Since we published our guide to create your own ERC223 token & launch your ICO on Ethereum Classic, we have witnessed the birth of multiple new cryptocurrency projects being launched - BCT, XMRT, ONEX, NTRO & ASTRAL to name a few. It has been incredible to see Saturn's API & Saturn's toolkit being put to the test, coming out strong & helping entrepreneurs grow their new blockchain businesses.
That being said, we should all learn to walk before we can run! Since publishing our video guide and enabling token self-listing on our exchange, I have been inundated with queries & questions for advice about a new token crowdsale contracts. And though it is great practice to make sure you understand everything that is happening in your token's smart contract. Many queries seem to come off the back of simply not really having put much thought into what the token is being created for.
Running your own blockchain project can quickly become overwhelming, we just have to look at the littered past of failed token sales to see that things can very quickly go wrong. Sure you may say: those were all exit scams! But that would be very far from the truth. Not every failed project had bad intentions from the start, sometimes the volatile nature of cryptocurrency is simply too much for even the most successful traditional entrepreneurs. What is the best way to mitigate this risk? Simply plan, plan and plan some more.
Before Creating a Token & Launching an ICO
- Purpose of your token
- Your project's tokenomics
- Token technology
- Put together a great team
- Website & social media
- Execution plans & backup plans
- Market Early and Market Right
- Secure & audited setups
Need blockchain specific advice & feedback for an idea or a smart contract? Feel free to drop me a line [email protected] - always looking to help projects grow!
Purpose of your Token
Why does your crypto project need a token? Not every project using blockchain technology actually needs a token, the crazy time of the "Whitepaper ICOs" boom has now ended. You can't simply offer your token as a way to raise funds, and even if your main goal is to raise the funds to make your project a reality, well you still need your token to have a secondary purpose. The goal is to attract investors who are actually interested in your project & would like to use your token - and not just buy in for purely speculative reasons.
Establishing the purpose of your token is very important, as it will allow you to start to think about if your token would actually be used, when, for what reason, how often and by whom? These are all questions you will need to ask yourself & research.
Your Project's Tokenomics
If you have done the research and attempted to answer the questions from Step 1, then you have started the process of establishing your Tokenomics. Many people define this term differently and give it a broad range of topics around token design, but usually, it includes the following: token's purpose, utilisation, functionality, distribution, and value.
And you should have a think about each one because they all influence your token's smart contract. Will your token be rarely used? Does your token need the ability to be staked? Do you need billions of tokens? Does your token have something behind it that makes its value straightforward? Different answers mean a different smart contract - investors will just worry if you are immediately issuing a new token because you forgot something.
You should not be scared of writing a whitepaper, you are excited about launching your project, right? So you should be able to write about it. A whitepaper should describe a problem, but remember that not everyone has lived in your shoes, so this problem should be described thoroughly. And then the largest part of your whitepaper should be dedicated to providing a workable solution. Try to explain exactly why your solution will work, and not just make a claim.
Avoid writing a fully blown detailed marketing paper, at this moment in time your product probably does not really exist, so you should stick to the technical side of things. A whitepaper which just details how their token will be on X exchange during Q1 and Y exchange during Q2, and how they will be at every blockchain event during the year - is a big red flag of a scam.
Also, I recommend you write it yourself, your project's whitepaper should come from the heart & generally you will be able to explain your project the best. If you are not confident in writing English, then write in your native language - you can always find someone to translate your whitepaper as a bounty campaign.
Now that you have done some research and have a foundation of your idea in place, you should put some thought into to which token technology would be best suited to your project - which blockchain would be best suited to power your token?
Ethereum is still the king if you look at which blockchain is most popular for launching an ICO, but most tutorials or developers still deploy ERC20 tokens which are now quite outdated. Also, it would be a good time to ask yourself can your idea stand out organically in the ocean that is Ethereum? Because if not then you will need a bigger marketing budget.
Ethereum Classic could be seen as a great option because it has adopted the ERC223 token standard and is also Solidity based - which means any experienced blockchain developer should have no problem implementing any custom logic your crowd sale may require. It is also much less crowded, which may help you stand out and gain a little hype.
ETH, ETC, NEO, EOS or TRON... and many more, are all more than capable candidates for creating a token. So you may want to think about your philosophy, about what you think cryptocurrency stands for and choose a home for your token that shares your vision.
Put together a Great Team
Just like any traditional business endeavour, cryptocurrency is no stranger to the benefit of knowing the right people & having great networking skills. This could be considered one of the biggest challenges for some, because it relies on your ability to make people believe in your idea. And when I say a Great Team, I do not mean simply having some cool people with verifiable Linkedin accounts on your website.
For example, if the success of your project is heavily tied to operating in an existing industry (think natural resources or manufacturing) then yes, by all means, you should have partnerships or verifiable relationships to people or companies in that industry. But if your idea has a focus around blockchain development, then you either need a team with the reputation to back up your claims or a working prototype. Times have changed, investors now realise that developers who really understand blockchain are hard to come by.
