How To Launch An ICO, A Detailed Guide
Last year, it seemed that everyone was either running ICOs or taking part in them, with the total amount of funds raised throughout the year nearing a $5 bln mark.
If you’re reading this, chances are you’re considering getting in on the action. While there are projects such as Useless Ethereum Token, which was very likely created by a single person in no time at all and still somehow managed to raise almost $200,000 in contributions, your future project will need quite a significant amount of time as well as a dedicated team to attract substantial funds.
Just a little disclaimer before we proceed: hosting a successful ICO from scratch is going to be rather expensive. It takes approximately $60,000 to launch such a campaign, but this number can vary depending on the project and its goals.
Also, launching an ICO campaign is quite time-consuming. In most cases, pre-public engagement phase, which includes all the processes prior to the first big announcement, takes roughly six months to one year.
The post-public engagement phase, which includes everything that happens between the first announcement and the actual sale of tokens, normally takes around three months. This timeframe is often considered long enough to gain the public’s attention and short enough for the public not to forget about the project.
When it comes to the team involved in the project, again, there is no rule of thumb regarding the amount of people you’ll need on board. The key here would not be hiring as many people as you possibly can, but covering every single area of expertise necessary for the project to come to life. That includes developers, Blockchain and cryptocurrency specialists, PR and marketing as well as advisors, partners and early investors.
So, in the land of ICOs, there are no set rules, the competition is fierce, time is an illusion and the future value of tokens is not supported by anything but demand.
To assist you in navigating through this madness, here’s a comprehensive checklist designed to help you launch your very own successful ICO.
If you want your project to be successful, it has to offer a solution that the market currently needs, and this solution should be objectively better than what your competitors have to offer. To achieve that, you need to have a thorough understanding of that market, know your target audience and, most importantly, know what they will be willing to give you their money for.
Obviously, if your project is sourcing its funding through an ICO campaign, it will have its own token. According to the CoinMarketCap‘s data, there currently are over 1,500 cryptocurrencies in existence. So, if your token is to survive this competition, let alone gain any value, it will need to be in very high demand. To achieve that, you need to think of a way to integrate a cryptocurrency into your project in a useful and meaningful way, so that it becomes an essential and integral part of the product.
Do you really need tokenization if you’re selling toothpaste? If your project will be using tokens unnecessarily, it is extremely likely that the investors won’t even consider putting their money into your project.
A good way to test-run your idea and get some initial feedback would be creating a thread on BitcoinTalk forum, tagging it [pre-ANN] for pre-announcement.
Who are you competing against? One might think it’s any other project offering similar services to yours. Well, you’re actually competing for the investors’ money, so the answer here is very simple: you’re up against everyone else. Yes, literally every single ICO being held roughly at the same time as yours.
ICOs are currently the most regulated aspect of cryptocurrencies there is. This is due to the high volume of ICOs shutting down and running away with the collected funds or simply being exposed as scams.
Still, in most countries, Initial Coin Offerings are either legal, regulated or subject to future regulations. So far, only China and South Korea have explicitly banned ICOs in their respective jurisdictions.
In the US, citizens are required to disclose any income earned and wealth held abroad to the Internal Revenue Service (IRS). Moreover, the US Security and Exchange Commission (SEC) is prosecuting ICOs that are not compliant with their strict Know-Your-Customer policies. Because of that, a rapidly growing number of projects, such as Goldmint, Datum, Monaco Visa, and many others have explicitly exempted US citizens from buying their tokens.
Bottom line is you need to learn how to navigate the cryptocurrency regulations that are currently in place and pay close attention to any future changes to them. This probably goes without saying, but still, don’t break the law. Hiring a lawyer with experience in cryptocurrency and ICO regulations wouldn’t go amiss.
Keep in mind though, even if you’re not breaking any laws, any shady activity on your part, especially in relation to handling the investments, may result in your project being labeled as a scam by the cryptocurrency community. If that happens, your ICO is doomed to fail.
So, not only do you need to obey all the relevant laws and regulations, you need to be completely transparent in how you’re going to handle people’s money. Spendings, taxes, fiat withdrawals and any other financial aspects of the project really need to be thought out to the very last detail.
