TOINNOV - Breaking Blockchain, Crypto & ICO News

more than 10 000 people every month reads TOINNOV learn more
learn more



TOP STORIES
ICOs from A to Z

I got involved with ICOs at the very beginning of this industry, around 1.5 years ago. The market gr...


ICOs from A to Z



I got involved with ICOs at the very beginning of this industry, around 1.5 years ago. The market grew vary rapidly, and if at first, we were talking about collecting $3-5-6 million, now ICOs collect hundreds of millions of dollars.



31.Aug.17 3:18 AM
By Swan Andersen
Photo INNOV.RU

   274

ICOs from A to Z

My expertise comes from being positioned on both sides of the market at the same time. On one hand, I conduct ICOs of projects, working on 18 turnkey projects at the moment. On the other hand, I buy tokens. My wallet currently contains about 45 different kinds of tokens.

This time let's look at ICOs and their organization from the point of view of a startup a company which decided to use this technology to gain support.

We have to tackle two tasks:

1. Figure out how future token holders assess projects

Here we have to pay attention to how our product (token) is assessed by the potential token holders. Let's try to look at it from two different sides.

2. Find features shared by all successful ICOs

Regardless of what kind of business you have and what exactly you would like to sell through your token, each of you is dreaming about gaining significant support.

Successful ICOs which managed to collect huge amounts of funds all share certain patterns and features. Let's talk about them.

Shared features of successful ICOs

  1. The project's user community should have a maximum overlap with the community of future token holders. Such community should be vast.

The potential target audience of any project getting ready to launch its ICO are blockchain users. These people should not be just buying and selling tokens or be engaged in mining. This is the community of token holders. The wider the overlap between the community of token holders and the project's target audience, the higher the changes of conducting a perfect ICO.

  1. Vision component: token holders should be motivated to bring value to the market, so the project must make a significant positive contribution to blockchain technology:

         Expand blockchain application, offering the market something new. For instance, new technology application in insurance, data storage, etc.

         Pull in users from adjacent industries bringing them to blockchain. Expand the market not only through the new technology application but by bringing in new users.

  1. Economic component: economic viability as a synergy between the token's worth for the user and its potential future sale. Token holders should have a very clear understanding of why they need your product, and how it will be used.

Which ICO projects' components make them attractive?

Once again, let's look at our product through the eyes of a token holder.

Business model transparency

  1. Business model should be understandable
  2. It should explain why the project needs funds
  3. It is important to demonstrate how collected funds will be used, how they will help develop the token and, consequently, benefit the token holders
  4. The essence of a business model: token's attractiveness should cause its supply shortage. We need to show that we have a plan on how to ensure the maximum token shortage.

People

1.       People are the main component of building trust in your project. A project must provide a product or a service but never offer a share in the company, as[NVF1] [NVF2]  courts protect token holders. Potential token holders must have grounds to trust the project's team.

2.       Team: in charge of the project quality.

3.       Advisors: significant players in blockchain and project's industries. Advisors are the direct tool for attracting the target audience.

4.       Backers: significant market experts, institutional players. Demonstrate the trust in the projectу by buying its tokens early.

Token positioning

A new token must be a product. If it is not, it will result in a massive drop in demand. Large institutional players will not flock to the sale, which means a likely presale failure. Second reason: If it is not a product you will have hard time selling and listing it. According to the latest SEC decision, nobody is above the securities law, so the exchanges will work hard to root out non-product tokens.

If a token is deemed an asset it will not get listed on exchanges.

Legal aspects

Why do you need to understand legal issues involved? One must look at the situation from a token holder's perspective. Predictably, he/she will analyze the primary issue, including the regulatory risks and secondary market risks, i.e. listing risks, if latter is deemed desirable for the new business.

