How to develop a winning ICO (Initial Coin Offering) process
What is an ICO?
An ICO pool or Initial Coin Offering is an activity common in the cryptocurrency start-up community. It is a way of crowd-sourcing funds by exchanging existing cryptocurrencies for the cryptocurrency created by the start-up.
Raising money in this way is great for start-ups as they don't need to sacrifice ownership of the company, which they may have to do if taking a loan from a conventional bank. Instead, they ask interested parties to exchange more established cryptocurrencies for the freshly minted coin. If the company is successful, this coin may suddenly be worth significantly more than the initial cryptocurrency invested.
Types of ICO pools
There are two types of ICO pools:
Non-trustless ICO pools
Generally run by a "pool manager" a non-trustless ICO pool requires all the cryptocurrency raised by an ICO to be sent to a specific wallet address that is managed by an individual, the pool manager.
This requires investors to trust the pool manager and can very quickly result in investors getting scammed. There is no guarantee the pool manager will complete the ICO as promised, or make a mistake. They are only human after all.
Trustless ICO pools
Trustless ICO pools use smart contracts to complete the transaction advertised to investors. The smart contract predefines all the rules of the ICO, for example, it can be written to store all of the cryptocurrency until the investment goal is reached, at which point it can complete the airdrop to all recipients. This is the preferred method and renders pool managers obsolete.
How to create an ICO for your company:
1. Decide if your project needs an ICO
Yes, an ICO can help you raise much needed funds for your endeavour. No, you are not guaranteed success. People signing up to the ICO do so on the assumption that the coins offered will increase in value over time. If your project does not use the coin as an integral part of the product, it is very unlikely to increase in value even if the project is successful.
In this circumstance your ICO, and potentially the project, will fail.
2. Find a lawyer and research the legality of your ICO
The legality of cryptocurrencies is unclear in a lot of regions around the world, the same goes for ICOs. There are some concerns ICOs may be used to launder money, or that they may be scams. China and Korea have completely banned ICOs.
If you feel confident with legal-speak you can start your research with Coinbase's Security Law Framework. If your coin is planned as a security you may have significant legal issues because legally you would be required to disclose and register certain aspects of the project.
3. Create a Coin
If the legality and project match up, you'll be creating a coin to distribute. This will involve building your own blockchain. Absolutely DO NOT use a pre-developed coin, or accidentally make a token. First, the coin could have security issues that will compromise the project. Second, a token isn't the same as a coin.
Tokens use pre-existing blockchains and so can't be used in ICOs. The value will not only be linked to the project. You need to create your own coin from scratch which may turn out to be expensive and time consuming.
Here at Dapple Airdrops we created a coin for the Fox Trading ICO, get in touch if you need a coin.
4. Write an enthralling white paper
A company requiring investment will announce a plan for an ICO, including a white paper with how that company will carry out the ICO and plans to spend the funds gathered. This will give the ICO credibility amongst potential investors.
The white paper is a an opportunity to sell the project, so do not skimp on detail, or information. Avoid typos and absolutely aim to engage the reader with the possibilities that an investment in the business could deliver. Consider reading other white papers such as the Ethereum white paper.
5. Prepare a Smart Contract for your ICO Pool
There is no reason to add risk with a pool manager and the possibility of human error. Recruit a smart contract developer to run the ICO. Beware of preset smart contracts that may contain flaws, or very rigid criteria which may not suit your company's specific situation.
This is a crucial step - the white paper will contain the rules by which the ICO will operate.
6. Advertise to your target audience
Using popular social media platforms for ICOs, such as Twitter, LinkedIn, and Telegram, you need to advertise the fact the ICO is being held. These people will be your investors, so it may help to quantify the benefits of investment and build a case for the success of your venture. Facebook recently announced it will be banning all Crypto and ICO related groups, so no need to try there.
You may want to consider recruiting influencers, and attending relevant industry events to popularise your company and its ICO. Starting with people who are already in the industry will be a great way to start as you know these people are willing and able to invest in ICOs.
Standard community management techniques will need to be employed at this point. Keep in contact with investors and prospects by answering questions on social media platforms and posting updates. You will have to be active on the main cryptocurrency platforms to reassure as well as to advertise. You can start off with these:
There are a huge number of subreddits, but the above are a good place to start.
You can also use any other marketing channel that you choose, such as SEO, PPC, and Direct Marketing. Just keep your target audience in mind.
With all the above completed, your project should be a great success! Again, Dapple Airdrops can offer assistance and consultancy along the way.