelihood, not respond too kindly to your token.
2: Assessing the target audience
As mentioned earlier, your goal with a token should not be to just obtain funding. Instead, think of the ICO sale as building a valuable customer base for your project.
That is not to say that prospective users are going to be the only people purchasing your token during the sale period. The cryptocurrency market allures a wide variety of people, including traders, manipulators and those looking to make a quick profit. You can’t really stop people from flipping the tokens they purchased for a lower price immediately after you manage to get it listed on an exchange.
It is prudent, however, to work towards finding legitimate users of your system. Users that will hold their tokens until your platform gives them some utility. After all, if you have ensured that your token has definite purpose, early investors will simply be the ones that manage to get in on your project earlier than the general public. They undertake the risk of purchasing tokens for several hundreds of dollars precisely because they believe that the platform you are building is going to be useful someday.
A word of warning though; attracting token investors that are primarily interested in your underlying system takes a lot of effort and requires that you actively listen to them. This handbook covers almost everything that you need to know, but even so, it is important to note that fact.
3: Finding the right blockchain protocol to use
Most tokens these days rely on the Ethereum blockchain. More specifically, the ERC20 token standard. At the time of writing this article, Etherscan estimates that there are 42230 ERC20 based tokens currently on the market. Tron, Binance’s BNB, Populous and OmiseGO are only some of the big name ones that have decided to use this standard.
Now, you may be tempted to ask, why use any such standard at all. The answer lies primarily in the fact that using a technical specification reduces a lot of the work required when designing your ICO’s smart contract.
The ERC20 standard, or really any specification for that matter, will handle the nuances of the usual token economics in a smart contract, including common tasks such as transferring tokens between addresses and managing the supply cap of your token as a whole.
Alternatives to the Ethereum blockchain’s token standard exist, of course. The NEO blockchain also offers the ability to build a token on top of. Qlink, for instance, had its token sale run through December 22, 2017 and was built using NEO’s NEP-5 token standard.
Quite obviously, the blockchain you select will also largely influence your choice of cryptocurrency to accept at the time of the token sale. If your project is propped up on the NEO blockchain, you have no choice but to accept it. That is not to say that you cannot offer tokens in exchange for bitcoin, US dollar or Ethereum, just that it makes sense to appeal to an audience that already favours the underlying NEO blockchain.
4: Making sure that you comply with all relevant securities laws
A significant number of ICO investors are known to reside in either South Korea, China and the United States. However, at least two of those countries are especially problematic to deal with when running a token sale.
The situation with China is relatively simple because the government has currently imposed a blanket ban on the entire ICO market. This began in September, 2017 when the Chinese authority announced that it would no longer permit domestic cryptocurrency exchanges to operate in addition to the ban. Few investors that continued to trade using foreign platforms in Japan and South Korea, are also under scrutiny as of the time of writing this article in February 2018.
Prior to the ICO and cryptocurrency ban, China was a major player in the market, accounting for over 90 percent of all trading activity. Now, however, that figure is under a percent.
All of this means that your token sale is unlikely to capture the interest of the country with the largest population. That said, the Chinese government is considering introducing tight regulation and lifting the ban in the future but there has been no official announcement confirming that yet.
The United States of America, on the other hand, has not gone the way of banning cryptocurrencies and instead, laid down some regulation for tokens and their sales. In the past year or so, SEC (the Securities and Exchange Commission) has exercised its jurisdiction over ICOs. In December 2017, the chairman of the agency also stated that all tokens will be classified as securities in the US. Only a month later, the SEC filed a cease and desist against Munchee on the second day of its ICO.
While SEC intervention may have been warranted in the case of Muchee and the other ICOs, some people believe that the compliance liability with the country’s laws far outweighs the potential returns from the region. Consequently, those ICOs do not serve residents of the US. They do this by redirecting American IP addresses and blacklisting their emails from newsletters.
Keeping your token sale open to investors from the US, however, makes more sense unless there is something fundamentally deceptive with what you’re offering. ICOs that promise to increase token value over time or allow investors to passive earn money by solely promoting the token are a big no-no, since they would be deemed as ponzi schemes or fraudulent by the SEC.
Making sure that your token economics, white paper and marketing material complies with laws and regulations is an important step and is discussed further on as well.
Depending on whose counsel you seek, you may receive a lot of conflicting opinions. At the end of the day, it is up to you whether to heed the counsel of many or take unprecedented risks yourself.