A project must pass three tests:

  1. Howey Test
  2. Family Resemblance Test
  3. Risk Capital Test

These tests address the following risks:

  1. Primary demand risks, if a token is structured as an asset
  2. Regulatory risks concerning the company itself
  3. Secondary market risks, i.e. listing on exchanges (the regulator will prevent such listings if they do not clearly substantiate business goals accomplished by such listing)

Examples of valid grounds for listing:

  1. Attracting funds
  2. Attracting project's users (main ICO campaigns tend to only reach 15-20% of the target audience)
  3. Marketing

A project which intends to list its tokens needs to clearly state that the listing is not conducted for the purposes of speculation.

Consequently, a number of questions needs to be answered to pass these tests. These questions will help correctly structure the new token to minimize the risks.

Brief overview of legal tests

No shared risks

  1. The funds must be kept in escrow until the time the tokens are available for use.
  2. Tokens can be used right away, as soon as the funds are released from escrow.

If your token is not available to be used right away you may not legally issue it. Your token must operate precisely as specified in your White Paper. It can only provide some of the functions but its core features must be operational. The wild times when only some of the promises are fulfilled are over, and now you will get in hot water if you fail to deliver what you promised.

  1. For the funds to be released from escrow the token must be issued.

No shared economic benefit

To gain the economic advantages, token holders must put in their own effort, and the amount of effort should not be tied to the token holdings (although in some cases it is permissible for them to gain a reward equivalent with their contributed effort).

No direct economic advantage to any users. Your token may offer a discount or a pass to a private club, i.e. various VIP opportunities not available to non-token holders. But your token may not bring a direct reward which could be used for making payments.

Other restrictions

  1. A token must not grant any ownership rights or shares in a legal entity;
  2. A token must not grant rights to shares in a legal entity's profits or assets/liabilities; and
  3. A token must not grant its holder a status of a creditor or lender, or a right to the refund of the purchase price.

These legal issues are critical for your success. They help structure your token and avoid negative consequences.

The next section will describe how to maximize the benefit of your ICO.

Marketing of your ICO

Target audience

●        The lion's share of success is in the product and its positioning.

●        Do not try to sell to target audiences uninterested in blockchain. Doing otherwise will force you to start by explaining that blockchain is a unique innovative technology, and tokens are an interesting new niche for attracting support and you will simply not have the time to do this type of client education.

●        The longer your sale goes on the more funds you will be able to collect.

●        It is impossible to sell tokens in one go. You will have to continually engage with your potential customers throughout your ICO: in person, through chats, webinars, Facebook, etc. No user will ever convert to a customer through just one click.

●        Blockchain community congregates on certain platforms. This target audience is segregated and can easily be captured.

●        Do not spend more than $500-1,000 to test any one marketing venue.

●        Minimize your use of intermediaries, and be careful about those you do use. Do not contract out all your marketing to an external turnkey PR company. You know your product best. Use intermediaries only when absolutely necessary.

●        Your team: technical support, traffic manager, PR manager, copywriter, SMM manager, designer (paid per piece), developer. These will be quite enough.

Statistics

●        ICOs generally involve from 1,000 token holders (bringing in $1-1.5 million) to 7,000 token holders ($20+ million).

●        An average contribution is $3,000-3,500.

●        Major regions by contributions (in descending order): USA, Europe, China, Japan.

●        Much noise without much action: all of Southeast Asia, Eastern Europe (such as Bulgaria), most of South America (excluding Brazil), all of Africa (except South African Republic and Nigeria).

●        Traffic brings in "small fish": $100-1,000. But they create hype and help generate interest.

●        PR campaign and media buying bring in "medium fish" willing to contribute $1,000-20,000.

●        IR (Investor Relations) is responsible for capturing the "whales" $20,000+.

All main information materials need to be translated into the following languages (in the decreasing order of priority):

  1. English
  2. Chinese
  3. Japanese
  4. Korean
  5. Russian
  6. Spanish
  7. German
  8. Portuguese
  9. Italian
  10. French

These ten languages will cover 95-97% of the market. You can forgo the rest.