Having people agree with your claims positively on twitter & actually having the reputation that you can make an idea into a reality are two very different things. The latter is what you need if you would like to turn followers into investors, I am sure you have already heard the saying that reputation is key. And there is nothing better to cement your reputation than having a working prototype released.
Team Saturn, for example, spent a whole year writing technical analysis about different blockchains, outlining their philosophy around crypto trading and releasing a working decentralized exchange - before a crowdsale was even started. You could call this an extreme approach, but it made sense given that the development team elected to be anonymous.
Website & Social Media
Without having a website and social media presence, it is going to be very difficult for you to start having any brand presence or engagement with your potential investors. So these should definitely be ticked off before creating a token. Where are you going to send people to learn about your project? How will your excited followers help share your upcoming project with their friends?
No need to be an expert web developer, a quick google will find you hundreds of templates for putting together cryptocurrency themed websites. The important part is to ensure your landing page is very clear about your project's goals & that key dates around your crowdsale are easily found. That being said, it is nothing you should rush - your bounties and marketing campaigns will all be trying to send people to your website so sweat & tears should be spent making it perfect. In the short-term, consider setting up a quick blog on Medium where you can start writing about your vision & let people know how your prototype is developing!
For social media, you will find most crypto projects tend to stick to Telegram, Twitter & Reddit - though recently Discord seems to be a preference for community building. Growing various communities on different platforms, requires a lot of work & depending on your team it may not be realistic but it is a good idea to register an account on every platform.
Execution plans & backup plans
Apart from thinking about how your token will be distributed initially (through an ICO or via an exchange?) and setting key dates around your crowdsale periods (if you want to build any hype people need to set up their calendars!) You do need to think about your Soft Cap - what is the minimum funds you need to raise to ensure your vision can continue to develop? And that you can safely reach the goals you have pitched to investors.
Several ICOs are clear from the start that if they do not reach their targets, then they will end shop right there & refund their contributors. This can seem a little counter-intuitive if you have already built a prototype, therefore, you should always have a backup plan in place to allow your development to continue smoothly. Maybe it will mean things happen at a slower pace or some features will be overlooked - but it is always good to imagine a scenario where your budget is severely inferior. This is just good practice in the world of crypto - never forget the volatile nature of this industry's market. For example, the price of Ethereum is down by 74% since SATURN's ICO yet this has not impacted the development team's ability to push out releases.
“Someone's sitting in the shade today because someone planted a tree a long time ago.” ― Warren Buffett
It is all about planning!
Market Early and Market Right
There are numerous different types of digital marketing strategies out there & many crypto gurus telling you which is the best one to follow... And make no mistake most marketing is done in the realm of pay-to-play. Listing your project on all the top ICO websites and being featured in their newsletters can quickly eat into your development funds, so this should be done with care. Which is why you should start marketing early! You can't really build any hype if your project appears out of thin air & announces its ICO is starting the next day.
Try to research into the minds of your potential userbase and find out where they hang out (forums, facebook, twitter, telegram, reddit, slack etc...) it will help you to decide where to concentrate marketing efforts or which platform to focus a bounty campaign on. People who invest in ICOs are usually people who are already aware and into cryptocurrencies - so ask yourself, where do you go to find the latest crypto news? Your favourite crypto website will be a great place to start advertising via sponsored guest blogging or press releases.
On the flip side, there is a large untapped market of people who have trouble understanding what bitcoin is. Don't be afraid to go local crypto meetups, talk to new people and see their reaction to your idea - early feedback could be extremely valuable.
Secure & Audited Setups
You do not want to be known as that cryptocurrency startup that lost all its investors funds to a hacker. Make sure you have put some thought into your setup's security and the wallet you are using to store any collected funds during your ICO. A hardware wallet would be a really good option. If your project requires taking additional personal details from your investors, then ensure your website's hosting environment has been setup securely to deal with this.
When you are dealing with people's money, it goes without saying that you should be doing lots of testing to your hardware & token smart contracts. And to ensure your token smart contract has been developed securely, especially if you do not know Solidity yourself, then it should be audited by a third party. All it takes is one fraudulent function in your source code, and suddenly your project has become a scam. Keep testing, auditing and refining.
- Nobody likes a spelling mistake on your website's landing page or in your technical whitepaper, be sure you are proofreading all your documents numerous times!
- Engaging with your community big or small will go a long way.
- Do make sure you allow yourself enough time to set up your project's groundwork. Don't announce & deploy! Market hype needs time to grow.
- You will thank yourself later if you put in the hours of preparation work, research and planning before you launch an ICO.
If you are creating a token as a way to learn Solidity and understand how things are deployed onto your favourite blockchain, then by all means just go ahead & play around: the best way to learn how to code is by practice. However, if your goal really is to start a new crypto project then there are some crucial planning steps you need to take before creating your token - in fact, deploying your token onto your chosen blockchain is really one of the last steps of launching your ICO.