5: Ironing out major technical hurdles
An open source model
The platform that your token is designed for is going to have source code, quite obviously. Now that you are offering a product to investors, most of them consider it their prerogative to be able to understand your system. In addition to the white paper and media explanations that you offer, you may need to consider making your platform open source.
If you choose the closed source approach, potential investors will feel like they do not truly have a stake in what you are offering. Furthermore, since you withhold the ability to audit and run your code, they will need to trust every word you say. Most investors are simply not willing to do that, not without a good reason at least. Ask yourself, would you invest in someone’s idea solely based on the promises?
You need to demonstrate promise, dedication and transparency all at the same time, which is exactly where open source helps. Most successful blockchain projects today allow investors to investigate the code for themselves.
Location and taxation
Where your parent organization is based is important as it dictates several business-related factors, including taxation and local regulation. If you have decided to make your project open-source, you may also want to consider converting your company into a tax exempt one if it qualifies. Taxation is one of the primary reasons why a lot of blockchain oriented companies have set up their business in Zug, Switzerland.
If you need to pay taxes though, it goes without saying that you should consider hiring an accountant to manage your finances. Furthermore, since most of the money that you receive during an ICO will be in the form of Ethereum, bitcoin or some other cryptocurrency, understanding how you will be taxed is crucial.
Despite the value of the crypto in question wildly fluctuates throughout the year, your income will be computed at the end of the sale period or the date of settlement. In the eyes of the government, it does not matter whether the price of bitcoin tanked or soared after your ICO. The amount of money you received at the time it came into your possession matters. This, at least, is how the United States treats it.
Depending on which country your organization is based in, the taxation rules will differ. Again, an accountant will better assist with any tax consequences that may occur after your token’s ICO.
6: Communicating with your target audience
While most of what is covered in this section can be considered part of the marketing phase of your ICO, you need to have certain things ready to begin with at least.
Publishing a white paper
There is an unwritten rule in the ICO industry that every single new token must be supported by a white paper written by an experienced member of the development team.
A white paper is little more than documentation of what your platform and token is all about. There is no limit on how long or detailed it can be, especially as they can vary from ten pages all the way to a couple hundred. The sweet spot then, is perhaps somewhere in the middle. It makes no sense to make your product so convoluted that nobody will be interested in researching it at all.
The white paper must address critical aspects of your token, including what purpose it serves and how it will be used within your platform later on. Other nuances, such as the amount of tokens distributed during the ICO, supply cap and so on, should also be discussed in this document.
White papers are supposed to be technical pieces, so it is absolutely necessary to make sure that once it has been written, experts review and verify its contents. At the end of the day, every single bit of this document will be scrutinized by not only potential investors, but also the legal process, should your organization be hit by a lawsuit.
7: Establishing basic internet presence
Before actually announcing your token sale, you need a well designed and properly laid out website. After all, any investor interested in purchasing your token is going to expect to find this at the top of a Google search for your project.
Note that good design here does not necessary mean fancy animations and a copious amounts of color. It is entirely possible to build a very respectable ICO website without all of that.
The home page must offer some relevant information about your token sale, including where investors can purchase it and when. Other details can be hidden away behind a link, where your company’s business model, modus operandi and token economics can be explained.
Other than that, your website may have as many pages as you see fit. However, almost every blockchain oriented company tends to include a segment that contains details about the development team. In fact, including these details is yet another unwritten rule in the ICO industry, primarily because it lends credibility to the underlying project. Even if your blockchain system is being developed by less experienced developers, adding their credentials will do your company and by extension, your token, more good than harm.
While developing your website, you will also need to set up a one-way official communication channel with your investors. More investors than you probably think are interested in receiving a newsletter from time to time. Even though email is no longer the newest method of doing that, it is almost unanimously preferred for its formal and simplistic nature. As such, if you do choose to set one up, a subscription prompt should be displayed prominently on your website’s homepage.
8: Roping in experts and advisors
Even without dealing with the complex financial situation of tokens, your organization and project is susceptible to a host of legal ramifications from the moment you disclose a business model publicly. Once you add the aspect of dealing with large amounts of money, possibly in the millions, it is a good idea to prepare yourself for any legal trouble that may come your way.
Legal advisors will ensure that everything you do before, during and after the ICO is by the books. Before making any major decisions, it is always a good idea to seek their counsel.