Top 10 strategies (in the decreasing order of contributions)

  1. IR (Investor Relations): personal meetings with major potential token holders.
  2. PR in blockchain media. We estimate that this strategy will continue to be affective for at least another year.
  3. ICO listings. These include such platforms as ICO Countdown, ICOrating, ICO Tracker, etc. You should definitely list your ICO there, regardless of the cost. All token holders who intend to participate in ICOs and buy tokens use these information resources.
  4. Traffic: Facebook, Twitter, AdWords, Reddit, vkontakte.ru, Bing, Yahoo, AdRoll. In China search engine Baidu.
  5. Media buying: Only use blockchain media. This means about 100-300 publications. You can use email to cover the vast majority of these resources (publish an article, post a banner, etc.). Price tags of top media resources are through the roof, but mid-level and regional publications price their services quite reasonably, and you can publish your information for $200-500.
  6. Referral program. Bring in a friend and get 5%. A very effective tool.
  7. SMM (forums, chats (Telegram), groups (Facebook), subreddits).
  8. Influencers' YouTube and Medium reviews of your ICO.
  9. For complicated and unfamiliar regions (such as China, Japan, Korea) it's best to use contractors. This is a case where you should use intermediaries people who already have experience working in these markets. As far as China goes, we found that IR is effective, as are certain crowdselling platforms (ICO 360, etc.) and local chats (WeChat, etc., where we can negotiate with the chat admins to post our ads). But if you lack relevant experience do go ahead and use an external agency.
  10. Blockchain conferences. This is an integral part of IR. You can use these events to establish future relationships. Oftentimes, veterans and gurus are available for conversations and willing to offer advice. However, it is important to remember that you will not sell them anything right away.

How to speed up your sales?

●        Advisors.

●        Referral program for "whales" (engaging advisors).

●        Landing page and White Paper localization. There are multiple huge regions where people do not know English at all. These include Japan, China, Russia, Spanish-speaking countries.

●        Multi-language 24х7 support.

●        Chinese crowdselling platforms: ICO365, ICOAge, Bizhongchou.

●        Webinars.

●        Guarantors: escrow, powerful partners, etc.

What doesn't work or works poorly (based on our personal experience)

●        Blockchain forums: nothing but noise. News are posted on popular platforms so often that your postings will just get lost in this torrent.

●        Bounty programs: lazy participants, fake accounts, etc. We tried using them for document translations (to be paid in tokens) and found them lacking in efficiency.

●        PR in non-blockchain media. The only things they are useful for is to add the publication's logo (The New York Times, Forbes) on your ICO's website. This helps improve your target audience's trust. In terms of bringing in new token holders they produce virtually no effect.

●        Any types of spam: chats, PMs, comments, etc.

●        Traffic blasts on platforms: teasers, media coverage.

You could fit all your traffic in a budget of around $100-300K. Anything above $500K will be a useless extra expense. Better use your money to build up your IR.

Traffic sources

●        AdWords and Contextual Google Display Network (CGDN)

●        Facebook. Any re-marketing campaigns + interest-based advertising (Etherium, blockchain). Together, AdWords and Facebook bring in about 80% of registrations, engaged token buyers, sales, etc.

●        Reddit

●        Twitter (lately started banning ICOs as financial services)

●        Adroll, VK, Yahoo, Bing, Baidu (fraction of a percent)

Characteristic features of ICO marketing:

●        IR is the most important component of your token sale. It is important to remember that in ICOs which sell major amounts of tokens in the first seconds of the sale it is usually the result of their IR.

●        For major institutional players one has to create the supply shortage.

●        Marketing will allow to sell no more than $10 million. Everything else is direct sales.

●        Token holders study how your marketing is organized, and how your team is implementing it. They realize that there are primary and secondary demand risks. They watch to see which agencies you will engage, whether you translated your documents, whether you are expanding to other markets.

Technology aspect

In this section we will look at the technical aspects of conducting an ICO.

Components:

  1. Smart contract
  2. Book building platform
  3. Storage

What does a prospective token holder want to see?

You should remember that the standards have already been created. You should not test new technologies: The risks are colossal. Better stick with the tried and true solutions.

  1. Production standards: Ethereum ERC-20;
  2. Smart contract code posted on GitHub; and
  3. Book building platform (a service where token holders buy tokens).

