If you’re reading this article, chances are that you have a groundbreaking startup idea and are currently pondering the idea of launching an Initial Coin Offering (ICO). Ideally, you have already read our article on how to create your own Ethereum-based token. If not, we strongly recommend that you read that first, as it’s a quick piece that will provide helpful insights in this regard. Also keep in mind that this is just the beginning. We understand that the technical requirements behind the process of launching an ICO can be intimidating, but this is why we’re here to show you just how simple it can be.
Your startup does not have to be based on cryptocurrencies or the blockchain. However, raising money through an ICO means selling tokens. Our article on creating a smart contract covers the topic of which type of tokens you can have. For example, investors (and later the general public) could use them as a payment system for the services you offer. You can also sell a piece of your company through a token, or back it with a tradable good – whatever works for you. Should you decide to launch your own ICO, this guide is for you!
What do I need?
First, you need a plan. It’s important to assess what you want in terms of growth and price of the blockchain service according to the needs of your project and its future.
What percentage of your token goes to investors, creators, developers, network users, and others? Do you have a hard cap on the number of tokens that you are selling in the ICO? Are you offering bonuses during the ICO, such as “Buy 100 tokens, get 50 more?” Do you have a fixed price for your token?
[bctt tweet=”What percentage of your token goes to investors, creators, developers, network users, and others?”]
Making a list of these requirements and figuring out what works best for you is the first step that will make it clearer and more manageable. There’s no way to forget anything if you’ve written it down somewhere!
Tokenmetrics – How will potential investors see me?
You may have already encountered this word while researching ICOs. A methodology to evaluating tokens, it takes into account every little thing surrounding the token in question such as economics, the hype surrounding it, overall structure, risk factors, and token inflation, among several others. For a successful ICO, the more boxes it ticks, the better – a unique idea is not enough if the infrastructure surrounding it is deemed insecure.
The commonly employed rating methodology points to the various dimensions surrounding the token in question. In ICO economics, would-be investors evaluate your token sale hardcap, the percentage of tokens distributed to the public, whether or not you have a buyback program or something similar.
Qualitative metrics include ratings for your team, your transparency, use cases, and how reliable and professional your platform seems. People are more likely to trust projects that have clearly-defined goals. Hype metrics consist of what the people think of the project, from a Telegram community to whether or not you have a bounty or referral program.
[bctt tweet=”People are more likely to trust projects that have clearly-defined goals”]
Reading the linked list and figuring out how to meet as many standards as possible is your first job – your outline will be your guide afterwards.
Token and Contract – What are the technical needs?
After you’ve followed the instructions for creating tokens and figured out how you fit into the tokenmetrics standards, it’s time to get technical. Right now, you need a contribution wallet and an ICO contract. There are three ways to do this: custom coding, using a platform, or using CoinLaunch.co.
Custom coding is bound to give you the best results in terms of what you need. Every little thing is going to be exactly how you imagined it. However, if you are not a programmer you will need to hire one, and be prepared to pay because many charge more than $100 per hour. This is due to prices being inflated several times over, as this is a young industry and professionals are few and far between. Taking around two weeks, five days per week, for 8 hours a day, the price comes to around $8,000. This also does not take care of a contribution wallet by default – don’t forget to make one!
Using a platform like BlockStarter may be the logical choice for those without much technical knowledge. It offers features such as smart contract creation, promotions for your campaign, and investing into other projects. These features are paid for with ZBS tokens, created specifically for this, where 50 ETH will buy you 1,000 ZBS. Although the website does not cite any prices outright, the announcement for the platform mentioned that launching an ICO would go for around 100,000 ZBS – or 5,000 ETH. This includes creating a smart contract and raising funds, along with choosing between issuing tokens on the Ethereum or Waves platform. However, you may not need every one of these things, so being forced to pay for them anyway may not be in your best interest.
If you’re a beginner, CoinLaunch is your safest bet. Not only are the services free (they take a commission from funds raised), but the process is also simple and user-friendly – and you can create the token you need through them as well. Keep in mind that it also does not make a contribution wallet for you. The commission in question is dependent on the amount your ICO raises: between 1 and 500 ETH, they take 10% of everything, 500-1000 means 8%, 1,000-10,000 is 6%, and anything above 10,000, they keep 4%. The more you raise, the more you keep!
