How to launch an ICO
Prerequisite knowledge and opportunity
ICO (Initial Coin Offering) allows startups to raise money by crowdfunding for their blockchain-based projects. This is done by inviting investors to assist them on purchasing coins in exchange for the crypto assets that they will use for the development and realization of their idea.
In 2017 only, it is believed that almost 60% of all ICOs were scams. This brought a huge disbelief and insecurity in ICO as a whole, but despite the odds, ICO managed to live through it and even far exceed its expectations. From a start-up standpoint, you have to distinguish yourself from the scammers so that potential investors can be certain that you live up to your expectations. To do that, you should prove that your service/product is legitimate and valid through the use of the following features:
- Website information, design, authority, presentation
- Whitepapers
- Team and advisors
- BitCoinTalk forum activity
- Social media engagement
- ICO rating
- GitHub code
ICO is currently in its childhood stage, but when observing the potential benefits and virtues it brings on the table, ICO will highly likely, at least match or even overcome the traditional forms of the system. Startups should definitely seize the given opportunity, present their idea to the public and wait for investors to start pouring in.
Since the emergence of ICO as a term, many well-established startups such as Ethereum, Mastercoin, and Karmacoin raised money through crowdfunding. However, the utilization of ICO techniques took a different path during 2017. Startups immediately saw the market’s opportunity and seized it. From April 2017 to the end of December, more than 3 billion USD have been raised.
However, during 2018 the emergence and employment of ICOs skyrocketed as never before, raising almost 12 billion USD. More than 2,500 ICOs have been initiated, but around 750 ICOs never managed to reach the soft-cap, and 400 ICOs disappeared after the main sale.
The most widely-accepted industries in which ICOs mostly revolve around are Platforms creation, Cryptocurrency utilization, Business services, Investments, and Software.
After the successfully conducted pre-sale and main sale, many ICOs succumb to market pressure and fail to deliver their goals. However, throughout the past 5 years, there were ICOs whose ROI far exceeded everyone’s expectations. Here is the list of top 5 ICOs (according to
https://icostats.com/roi-since-ico) who crowdfunded their development:
1. NXT – ROI – 378818%
2. IOTA – ROI – 132323%
2. Ethereum – ROI – 62345%
5. Neo – ROI – 58885%
4. Spectrecoin – ROI – 30535%Research
Does my business need a token?
Why do various companies have to incorporate blockchain technology for their functionality? On top of that, why would they generate tokens when traditional databases can get the job done?
Well, the first thing that needs to be addressed is firmness. If you keep your data decentralized through the utilization of blockchain, no one will be able to meddle with the data, whereas the traditional databases work on the sole principle of trust.
Another feature that traditional networks couldn’t totally encompass and deal with is security. Their data is stored in servers, which makes them an easy target for hackers. On the other hand, blockchain and its decentralization make hackers’ life insurmountably problematic. To conduct a successful malevolent attack, hackers will have to hack not only the block in which the data is stored, but all the prior blocks as well. In practice, this is virtually impossible.
Overhead expenses in terms of IT personnel and software engineers are mandatory for big centralized companies due to their servers being constantly attacked by hackers. Having a decentralized network, on the other hand, eliminates the need for various types of hosting. As a consequence, companies that are being transparent about their activities are gaining popularity and are growing at an unprecedented rate.
All of this is great, but it still did not address our main topic, which is “Does our business need a token?” Well, it depends on the business itself. If your business is based on an exchange, service providing, betting, finance, commercial retail and asset managing or similar services, then your business can benefit by utilizing tokens. Depending on the type of business, you can incorporate different types of tokens and if you employ transparency and legitimacy as your main virtues, then you are on the right track.
Competition analysis
Analyzing ICOs that have similar ideas, purpose, and tokens can be very beneficial and instructive for your own ICO. Observing how competition progressed and went through the whole process can also give you an idea which feature needs to be updated and enhanced in order to accomplish similar or better success. Furthermore, when analyzing competitor’s services or products, you will come across pros and cons of their utilization. It is important to focus more on cons because once you understand what they are, and what they reflect on, you can work your way into fixing and incorporating them on your end. As soon as an investor sees that you made an extra effort and fixed these negatives, the chances will be much higher that he will invest.
There is an alternative method or an additional step that you can use for inspection. As soon as you gather sufficient information related to pros and cons, you can also use SWOT (Strenghts, Weaknesses, Opportunities, and Threats) survey. This survey’s function is to highlight prior mentioned key factors, so that you can inspect how you can do better.
STRENGTHS
WEAKNESSES
Small competition
Lack of Bitcointalk forum thread
Good market potential
No experienced personnel
Working prototype
Unfair token distribution
Team and advisor experience
Exponential operational costs
User-friendly whitepaper
Undefined soft and hard caps
OPPORTUNITIES
THREATS
Huge potential partnerships
Inability to reach their hard-cap
Lack of solutions
Possibility to disappear after pre-sale
Technology can be used widely
Competition development
Team’s inability to execute an idea
Getting Started
Legitimacy and aspects that your website MUST have
Understandably, the home page is the key factor you need to address and optimize to put forth an idea, plan and its execution, followed by your team who will supervise the process and apprise users with news, updates and other useful information. Design, layout, animation, UX are also parts of the website that should be inviting to users and taken into account when giving instructions to your developers and designers. Other features that the website MUST have are the whitepapers, link to the social media accounts, roadmap, unique link through which a user can buy tokens, and displayed idea behind the project.
Other preferential but VERY beneficial and useful key aspects that, as an ICO startup, you can start practicing are use cases, marketing plan brief overviews, token presentation and distribution, partners, and press & media. If the ICO is aiming to conduct crowdfunding without a specific target group, let’s say people from USA, you can translate the website into 10-12 most popular languages so that the people can feel more secure about investments.