Think of your project as a human being. The technical architecture is its skeleton that supports its entire body. The blockchain technology and the token itself function as blood vessels, enabling the whole body to fully function.
Firstly, you need to have a solid distribution plan. It heavily depends on a particular ICO’s requirements and plans. For instance, there can be many different stages of the token sale, including but not limited to a private sale, pre-sale, the actual ICO and a general sale.
Different structures work for different ICOs. Back in 2013, NXT managed to raise $16,800 worth of Bitcoin simply collecting donations to an anonymous wallet via the BitcoinTalk forum. Interestingly enough, after all these years NXT’s ICO still holds the number one spot in terms of Returns of Investment.
On the other hand, we have Telegram which managed to raise $850 mln during a rather secretive pre-sale, and apparently they are preparing a second round of pre-sale, aiming to double the amount of investments even before the actual ICO happens.
Next, you need to clearly outline how exactly the tokens are going to be distributed. Decide in advance how many tokens will be issued in total, how many will be distributed among your team members and how many will be sold during each stage of the token sale. Finally, decide in which particular scenario you will issue additional tokens.
When it comes to blockchain platforms used to issue tokens for ICOs, the market really isn’t that competitive. According to the ICOWatchList data, 81.7 percent projects use the Ethereum platform, while the other 9% opt for developing their own custom blockchain platforms. There are, of course, other services such as Waves, Stratis or Hyperledger, but even their combined share of the market amounts to just 3.7 percent.
Creating the token itself is a relatively easy process, especially when it comes to Ethereum’s ERC20 tokens. Ethereum’s website even lists the code you will need to use. However, customizing certain aspects of a crowd sale logic for your tokens might be a bit more difficult, so if you’re not exactly tech-savvy, consider hiring a professional to do that for you. For more detailed information, check out our guide on ICO platforms.
A white paper is a mostly technical document that describes your entire project in every possible detail. Ideally, it should cover literally everything: market analysis, your vision of the project, its development strategy, architecture and goals, information on the token and its distribution, legal issues, your available resources, a description of your team, early investors and advisors and so on, and on, and on. Everything.
Read our guide on how to write a white paper here.
Of course, not every possible investor will carefully read through a detailed technical description of your project. Maybe ten people will read the entire thing. But it’s those ten people that you need to satisfy with the white paper because they are capable of bringing some serious problems on your ICO.
The Blockchain enthusiasts have a great understanding of technical aspects and a substantial amount of expertise, they are extremely prominent and valued people within the community. They are opinion leaders with audiences of tens of thousands of people. If you’re running a big PR campaign, but your project has some obvious flaws, those people won’t miss their chance to expose them.
Content. People are only really interested in three things: the team, the project’s aims and the measures in place to ensure the protection of the investors’ interests.
One of the first things you’ll see on Nuvus’s website is the detailed breakdown of the token sale structure. Not only does this block present the information is clear way, but it also heavily contributes to building FOMO or Fear of Missing Out.
The ‘team’ section of the website should contain names, high-quality photos, brief biographies, (focus specifically on team members’ skills relevant to this particular project) and links to social networks. Personify the project.
‘Team’ section of the same ICO should’ve been more informative, we don’t even get to know those people’s roles in the project.
Shpring does it a bit better.
ClearCoin actually includes bios, which is extremely helpful. Although, those could be shorter.
Another hugely important section of your website is the roadmap. It should contain clear and realistically achievable goals and set timeframes. A roadmap with some important milestones already being ticked off will undoubtedly give the investors a lot more confidence in your project.
Ideally, your timeline should include set dates of an alpha release, beta release, public release and all the future milestones you deem necessary to mention. The dates shouldn’t be vague, you need to be as specific as possible. A breakdown of costs associated with every task outlined in the roadmap would also be a rather good idea.
Roadmaps can be presented in various forms. The examples above from Nuvus, Sapien and PikcioChain contain both history and future plans, are rather informative and set concrete dates in terms of quarters.
Finally, make sure that all the information concerning token distribution is easily accessible to your future investors. Let them know what portion of your project’s currency will be distributed among the development team, and how many will be actually available to buy.
