The number of initial coin offerings (ICOs) being launched have been seeing a decline over the past few months. However, the new crypto market is still full of massive possibilities at the end of 2018. The few projects which effectively communicate their message to potential investors have the greatest potential for success. Businesses, start ups and individuals considering this fundraising method just need to adjust the approach for holding ICOs. Industry insiders focus on these 10 basic factors while launching an ICO.
Best practices for crowdfunding in Q4 of 2018
1. The underlying value of tokenomics
Since an ICO involves the sale of tokens, it is the quality of these tokens and the ‘tokenomics’ of the project that determine the project’s success or failure.
Tokenomics refers to the incentive structures created within distributed ledger protocols which allows for an exchange of information and value between people. A great project will account for various cryptoeconomic metrics which will ensure balanced crypto market conditions and as a consequence provide contributors with promising revenues.
2. The fundamental KYC/AML procedures
While many believe that cryptocurrencies herald the advent of a decentralised global economy, we still are living in a world dominated by traditional financial institutions. Therefore, it makes great business sense to consider this and ensure that these measures are met. In the present regulatory environment it is important for an ICO to have a secure and rapid process for fulfilling KYC and anti money laundering procedures.
Due to heightened regulatory activity, online exchanges are also increasingly considering whether a project fulfils KYC requirements before listing it. Also banks and investors expect an AML certification before engaging with ICOs.
In any case be sure to use a provider who has experience working with ICOs and can verify a person’s KYC application in a few seconds.Further, remember to keep the marketing funnel lean and avoid any road bumps for investors when working with cryptocurrencies.
The dashboard of tokenware.io provides an integrated AI powered KYC/AML verification features, which allows users to effortlessly prove their identity and fulfil compliance requirements in any location.
3. The right standardised token
Another common characteristic among successful ICOs is the use of ERC20 tokens for fundraising. It is a standard token which is issued on the Ethereum blockchain and does not require to have its own distributed ledger. A team can therefore raise funds on the Ethereum blockchain before transferring the value of the tokens bought onto their own chain or keep it on the Ethereum blockchain and setting up a dApp on top of the base chain.
Further, this token offers a fast rate of transaction and it is easy for a web client to communicate ERC20 transactions with a blockchain. Due to its acceptance among a wide range of cryptocurrency exchanges and wallets, the ERC20 token is also accessible by most cryptocurrency investors and provides the largest pool of developers who can work with the token.
Through tokenware.io you can offer the contributors of your project a multi-signature wallet that will give the new members of your community the ability to purchase your tokens without setting up their own wallet or making an account on an exchange.
4. The power of airdrop campaigns
When discussing marketing strategies for ICOs, the first tool to consider is the airdrop, where tokens are distributed to large groups of people in order to raise awareness of a particular project. An airdrop can help a cryptocurrency achieve the network effect needed to obtain value. Even if the project does not see a benefit from the network effect right away, it can be a cost effective means of marketing.
While at first this seems like giving money away for free, a well executed airdrop can lead to an increase in the value of an ICO. In fact, a token is only valuable if it is used as an exchange for value and circulates among a great amount of people.
Carrying out an airdrop can be similar to a traditional pay per click advertising for example if participating in an airdrop requires a user to visit the ICO’s website. Moreover airdrops can allow ICO campaigns to tap into existing communities of cryptocurrency holders.
5. The bounty program as an effective incentive
Referral programs are a common example of bounty programs and the crypto space is now seeing a large amount of increasingly creative campaigns. Actually it is another excellent addition to the marketing strategy of any ICO. It is the provision of incentives for community members to add value to the project.
Bounty campaigns can also be used for a variety of other purposes which help the global visibility of an ICO. Considering all potential benefits, bounty campaigns deserve a permanent spot in the ICO marketer’s toolkit.
6. The importance of token metrics
Extremely important is setting the right soft and hard cap for your project. The earlier refers to the minimum amount of money needed for the project to get off the ground, while the latter refers to the maximum amount required to execute the ICO’s aims.
Many investors are skeptical to contribute to an ICO until it has reached its soft cap so it should not be placed too high. However, keeping a very low soft cap can put pressure on the development team to create a MVP without sufficient capital. With this in mind a soft cap should ideally be 10 % higher than the amount needed for a MVP to account for any unexpected costs.
An ICO’s hard cap is a far more important determinant of its success. Most successful ICOs have had hard caps no more than $25-30 million USD, with many keeping the figure even lower. Analysts see low hard caps as a representation of a team’s commitment to setting achievable goals and this makes them promising for investors.
To sum up the above it needs to be said that when designing an ICO, take the time to consider the token metrics of your project. While they may vary depending on the ICO in question, the intuitive ICO dashboard of tokenware.io has been designed for use by any ICO. Token metrics are all fully customisable to give you the easy campaign you want and deserve.
7. The community building as crucial task
Unlike most other means of raising funds, a good ICO also involves the creation of a community of users who invested in the development of a particular distributed ledger, dApp or cryptocurrency. While each ICO should use the best tools, there is a certain level of engagement which the crypto community and ICO investors have come to expect.
There are many social media platforms which can assist a development team in connecting with the community. The most important platform for the ICO marketer is Telegram, and it has become a standard for ICO teams to have a Telegram group in order to communicate project updates to the community and get feedback on what users feel is the right direction in which to develop the project.
8. The careful vetting of partners
The high number of ICO scams has also resulted into an abundance of fake companies wanting to cash in on what they see as a way to profit at someone else’s expense. Add to that the lack of transparency in a market constantly adjusting to the latest regulations, the young age of many firms providing crypto related services and it can be hard to determine which agencies are more than a dingy website and an Ethereum address.
Therefore, it is extremely important to exercise due diligence and make sure that any partner firms dealing with issues such as KYC/AML or community management have a solid track record in the crypto space.
9. The good tokenomics
While investors should not expect a minimum viable product (MVP) until an ICO reaches its soft cap, there now is an expectation for ICO teams to be able to provide as much evidence as possible to show the viability of their vision.
Having an experienced team behind an ICO can on its own provide much assurance for investors. Though this route is tough for a team comprised of individuals who are unknown in the crypto sphere. Other ways of overcoming this lack of trust is by making your platform’s code open source and getting established crypto personalities involved with your ICO.
10. The education of your community
ICOs that sufficiently educate their community about their cryptocurrency, product and market will greatly benefit from a loyal base of users in the future. It is important for ICO teams to bring the risky nature of cryptocurrency investments to the public. Large institutional investors are already aware of the risks in the market, however, there are still a lot of small scale investors, who are hurt by ICOs promising unachievable returns. If you have an idea for a great crypto project and want to enter the market, it is beneficial to consider tokenware.io as your ICO service provider.
tokenware.io is the leading full service ICO provider. The Berlin based company has developed an incredible dashboard which allows you to focus on your product. The dashboard allows ICO teams to plan and execute airdrops, bounty campaigns and provides detailed statistics on token sales and the health of your token economy.