Your project’s source code, depending on who wrote it, may be riddled with bugs and other vulnerabilities. If you’re converting a project in this state to the open source model and then attracting public attention to it, you can bet that there will be many malicious actors and hackers looking to exploit your code.
As such, there is little that can be done about bad code except hiring a bunch of talented individuals to comb through it from top to bottom. You might want to consider having them sign a non-disclosure agreement though, especially if you are paranoid about your code leaking ahead of time.
An important point to reiterate is that your project’s white paper also requires strict peer review and expert guidance.
As mentioned earlier, not all of your investors are going to be based in English speaking countries or even know the language at all. All documentation that you release will need to be localized in many different languages, including the white paper and website.
Hiring a translation service or crew is not a one-time occurrence. Once you have committed to attracting investors belonging to a certain user base, you can never really stop, no matter how insignificant that language demographic. All official notifications and statements will have to be made in the languages you started out with.
The cost of implementing such a translation workflow will easily reach into the thousands but as long as you’re certain that the prospective returns are far more, that should not be a concern to you.
9: Deciding the minimum and maximum market cap targets
The lower limit
This figure represents the minimum number of tokens that need to be sold in order for your project to get off the ground. Say, for instance, your project requires 10 million USD to be fully developed. Obviously then, you would not want to settle for lesser. And you shouldn’t, not even at $9.5 million. Even if you end up a mere five percent away from reaching the minimum target, it’s better than being forced to work on a shoestring budget.
While setting a realistic sale minimum is essential, the same can be said for asking at least how much you need. All too often, companies end up with far less funding than they require because they think they could manage their finances after the ICO.
If you think your project will probably have a small amount of leeway, that is fine as well. As long as all capital raised from the ICO goes towards the development process itself, there is no real cause for concern.
The upper limit
Let us assume for a second that the blockchain-based system you have developed is a complete runaway public success. People are throwing money hand over fist to purchase your token. Another question emerges at this point, how many tokens do you decide to sell during the ICO phase?
One one hand, if you sell too few tokens, a small fraction of the interested audience will be able to invest in your project. On the other, sell too many and you risk dealing with several problems, including loss of exclusivity among early investors and an inflated market cap without an actual working product.
If you think (and know) that the value of your company’s platform has a valuation of $20 million when fully developed, it is prudent to not exceed that figure by more than 10-20 percent.
Min-max delta: A sweet spot
All too often, companies set a vast gap between their minimum and maximum targets. If your threshold is anywhere close to 10 to 20 percent of the ceiling, you should probably stop yourself and question the huge delta. After all, it is one thing to get slightly more money than required and another to want ten times as much. Ask yourself and the team, will the platform actually realise the benefit of the additional money? If you don’t think it will and more importantly, if investors smell a blatant cash grab, they will perhaps view it as a warning sign.
A surplus amount of income also invites extra regulatory attention to your ICO, something that you will want to avoid as far as possible. If you bring in large swathes of money in a short time span, you can guarantee that the government will be interested, at least in taking a cut.
Setting no cap at all
Despite the concerns about regulation, you may proceed to not have any cap at all. This is not recommended for other several reasons too, including sending off a signal that you are greedy or do not have a clear budget in mind. Furthermore, the cryptocurrency space has mostly revolved around the concept of a supply maximum (for instance, bitcoin’s 21 million cap). Tossing in the uncertainty of an uncapped sale is not a move that cautious investors appreciate.
That said, several successful ICOs, including the Ethereum sale in late 2014, have gone the uncapped route only to come out relatively unscathed. The safer route, of course, is to treat such occurrences as mere one-offs and stick to the conventional capped token sale.
10: Setting a price point for every token sold
The price of each token during the sale period has a direct correlation with how many of them are being offered. This is because the product of the two figures results in the total market capitalization of your token, something that must be decided by the end of the previous section.
There are various approaches to pricing your token during the course of the public offering:
One strategy is to sell all tokens at a fixed price throughout the sale, no matter how much the demand or how long it has been since the start of the offering. Even if you decide to host multiple rounds of the sale that span several months, no investor will receive incentives for buying early. Typically, most ICOs decide to not go with this approach, as offering a bonus goes a long way to attract various types of investors.
This approach refers to selling tokens at different prices based on how long it has been since the start of the ICO. Ethereum’s offering, for instance, lasted 42 days in total and was initially priced at 2000 ETH per BTC for the first fortnight. The price followed a linear trend upwards thereafter, closing out at 1337 ETH for 1 BTC.