Traditionally, links to the project’s social networks are listed at the bottom of the website, like Shping did it:
Of course, there are always other options, as demonstrated by the clever placement of this section on top of the page on the ClearCoin’s website:
Layout. Once you have all the content ready to be published, take some time to think about the website’s layout. The absolute majority of projects these days are opting for a single-page structure. Without a doubt, it’s a very convenient and easily-accessible way of presenting all the necessary information in the exact order it’s intended to be in. Still, you and only you will know the most suitable structure for your project’s website.
Security. Now, one thing you definitely don’t want your website to do is to be down at any point of time. Once your ICO starts, provided it got sufficient interest from the community, thousands of people will be flocking to your website all at the same time. The last thing you’d want in this situation is your website crashing, so make sure to invest in a good and reliable hosting service.
Moreover, hacking and DDoS-attacks are also a very common threat for any project running an ICO. There have been many instances of official websites being hacked and the wallets’ addresses being replaced. As a result, investors unknowingly sent their money to scammers.
Also, if you’re running a big PR campaign, make sure to take all the precautions necessary to protect your project from phishing attacks. It is quite common for fraudsters to accompany a DDoS-attack on your server with an all-out spam attack across every possible social channel with a message saying something like ‘our website is temporarily down, use this link instead.’
Design. The website’s design should ideally reflect the nature of your project, it has to be reliable, look slick and professional, yet friendly. Even a tiniest mistake in, say, text formatting will repeal a lot of investors. Definitely, consider hiring professionals to both build and design your project’s website.
- Subscription form
- Presentation Video
- Roadmap: what, when and how you’re going to do
- Description of your ICO
- The team: high-quality photos, short bios, social networks links
- Press coverage: pictures with Vitalik Buterin and other prominent members of the cryptocurrency community, links to articles and publications, videos of presentations and talks
- Description of your product
- Real-life cases
- Documents: terms & conditions, legal, whitepaper, etc.
- Partners, advisors, early investors
- Contact information and links the project’s social networks account
Translating. It is also worth pointing out that if you’re developing a truly global project, you might want to consider translating your website into the mother tongues of your target audiences. When it comes to ICOs, the most useful languages to translate all the relevant information to are Chinese, Japanese, Korean, Russian, German, French and Spanish.
Considering that it costs around $60.000 to create a successful ICO from scratch, you will only need to allocate a relatively small amount of money for translations. Depending on a language pair, a translation of a 25-page white paper done by a professional or an agency should cost somewhere between $150 and $300.
If you do decide to create a multilingual website, make sure that you hire professional translators who are definitely good at their job. Even the tiniest of mistakes will result in your project looking unprofessional and losing potential investors.
So, you have everything taken care of. You developed an idea, gathered a dedicated team, wrote a white paper, created your token and made sure your ICO campaign complies with all the applicable laws and regulations. Now, it’s time to promote it. Otherwise, there is no chance of you making any money.
So, make sure to allocate a substantial amount of money for marketing. Prices for paid information listing can drastically vary from around $400 to $15.000 and up to a virtually infinite number. A good community manager who will be in charge of your project’s social networks’ feeds will cost you at least $2,000 per month.
Also, make sure to use paid ads to your full advantage. That includes Google ads, forum ads and so on. Around $5,000 should give you a decent userbase of capable investors. Finally, consider how much money (or tokens) you’re willing to allocate to bounty programs, in keys they’re a part of your PR-campaign.
Similarly to designing the website, planning a PR-campaign is where you need to have a look at your project from the point of view of a potential investor. Consider how and where will your audience find out about the project, and, most importantly, exactly how will it be presented to them.
You need to be able to clearly define where your project positions itself within the current market and put together your first line of communication: an F.A.Q. and your Terms & Conditions.
The entire cryptocurrency market is driven by one particular powerful force: FOMO, or Fear of Missing Out. People will invest in your venture if the hype around it is so powerful that it makes them believe they’ll miss out on an amazing opportunity if they won’t do so.
Make sure that your team is constantly communicating with the investors, both prior to the ICO campaign and during it. The more communication channels you use, the more likely your project will be a success. Think social networks, such as Twitter and Facebook, and forums like BitcoinTalk and Reddit.