The Launch – How can I test everything before going live?
After you made the outline, a token, a contribution wallet, and finally the contract, the latter needs to be tested to see whether it’s working as anticipated and if anything needs to be changed. Of course, you don’t want it to go live immediately – which would cost you money – which is why you need to deploy it to the testnet first.
Testnets simulate the mainnet, which is the environment where your token will be traded. The mainnet is the original and main network for crypto transactions, where tokens have real value. Testnets, on the other hand, enable developers to upload and interact with smart contracts without really paying for anything. As the name suggests, it’s for testing purposes.
Since the deployment is considered more a part of the token creation than an ICO roll-out step, most ICO platforms (BlockStarter included) do not offer this as part of their services. Usually, if you’ve opted for a platform, it is presumed that you already have everything ready and only need a place to advertise yourself.
Again, deploying can be done through custom coding. If your token is ERC20 – based on Ethereum – then your programmer will most likely use existing testnets, such as the Rinkeby and Ropsten testnets. You can do it yourself, but if technical knowhow and/or finances are in the way, there is a catch-all solution.
What’s the cheapest and safest option for beginners?
CoinLaunch makes the whole process of launching an ICO easier. After creating your token on their Coincreator, you can deploy the ICO onto the testnet at the same time, having every step explained, from the installation of the MetaMask extension to everything you need to do. Don’t worry, the amount of things you really need to do here is the absolute minimum: you will send an (imaginary) amount of ETH from your own wallet to the contribution wallet to check if it works, and CoinLaunch will do the rest.
[bctt tweet=”If your technical knowhow is in the way, there is a catch-all solution to launch an ICO”]
Make sure you are absolutely satisfied with the specifications of your contract! Once you go live, you will not be able to change anything, including bug fixes. After all, it is a contract, and a smart one at that – immutability is its main selling point.
One important part of your ICO will be determining of bonuses, which act as incentives for your investors. For example, if a customer would pay for 100 tokens, they’d get another 50 free or get a 50% bonus, etc. CoinLaunch has a tab where you can determine the bonus amount in all phases of your ICO – so perhaps those who came earlier get more than any latecomers. It also takes care of the presale bonus should you decide to have one.
BlockStarter also has the option of setting your bonus amount through a certain period of the sale. Custom coding means that there will be a little bit more work – writing the code that will give an additional percentage of tokens to those who took part during a certain period is not a difficult feat.
Another important feature of your ICO will be vesting. In short, you need to have a clear stance on how and when the tokens will be made available to your investors as well as your developers (as this is an incentive for your developers to commit to the project and so your investors can’t just go and sell off your tokens, like a pump-and-dump scheme.) This is also important if you’re offering your tokens in markets that have holding requirements such as the US under their Regulation D exemptions for high network investors.
[bctt tweet=”KYC procedure is important for jurisdictions that require only verified buyers to participate in the ICO”]
In CoinLaunch, you will set the vesting duration, which is the amount of time over which the tokens will be distributed, and the vesting cliff, which is representative of when it starts – an X amount of hours after the date and time you set. There is no need to bother yourself with this anymore! The platform is, for all intents and purposes, doing your thinking for you. The platform also includes integrated KYC or “know your customer” capabilities that allow you to only accept payments from known buyers. It’s important for jurisdictions that require only verified buyers to participate in the ICO. Using CoinLaunch you can easily choose to include a “white list” of known wallet addresses as well as direct KYC service that will verify the identity of your buyers.
BlockStarter and custom coding offers the same option, although custom coding is a bit more time-consuming as opposed to entering the values in CoinLaunch.
Which one will it be?
In terms of price, custom coding is by far the most expensive option – but it is also the most flexible. It could be argued that using an ICO platform such as BlockStarter is something of a middle ground, as you’re really only getting an advertising platform for your ICO and a smart contract, all things considered.
Finally, CoinLaunch is the cheapest and safest option for beginners. Not only do you not pay anything beforehand – a feat in and of itself – you’re also being led step-by-step through this daunting and frankly exhausting process of getting people to invest in your project.
Whichever works best for you, go for it! Remember to check your local laws and regulations to have a clear idea of where you are and where you want to be after the ICO has ended. Aside from that, shoot for the stars!