Investors that believe in your project and believe in the token’s utility will obviously make the jump initially, when the returns are guaranteed to be maximum. Token flippers will also attempt to jump onto the bandwagon, since they tend to chase the best bang for the buck possible.
As long as your project has a loyal following and demonstrable use, the initial flurry of investors is guaranteed to make your coin more popular, especially if a great number of people buy out the initial round within hours or minutes. Like other limited sales of this nature, a successful pre-sale and first round builds up investor momentum for the remainder of the sale duration.
It goes without saying, the price difference should not be too substantial. If you price a large segment of the market out, there is a higher likelihood that your token will be overrun by those looking to quickly profit from it.
11: Marketing, building a brand and token awareness
Without investors, your token’s ICO will obviously never be able to get off the ground. Building a customer base and putting your name out there is therefore one of the earliest steps that need to be undertaken soon after planning out your ICO. There have been many promising projects that have never received any funding whatsoever, simply because nobody knew of their existence.
There is, of course, another extreme to this point. Market too much, or do so in ways that people consider dubious, and you risk veering the cryptocurrency community away from your platform. Like most things related to the ICO, it is probably best to market in moderation.
The logo is yet another aspect many ICOs fail at. Besides the name of your platform, this is the first highlight that sticks in investors’ minds. While there is no need to spend several thousands of dollars on well made graphics, it is recommended to choose something that fits in with the overall theme of your business and is likely to be associated as such.
People need to know about your token through a source other than your own marketing and advertising. You can often offer monetary incentives to certain personalities on YouTube and other social media platforms to talk about your platform. Note that paying for honest coverage is fine and not frowned upon at all. However, the United States, at least, requires that such people to disclose the sponsorship and affiliation with the company.
12: Building hype, but within control
Let us address the elephant in the room before we move any further, that is, what the “within control” part refers to. As stated previously in this handbook, your advertising strategy should not be overdone to the extent that news of your ICO is plastered all over the internet. Doing so comes with the risk of driving away potential investors that would have otherwise preferred to organically find your platform through a means other than advertising. Those other methods are discussed under the next part, dealing with public relations.
In the same vein as advertising, it is essential to not hype your token (and platform) to a point where the cryptocurrency market just becomes immune to discussion of it.
The way to generate hype around your token is, quite surprisingly, to not hype it at all. Instead, you should talk about the underlying system it compliments. You are, after all, giving your token an intrinsic utility, correct?
A physical presence in your target markets and public talks are the best ways to do this – either at blockchain oriented symposiums or entrepreneurship events. These guest talks are sometimes recorded and uploaded online, so you aren’t exactly limited to the audience at the location.
In addition to that, if you have at least a small dedicated user following, hosting online webinars will allow you to display credibility and legitimacy for your platform. It also comes with the added bonus of being able to answer any questions that potential investors might have.
The way to go in the marketing sphere is most definitely to encourage a healthy coexistence of people that believe in your platform and those that sometimes criticize it. Not only will you gain valuable insight on your token directly from users, but also gain additional visibility online.
Apart from the usual and expected Facebook and Twitter crowd, a rather large segment of the cryptocurrency community thrives on Reddit and BitcoinTalk. Some other outliers exist but those two websites are home to, by far, the largest conglomeration of digital token investors out there.
Slack and Telegram also host many ICO related channels. However, the two platforms are discussion oriented and do not let users stumble upon your platform the way they would on other social media platforms. Once you have a user base though, they are considered invaluable and unrivaled, if only a little dangerous since scammers tend to look for their prey on such platforms.
It is important to note that managing several social networks is not going to be a feasible task for one or two people, and that is considering that they are even remotely skilled at doing such a job in the first place. It is not uncommon for large companies to allocate a large amount of their budget towards hiring dedicated personnel for the job. You should consider it too, especially since this sort of thing is best left in the hands of professionals.
13: Public relations
Considering that the financial future of your company rests almost entirely in the hands of your user base, it is perhaps deserving to give public relations a rather heavy emphasis.
In addition to hiring a dedicated crew to manage your social media accounts, maintaining a strong feedback loop with your community is quite advantageous. It will also potentially save your company from insolvency, since defamation of a company is quite an easy thing to do in the cryptocurrency sphere where rumors fly faster than facts.