Here are some of the ways of engaging with the cryptocurrency community:
- Forums: The essential part of your PR-campaign. Back in the day, most ICOs were held on Bitcoin-related forums. BitcoinTalk is the one you really need to focus on, as it is the biggest and most popular of such platforms right now, especially when it comes to announcements of new cryptocurrencies. Of course, you shouldn’t forget such forums as Bitcoin.com, AltcoinTalks, BitcoinGarden and many others.
- ICO calendars: People need to be able to stumble upon your campaign by accident. There are a lot of ICO calendars which enable potential investors to track upcoming ICOs, and you should be taking full advantage of such services. Notable examples include calendars by CoinTelegraph, TokenMarket, ICOAlert and many, many others.
- Reddit: Pay very close attention to this one. Reddit has over 40 subreddits related solely to Bitcoin, and it is perhaps the most active social network when it comes to cryptocurrencies. There are also numerous subbreddits dedicated to altcoins, as well as those fully focused on ICOs, such as r/icocrypto (active and upcoming ICOs), r/ico and r/ICOanalysis. Moreover, make sure to constantly monitor the platform and make use of the search bar to find and track threads about your project and it’s ICO. Actually finding people’s questions and answering to them should be a big part of your marketing campaign.
- Quora discussions: Quora is a community built around users asking a question and getting comprehensive answers to them. While researching for this article in particular, as well as many other ones related to cryptocurrencies, I must’ve visited Quora at least a few hundred times. Your best strategy here would be to not just let other people discuss your project but to answer any questions directly. Much like with forums and Reddit, proactive communication will go a long way here.
- Slack & Telegram: Those are the two messengers most widely adopted by the cryptocurrency community. Most importantly, both services enable you to set up channels, which is an extremely useful way of keeping your audience updated on your campaign. Moreover, you can also set up a chat for your potential investors to communicate and discuss the project. The more open you are about it, the more funds you’re likely to attract. Moreover, you can use already existing channels and chats to promote your ICO.
- LinkedIn professional groups: Considering that your project’s website provides links to your team members’ LinkedIn accounts, the service becomes another extremely useful tool for both promotion and instilling confidence in your potential investors. This is where they’ll be able to see how deeply-rooted your project is in the cryptocurrency community. Moreover, there are professional groups such as ICO Launch group, ICO group and many others where you can discuss and promote your campaign.
- Facebook groups: Definitely create a Facebook page for your ICO, as for many people it might be the easiest way to reach out to a startup. Bear in mind, though, that this platform can’t be used as a tool of paid promotion anymore, as Facebook is banning all cryptocurrency and ICO-related ads. However, there are still many dedicated groups, such as this one, where you can promote your campaign. Moreover, keep in mind that Facebook is very international and you might be able to find a lot of language-specific groups on there which will be suitable for promoting your ICO as well.
You need to keep people updated with a weekly email. You could also remind them about the start date of your ICO a month, a week, a day or even five minutes before it begins. Although, don’t force them on people and definitely don’t send out too many emails: no-one likes plowing through piles of spam mail in their inbox.
These days, many ICOs are offering bounty programs. Such programs entail financial rewards for users’ PR-activities. Essentially, this means paying people for promoting your ICO on forums, maintaining language-specific threads on various services and messengers, translating and localizing documents, posts on social media, blogs and so on.
While there are a lot of advantages to this approach, you should really try to not go overboard with it. Experienced users will easily spot paid-for posts and publications, and if the word gets out that your project abuses bounty programs, the community will inevitably get suspicious. At the end of the day, no one likes aggressive advertising and your product should be able to sell itself without you having to resort to paid promotion within the community.
If your campaign is to be successful, you will have to advertise it through any means possible, making sure you’ve reached as many people in the community as possible. But it is paramount that you and your marketing team are very careful with every single publication, post or reply.
Even if just a couple of users on any forum, subreddit or social network will have any reason to suspect that your ICO is a scam, it will heavily affect the outcome of your campaign. Other potential investors will be conducting thorough checks on your project, and they will find those negative opinions about it. No ICO can afford to run that kind of risk, so always make sure to carefully choose your words.
Remember, there is nothing more damaging for an ICO campaign than the cryptocurrency community labeling it a scam.
