ICO (Initial Coin Offering) is changing the fund-raising scenario with its quickness and cost-effectiveness.
Aspects to Concentrate on Launch of Your ICO Token
- Fixing an amount as the ICO cap – Irrespective of the size and complexity of the project, a firm needs to collect a minimum amount of funds to begin operations. The company must also return the funds to the investors if it is not able to reach the minimum cap.
- Determining the maximum ICO cap – Once the minimum cap has been set, companies usually ponder about the maximum target. However, some firms would not prefer defining it. There is no point in receiving extra funds if they cannot re-invest it in their operations. Enterprises try to attract a huge number of investors by offering a lower price during the pre-sale stage. Sometimes, companies transfer the extra funds received during the Pre-sale to the ICO stage.
- Deciding the time and duration of the Pre-Sale – Pre-sale can be started anytime as it need not be coded in the smart contract. However, ICO needs a smart contract. The duration depends on the operational scope of the project. If the company is targeting a significant size of the audience, its marketing efforts need to be longer.
- Calculating the conversion rate – While building your ICO, fix the cost of a token. Since the prices of Ethereum can vary, funds can be raised in any other cryptocurrency or even in fiat currency such as the US Dollar or Euro. Apart from determining the token rate, investors can be attracted by offering bonuses depending on the time and amount of sold tokens.
- Formulate a policy regarding the return of investment – Generally, if the minimum cap is not reached by the end of the pre-sale, firms will return the invested Ethereum. There are some exceptions where firms have continued their ICO token sale indefinitely till they somehow reach the minimum cap.
- Decide on unsold tokens – In some situations, a firm will not be able to sell all the tokens that it has offered during ICO development. Most companies carry it forward to the next phase instead of rewarding the unsold tokens to their founder. Accordingly, changes will have to be made in the Smart Contract.
- Other factors affecting the Pre-Sale – Some companies who do not wish for frequent changes in their principal investors resort to a technique called lock-out, which does not allow the sale of tokens for a minimum period. If investors are allowed to freely enter and exit projects, they would get high returns by selling a part of their tokens. This might lead to a reduction in the final price of the Pre-Sale tokens which would ultimately weaken a firm’s financial position.
- The number of decimal points which the firm wants to track – A company can fix the number of decimal points it wants to track depending on their decision regarding the division of currency into smaller units. If the worth of an ICO token is so large, a firm would prefer to track a higher number of decimal points.
- Coining a name for the Cryptocurrency – A company must fix a catchy name for their currency. It can attract investors during the marketing process. A name is important as it discloses the identity of the firm and its offerings.
- Understand the market conditions – With volatility in the cryptocurrency market, banning of ICO’s by countries such as China and South Korea lowered the value of digital assets. Social media giants such as Facebook, Twitter, and Google have restricted cryptocurrency advertisements. These factors must be considered during ICO development.
- Focus on problem-solving – Rather than replicating what competitors have already been doing in the market, concentrate on giving solutions to real problems. This would garner more support from investors. The project must prove to be a game-changer in the industry by harnessing the power of blockchain technology.
- Comply with regulations – Follow the guidelines laid down by competent authorities for the KYC (Know Your Customer) process. Be aware that criminal proceeds can be filed if the tokens are sold to sanctioned individuals or entities. Follow the rules set in the Anti-Money Laundering laws too.
- Transparency in the Whitepaper – Disclose the project’s vision and the different stages involved clearly. Do not cut down expenses on your Whitepaper as it may backfire in the long run. The cost of preparing a Whitepaper depends on the qualification and experience of the technical writer, as well as the complexity of the ICO project.
- Develop an interactive website – Ensure that a user-friendly website is up and running. Hire a professional web developer and web designer. Have different sections disclosing all the aspects of your project. Make sure that the site loads fast and is SEO friendly. Fill the site with multimedia elements to make it visually attractive.
Consider all the above factors with due diligence during the process of ICO development. This will ensure a successful launch of your project.