14: Answering public questions through a FAQ
When you consider that your token is going to be made available in exchange for a large amount of money, it is only fair that investors will have plenty of questions related before participating in your ICO. Chief among these will be some rather basic ones, such as the cryptocurrencies you accept, price for each token, roadmap for the future.
Maintaining a Frequently Asked Questions (FAQ) section on your website and clearly pointing people in its direction will prevent you from receiving a literal truckload of emails from people simply looking to know the last day of the sale period.
Even though the title of the section represents otherwise, you should also include a few questions that would come up rather infrequently. As an example, to-be victims of a phishing scam would probably benefit from a page detailing official payment channels and wallet addresses.
Even long after the ICO, people might have a few recurring questions (“When will I receive my tokens in my Ethereum wallet?”). Having an official statement on the company’s website helps mitigate such problems.
The easiest way to learn best practices in this aspect is to visit the websites of other successful ICOs and observe how they address user questions, concerns, feedback and complaints.
15: Dealing with common ICO related scams
The cryptocurrency and digital token industry has been overrun by scams and phishing attacks since its inception. However, with ICOs starting to become more commonplace in 2017, the risk of investors inadvertently losing their money to a malicious action is arguably higher than it has ever been. It is in your best interests to prevent investors from being scammed. This is for two reasons, with the obvious one being that they will turn away from your ICO after losing their money.
Even though scams are quite easy to spot on the internet, you can not expect everyone to be able to avoid them. As a result, some basic preventative measures will need to be taken before announcing a token sale.
Just days prior to writing this handbook, it was reported that the Bee Token ICO was hit by a phishing scam that cumulatively cost several potential investors close to $1 million. Obviously, for the company, the worst part was the huge mess it had to clean up alongwith the damage control it needed to deploy on its customer service side.
Social media phishing
Whether you choose to build a social media presence or not (hint: you probably should), you are going to have to deal with scams that impersonate your brand and lure possible investors to send them money. Tweets of this nature are quite common, and are usually sent in reply to certain hashtags or mentions. The accounts used for these messages will often be authoritative looking, with the exception that they will swap an ‘o’ for a ‘0’ in hopes that nobody will notice. Sometimes though, they are correct in that assumption and fool someone into sending money
Such attacks affects your brand and ultimately, your company’s bottom line because the scams usually involve telling people that the ICO period has already started when it has not. They then encourage people to move money into a certain wallet in exchange for tokens in the future. The wallet in this scenario will, quite obviously, not be one belonging to your company, causing you to lose out on an investor.
Complex phishing attacks
Once your company and its token gains significant traction on social media and other websites, scammers will resort to creating an identical website to yours with misleading instructions directed at potential investors. Most of the time, the differences between the original website and fabricated one will be quite subtle, if at all. As an example, if you offer user account functionality, scammers can entice visitors to enter their credentials on their website, giving them valuable user data.
On the surface, leaked data may seem like an innocuous problem to have. However, if you handle the user’s email address and full name, scammers can obtain these details to send even more phishing scams their way. Personalized phishing attacks, of course, will almost always lead to monetary loss, which is a significant problem.
Even with the perceived legitimacy of a seemingly convincing website and email, a multi-pronged approach such as this one can only scam few investors, but inversely, net a lot more money. This was clearly demonstrated in the case of the Bee Token ICO referred to earlier where scammers sent out emails ending with the domain thebeetoken.com.
16: Deciding how to accept payment for tokens
Currency of choice
Again, as stated in the “finding the right blockchain protocol to use”, the choice of chain will influence the choice of your primary payment method quite heavily.
Say, for instance, that you have resolved to build your digital token based on the Ethereum blockchain, complying with the most common ERC20 standard. Doing so will result in all token related transactions to take place solely between Ethereum wallet holders, regardless of whether the user wants to or not. There simply is nothing other than an Ethereum wallet or private key that can hold a digital token of that nature.
Surprisingly though, an increasing number of ICOs these days are also accepting fiat as a payment method for digital tokens. The method of implementations differ, with some having a larger minimum buy amount for fiat as opposed to cryptocurrencies, but the existence of the choice in the first place is the point.
A point can perhaps be made that companies offering digital tokens in exchange for fiat are attempting to display some legitimacy to non-crypto investors.
Nevertheless, if feasible, fiat based payments do not pose any significant risk to speak of, only added challenge. It is worth noting that offering a digital token in exchange for fiat currencies is sometimes frowned upon within the cryptocurrency community. However, if you believe you can work with the few caveats it comes with, there is no reason not to do it.