Congratulations, your Initial Coin Offering is live! But how long should it last for? Let’s take a look at some successful ICOs from the past:
- Mastercoin (now Omni Coin) — ICO lasted for one month, raising about $750,000 worth of Bitcoin
- Stratis — ICO went on for 36 days, raising almost $600,000
- Ethereum — Token sale went on for 42 days, raising $18 million
- NXT — ICO happened over 51 days, raising $14,000
- Waves — Token sale lasted 49 days, raising over $16 million
Taking the aforementioned statistics into consideration, simple mathematical manipulations will lead us to the ideal duration of a successful ICO standing at 41 days. Of course, this is just an average number based on five campaigns and by no means a golden ratio of some sorts.
However, it does reflect the current market situation to some extent. The timeframe is long enough to generate FOMO and hype around the project, which attracts more people and more investments, while it isn’t too long for the investors to see some actual results and the project to proceed forward.
Communication is the most important tool in disposal of any cryptocurrency-related project, and this is especially true during the actual ICO. Ideally, you should have specialists in every aspect of your project there is on round-the-clock duty. Remember, this is the decisive period in your project’s history, there will be people seeking answers to their immediate questions before contributing, or simply asking for guidance on how to do so.
Most importantly, you need to have security specialists on call at all times. At any given moment, your website can be subject to an attack, as it was the case with the Coindash’s ICO on July, 17th, 2017. Their website was hacked on the very first day of their ICO campaign, which resulted in the loss of $7 million.
If your ICO was a success, that means that the community has delivered. Now, after the campaign ended, it is your project’s turn to deliver. Now is the time to distribute the tokens, continue following your roadmap and try as hard as you can to deliver as much value as possible for customers and token holders.
Essentially, this is only the beginning. Your ICO was the easy part. Now that your project raised the funding required, the development of the end product should start or, preferably, continue on a much larger scale. At this point, your project not only has the funds to do what it set out to do, but also a moral as well as a financial obligation to not let the investors down.
Of course, fine-tuning your product, making your dream of being a successful entrepreneur come true and making the cryptocurrency community a better place by developing and integrating your project is great. But, in the meantime, your team and your investors will be expecting the project to do something else: make everyone rich.
In order to do so, your token needs to be in demand, it has to be valuable and, most importantly, it needs to get listed on at least one cryptocurrency exchange. Different exchanges will have different requirements for tokens to be listed, but if your project offers something unique and truly valuable to the cryptocurrency community, you shouldn’t have any problems getting it in.
Poloniex is one of the biggest and most well-established exchanges out there, and here is a direct quote from their website: “We don’t have a definitive set of criteria as each project is unique. We listen to the community and select projects that we believe are unique, innovative, and that our users would be interested in trading. We also look for products that have strong (organic) market demand.”
Another major cryptocurrency exchange, Binance, has a team dedicated solely to reviewing applications for new tokens waiting to be listed. Most other exchanges will require your token to prove its worth in a similar way.
The basic attributes that any coin needs to have if it is to get listed on an exchange:
- Coin name- This should be self-explanatory, it is either the same name as you project has, or something very similar.
- Coin trading symbol- Usually a three-letter ticker that will represent your token forever. The amount of letter can sometimes go up to five, with no numbers allowed.
- Description of your project and its token- You need to provide every exchange you’re trying to get your token listed on with a clear mission and a pitch for your coin. Why would they want to list it? What makes your token different to hundreds of other coins floating around?
- Coin logo- You will need to design a slick and memorable logo for your token. Think Bitcoin’s instantly recognizable orange logo. Most exchanges accept logos in PNG format with a transparent background.
- Launch date- This should be the first day of your ICO campaign.
- GitHub link- Most exchanges will require the source code before they will even consider listing a coin.
- Source code reviewed by a trusted third party- Again, this should be self-explanatory.
- Compliance fee (in some cases)- Some exchanges, in case enough due diligence is necessary, may require you to pay a compliance fee before your token can get listed on them. Bittrex, for example, used to warn its users that a $5,000 fee might be charged, however, they seem to have scrapped that rule since then.
In case you’re unsure which exchange to apply to, here’s a list of some of the biggest cryptocurrency exchanges in terms of trading volume out there: