Rockchain provides extensive advice on strategic planning of a Token Sale, often called Token Generation Event (TGE) or Initial Coin Offering (ICO).
We work as an ‘extension to your management team’ in an advisory role - offering you specialist skills and experience relevant to the project and extra bandwidth towards an efficient delivery and successful outcome.
For a Token Sale, a variety of services need to be provided and coordinated and we knit together a ‘best-in-class’ team of providers which we believe best suits your project.
Projects vary and we may connect with you at different stages, so we prefer to understand more about your project before we confirm the scope of services we can offer.Tell us more
A Token Sale (usually unhelpfully referred to as an Initial Coin Offering or ICO) is, to date, an unregulated sale of digital assets that represent the potential value of an early-stage project or concept.
A Token sale is a crowdfunding event, whereby investors receive cryptographic Tokens in exchange for their contribution. These tokens are supposed to be used as a currency or other form of utility once the project has been completed. Token sales have been used to fund a wide variety of use-cases and projects raising billions of dollars in 2017 overtaking venture capital investment in blockchain project.
That has been the perception for many in the last phase of the crypto economy. We believe that this phase is coming to an end and we see the following trends: much higher standards are required in terms of transparency, feasibility and compliance with existing and evolving laws and regulation; stronger emphasis required for a clear use-case of blockchain technology and the rationale for the new coin or token; clearer evidence of the team’s ability to execute its vision. In short - Token Sales are ‘growing up’. It’s no longer viable to write a whitepaper, attach some names and launch and expect investors to fund your project and your target community and early adopters to contribute to your development.
Token Sales (or Initial Coin Offerings, ICOs) have become a key way to fund early stage projects that typically have a use-case based on the blockchain or other distributed ledger technology. It is a crowdfunding event (typically a one-off or also with further sales planned) in which a new cryptocurrency asset - a Token or Coin - is sold to supporters of the project, early adopters and enthusiasts in exchange for money or value today. The fundraise is normally in Bitcoin (BTC) or Ether (ETH) however it may also depend on which blockchain the sale is supported by (NEO, Stellar, Waves etc.) The funds raised are typically assigned to development and other operational costs related to the functions, products and services described in the whitepaper and accompanying roadmap. Token Sales often involve both private sale and public sale phases. The Token Sale may specify a minimum amount that the project needs to raise in order to deliver it’s roadmap (or sometimes a specified portion of the roadmap at different funding levels) and/or there may be a ‘soft cap’ (but this term is not always used ) and/or a maximum amount of capital required (referred to as a hard cap) after which the fundraising will close and excess funds will be returned to senders. Some Token Sales are uncapped. Also relevant are token supplies and emission schedules and more. There are several permutations and we can advise you on these and what may suit your project best.
In order to secure a successful Token Sale, there are multiple services that projects need at different stages.
In this stage, you will need an advisory service to help you decide if a Token Sale is right for your project and to help determine the strongest proposition and structure (your ‘story’ or narrative, the problems you are solving, your use of blockchain technology, the role and functionality of the token, the Tokenomics and who your target community is. Building a blockchain application can be a very complex process compared to building a website or a mobile app, and many applications do not really need to issue a new token or make sense as a Token Sale. Once you have decided that a Token Sale is the right approach for your project and that you have a compelling proposition, you will need legal advice to decide on the best jurisdiction to establish your operations, set up your corporate entity, and make sure that you understand and can comply with all the regulatory and compliance requirements with respect to the Token Sale but also to the activity that your project or company wants to undertake. Also, you might need help with the content of your website, preparing and peer-reviewing your whitepaper, setting up your social media accounts, and creating your marketing material. A well-prepared and well communicated Token Sale costs money and you may need to invest or raise pre Token Sale funds to support this process.
In order to promote your Token Sale, you need a sound team to lead the marketing and PR efforts, including spreading the word about your project and managing the community around it. You will also require to work with an external firm to run the KYC/AML processes on the participants of the Token Sale to minimise the risk of potential hacks and other types of theft. This is one of the advantages of a GBX listing as the investors will be whitelisted through their platform. Lastly, if you want to provide liquidity to your investors, you will need an advisor/sponsor to help you list your token on one or more recognised exchanges.
Completing a successful Token Sale is just the beginning of the journey, and you now have to deliver. In this stage, you need to be extremely careful with how you manage the funds that you have just raised, and having an external advisor with experience in this field can be particularly helpful. Moreover, you need to stay in continuous communication with the different stakeholders, including token investors, the exchanges where your token is listed, and the all the relevant regulators. To do this, you could work with different companies specialised in managing these relationships, so you can focus on delivering your solution to the community.
You will also benefit from marketing making services to help keep your Token buoyant during the often volatile months that follow a Token Sale.
This is a very important question and the design and legal classification of your token is critical to your project. Security tokens are designed to be or act like the company’s share and may have economic rights and benefits attached (share of profits etc.) or otherwise participate in the financial participation of the issuer; while utility tokens represent access to company’s product or service and have solely a practical use (access, value exchange, currency, governance, gas or other function). Utility tokens are typically exempted from regulation and security laws. Tokens that are deemed securities will have to comply with the applicable laws based on where the token is issued and to whom it is marketed or offered. This requires regulatory analysis early in the design of your Token Sale and because it varies between jurisdictions, this may affect where you can sell your Token or allow it to be made available. The consequences of non-compliance can be severe. Many tokens are hybrids and many token sales to date have been non-compliant.
The tokens can be bought for the first time on Primary market platforms, and after that traded peer to peer with the help of decentralized exchanges, or on a centralized exchange, that first needs to approve the Token for listing.