ICO Platform of choice
Plenty of websites out there will offer the ability to host your ICO. At the end of the day, what you should be interested is in the platform’s feature set and the currency choices it offers.
Some ICOs are listed on multiple smaller platforms, rather than one large one. If the target audience of your token is in a non-English speaking country, using an alternative platform may not even be a choice for your token sale. It is unreasonable to expect foreign investors to use a portal only frequented by the Western countries, a rather small subset of the cryptocurrency world. A list of all relevant platforms can be found quite easily through an online search.
Almost all ICO platforms charge a commission, similar to the way Kickstarter handles its campaigns, there is simply no getting around that fact. There is the option of handling the ICO on the company’s own website as well, eliminating any middleman during the process. However, unless you’re a large company like Kodak hosting its own ICO, handling money through a recognized platform is sometimes perceived as an escrow by the general public, thus guaranteeing the safety of their money, at least until the end of the sale period.
17: The pre-sale
The pre-sale generally takes place a few days prior to the actual token sale. A smaller, different percentage of the total token supply is reserved solely for this period. Most pre-sales are conducted for two primary reasons. If you have an already existing customer base or know other individuals that you wish to give higher priority to, this period will give them a near guaranteed chance to participate as it will only be open to approved investors.
If you know your pre-sale is going to be hit by a few people that are going to buy out the entire cap, it may also be worth looking into giving them a bonus, for greater incentive.
Offering bonus tokens to early-bird investors
Investors that give you their money before the actual ICO begins are probably not going to do so unless they either see overwhelming potential in your platform or you offer them an economic advantage over the others.
As an example, during the pre-sale, you can offer five additional tokens for every hundred purchased.
The pre-sale is generally held only to gauge interest and help pay for expenses generated during the ICO period, including advertising and recruitment. However, early investors often sell their cheaply obtained tokens on exchanges, causing the value of your project to be in jeopardy. For both these reasons, it is important to not sell more than a couple percent of all tokens during this period.
18: The main token sale
Now that you have marketed and advertised your platform, the accompanying token, its utility and the ICO itself, you would assume that the token sale itself would not be a major customer service hassle. However, that is far from the case. Throughout the sale period, you may encounter investors that have, for example, sent their cryptocurrency to an unknown address claiming to be affiliated with you.
Public relations and customer support will have to be more attentive than ever, as widespread panic can quickly bring your ICO to a close, either due to legal trouble or lost investor faith.
Your actual sale period can be as little as a few hours long if you desire. However, not giving new investors sufficient time to study your token before they jump in is definitely not recommended. For this reason, the average length of all token sales is generally over a month.
It is up to you whether you wish to tier the ICO into different rounds, with variable pricing or fixed. Much like the pre-sale where bonus tokens are generally offered, if you choose to give out more tokens during the first round, you may see more investor interest in that time frame.
19: Leftover coins after the ICO
A large number of ICOs do not reach their funding cap and are thus, left with an excess number of coins at a certain market valuation. Assuming you find yourself in the same situation after the sale, you need to decide what will happen to the leftover tokens.
Several ICOs proceed to burn any unsold tokens, primarily because it puts the company in greater control of the limited supply. After all, if more tokens are in circulation than there should be, a negative correlation in price may be observed. Another viable strategy would be to freeze the excess coins until a specific date in the future, when you can re-release them to the market.
20: Listing on exchanges
Once you reach the point when your token is ready to be listed on an exchange, you will have to come to terms with the fact that you no longer have control over the economics of your token. The free market, or token traders, will then be responsible for the direction of the token’s price. If your project has sufficiently matured since the ICO period, the value of your token will almost certainly go up. The fluctuations in price should not matter to you though, especially since the cryptocurrency market tends to move in tandem with the larger entities such as bitcoin and Ethereum.
It is unlikely that the first exchange to list your coin will be one with a great deal of total trading volume. You will not only have to fill various application forms with exchanges that you want your token on, but also comply with their requirements. However, as long as you slowly make your way onto more and more exchanges, the problem of liquidity goes away and investors start gaining more and more confidence in your token’s potential.
If your token reaches critical mass and becomes a frequent topic of discussion on Reddit and BitcoinTalk, it is possible that larger exchanges will begin taking interest in your token as well. Binance, for example, is one of the largest cryptocurrency exchanges in the world and every few weeks, hosts a public vote for which token should be added to its trading platform.
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