Whitepapers as an ultimate tool for displaying ICO’s features!
As a startup, paying special attention that the Whitepaper provides satisfactory idea about the Token’s potential worth, but also showing if the team and advisors have enough experience and skills to bring their idea into reality, is a MUST. When taking a closer look at your Whitepaper, investors can assess if that’s what they want to invest in or not. For this reason, it is highly suggested that the Whitepaper prove your legitimacy through the marketing plan analysis, fair token distribution, concise roadmap, and idea consisting both problem/s and solution/s.
Ecosystem/Protocol shows how the whole process is conducted
The Ecosystem/Protocol section of the Whitepapers should envision the utilization of smart contracts and blockchain alongside your idea. Entire functionality behind the idea should be presented here through a step-by-step instruction of each task. You will use an ecosystem to show how the workflow will be conducted on your dApp. In most occasions you will add correlating graphs depicting various tasks triggering each other individually. In order to explain the ecosystem/protocol to your audience, consider demonstrating what you achieved thus far, and include future goals for their end-product/service.
Business model, as one of the constituents, shows how all users will benefit from the environment/platform by interacting with it. You can incorporate all of these information in various methods. Newcomers tend to be creative and present the information related to the ecosystem/protocol in a rather alternative manner by neglecting “tedious” technical specifications, and including interesting and beneficial data that investors will find engaging in terms of statistical information or how their platform/service/or product work.
Roadmap – progressive timeline of processes
From an ICO startup point of view, it is crucial to create the roadmap, and keep track of the processes and tasks occurring in the timeline. Fulfilling previous roadmap steps can increase the validity and authenticity of your ICO, so tread carefully when creating the roadmap and make your tasks feasible. Usually, a roadmap will be presented in a graphical manner so that the goal of each step will be clearly visible. This is very important because once an investor sees a roadmap, he can immediately appraise the timeline and assess its realization.
If, however, there is a step that is left unaccounted for, and you did not mention the delay or problems regarding the missed step on social media or forums, this is a scenario you mustn’t allow.
It is strongly advised NOT to miss a step that has been included in the roadmap, or if it already happened, posting update or news on social media is highly suggested. Otherwise, investors will be able to notice it in the roadmap and your whole project may not be successful.
Tokenomics – financial structure of the token and its distribution
Yet another highly regarded section of the whitepaper is tokenomics. Tokenomics shows the amount of released tokens, their value, and how they are going to be utilized. It is important to explain why your Token is required for the functionality and existence of your ICO. Its utilization, needs, requirements, depending on the token’s type, all have to be addressed in this section.
Announcing the maximum amount of money the project will raise (hard-cap), as well as the minimum for the project’s initiation (soft-cap) should be done in a fair manner. If an investor determines that the soft-cap is far below the minimum funds necessary for the project’s initiation, your ICO might be in danger. On top of that, it is essential for ICO start-ups to attract big whales by offering 20-50% bonuses during a pre-sale. That being said, if a bonus scheme caused a colossal difference between an initial price per token and the one during an ICO main-sale, there is a high chance of people selling their tokens immediately. To prevent such an occurrence, it is highly recommended that you apply lock-up periods after tokens hit the exchanges.
Reporting token supply and activity relating to unsold crowdsale tokens is also very important. If you do not manage to sell all your tokens, opting-in for one of the following three actions is suggested:
1. Eliminate (Burn) the unsold tokens, which will decrease the total supply;
2. Unsold tokens remain in the company’s hold;
3. Allocate the tokens in an alternative manner
Token distribution shows how tokens will be administered during a pre-sale and main-sale stage, but also how many tokens will be allocated for future token sales. Normally, 15-20% of the tokens are kept internally for founders, advisors, and developers; around 5% is dedicated for early contributors; 1-2% goes for bounty campaigns; another 20% is reserved for pre-sale and main-sale; making it a bit less than 50% of the entire token distribution. The other 50-55% are stored for rewards, utilities, assets depending on the token’s purpose and type.
Team and Advisors
If you lack competent and experienced people, then the project is not going in the right direction. Previous experiences, leadership traits, and management skills are just some of the aspects that investors observe the most.
To make sure that each team member has sufficient past experience and that he can deliver what is expected from him, investors opt-in for assessing your capabilities by observing professional development. Tread carefully when posting your previous experiences on social media because they can be easily backtracked, and try to be as detailed as possible for each and every member of your team.
Information relating to a team member’s experiences and past endeavors can be found mostly on LinkedIn. LinkedIn is a great tool because it does not only show a detailed compilation of the individual’s past positions, skills and endorsements, but it can be also used for DIGGING DEEPER so investors can come to the roots of your claims. However, if they find out that the source of your claims is false or inaccurate in any way, the outcome will not be good.
To make sure that investors won’t take you for granted, full transparency is highly recommended. Also, making sure that you have sufficient working staff is very important. Usually, an ICO startup’s team consists of:
1. At least two or more developers and engineers. Projects having only one of these will probably be prolonged, but prone to errors and mistakes.
2. Capable marketing personnel, who will be responsible for broadening the ICO’s awareness, bringing traffic, and enhancing engagement.
3. Social media managers who will guide and introduce the service or product to customers and investors.
4. Designers who will create a user-friendly environment for product release. Additional infographics and animated sliders will be very useful.
THIS IS ONLY PARTIALLY AVAILABLE INFORMATION, IF YOU'D LIKE TO CHECK THE FULL GUIDE WITH BOTH PRACTICAL AND THEORETICAL INFORMATION, PLEASE VISIT https://www.coinpoint.net/icoguides/ 
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