Pluses:

      Ability to accept payments in multiple currencies

      No risk of Ethereum crashing

      Maximum security during the sale (tokens are issued and distributed after the end of the ICO)

Minuses:

         At first glance, one might think that this system is not automated and is less secure. This is not so. Escrow wallets can also be transparent and open to audit. Everything is done legally and securely, especially if all the storage requirements are fulfilled (availability of cold and hot storage). Everyone makes their own decisions.

  1. Instructions to the code

5.       Smart contract's conformity to its description in the project's White Paper and on the website.

  1. Links to external auditors
  2. Famous technical advisors to the project
  3. Escrow to ensure the safe and secure storage of funds. According to SEC, escrow is the crucial requirement. New escrow services started emerging which accept both the fiat and cryptocurrencies. They are also now able to convert the currencies during the sale, so the token buyers don't have to risk dealing with currency volatility. Escrow is a legal service which keeps the funds until tokens are issued and available for use. It ensures the users' safety and security.

Token's business features

These features are important because they are the key to creating the highest demand.

●        Review of the token utilization model

●        Review of economic features

●        Review of the potential growth of user community

Ultimately, you will need to evaluate the entire project in terms of the assessment of the token supply shortage. Whatever happens, the demand for tokens must continue to grow, while their supply will remain unchanged. This is a key parameter which needs to be taken into account when developing the token concept.

Token buyers look at the following issues:

         Quality: who is conducting the project and how

         Potential uses: potential demand growth

         Shortage assessment: how will the shortage be growing

         Risks: regulatory, marketing and technology

Shortage creation:

  1. If the number of available tokens is finite the shortage will continue to grow.
  2. Your project should show the growth shortage prior to listing the tokens on exchanges
  3. The project's team should be paid in the project's tokens to make sure to be on the same side as the token holders.

Listings always raise the same questions: how many tokens will be paid to the team; are team members planning to dump them right after the listing, what exchanges will the tokens be listed on, what shortage growth rate is the team expecting, and how will it be created.

You should certainly not rush to list your tokens. You can always list them when you have independently demonstrated your development and shortage growth. Otherwise your listing will be unsubstantiated.

ICOBox

ICOBox offers professional services conducting ICOs. Its market position allows it to see the situation from the perspective of both the companies issuing their tokens and the token buyers.

ICOBox offers the following service packages:

  1. Legal support
  2. Marketing
  3. Technology

Prices:

  1. Any 1 service: 25 BTC + 1% success fee
  2. Any 2 services услуги: 40 BTC + 2% success fee
  3. All 3 services (+token concept development): 50 BTC + 3% success fee

All BTC amounts denote the cost price of services.

ICOS token

If we were to spell out the aspirations of token holders and issuers, we will get something like this:

Startup's dream: To conduct our ICO with the help of an experienced team and to pay for it with its future tokens. Alternatively, it could be to strengthen its marketing efforts by ordering an additional marketing campaign from people experienced in conducting ICOs and to pay with its future tokens.

Token holder's dream: To be able to buy tokens of already successful ICOs, after they were issued, but at presale price.

ICOS token allows to realize both of these dreams in the following way:

  1. Startups get free ICOs, not paying money upfront but paying with their tokens later;
  2. Token holders gain an opportunity to acquire projects' tokens at a 75% discount at any time (even after their listing), paying the startups' costs of conducting ICOs; and
  3. The market stabilizes due to the increased number of conducted ICOs.

In late September, after completing its own ICO, ICOBox will start offering another service. Startups will be able to submit their ICOs for ICOBox's prescreening. Token holders will vote on whether they are willing to support such a project. The payment will be made in tokens.

The application form will be posted on September 15, with the first vote to take place on September 22.

ICOBox aims to bring to the market dozens of new ICOs per month. The company intends to start with 10 new ICOs per week and incrementally increase this number to 20. It is estimated that this level could be reached in the next two quarters.

To summarize, it could be said that we help token holders grow their businesses, and give startups the opportunity to conduct their ICOs for free, paying with their future tokens.








Back to the list


Related Information: