ICO: how to run and how much does it cost?
What is ICO in simple words.
ICO – Initial Coin Offering – the initial placement of Coins or Tokens among investors.
In simple terms, ICO is the issue of a certain amount of coins or tokens and an attempt to persuade future investors to exchange them for more liquid coins, for example Bitcoin or Ethereum at some rate. As a rule, for these purposes Tokens based on Ethereum are used, because for this it is enough just to issue a smart contract.
Why do investors need to change liquid Bitcoins to my “crypto-wrappers” that are not yet needed by anyone? It’s simple: they hope that over time the demand for them will grow and they will be able to earn on the growth rate, selling tokens on the exchange.
For example, you have a project – a social network where you plan to use your token: with its help, users can make each other gifts. If your network becomes popular, then people will need these tokens and they will buy them. And, consequently, their exchange rate will grow.
What the typical ICO consists of.
- White Paper. The White Paper contains a sufficiently detailed description of your idea to convince investors to believe that the demand for Coins or Tokens will grow. This is the most complex document: it is prepared longest and must be carefully read. Lawyers should also participate in the preparation of this document.
- Smart contract. If you do not make a Coin with your own Blockchain, then the most popular way is to release a token through a smart contract based on Ethereum.
- MVP (minimum viable product). It’s better, if you have a prototype of your service at the time of going to ICO, it will remove the vigilance of investors and allow you to raise more funds, because they understand that the future growth of the value of the token will depend on how much it will be demanded.
- Team. The stronger the team looks, the more money you can collect. Typically, indicate 4-6 key team members.
- Well-known advisors. Strong and well-known advisors, whom you will involve in your project, will significantly increase the possibilities of raising funds. As a rule, consultants want some kind of reward immediately, as well as a share of the collected funds (bounty).
- ICO site. You will certainly need a beautiful site, which in a laconic form will inform investors about the project. Nowadays the single-page structure is mainly used, it is very convenient for acquaintance. The main language of the site and White Paper is English, but usually translates into 4-5 most common languages.
- Advertising and PR. Here, traditional PR-work: compiling a list of sites, preparation of materials, contact with editors. You will also need to register for ICO trackers, such as: Icoalert.com, Icorating.com, Icocountdown.com, The-blockchain.com and more than a dozen.
- Work with the community. You also need to configure social channels, at least: a blog on the site, Reddit, Medium, Telegram, Twitter, Facebook. A lot depends on the skillful management of these channels.
- Integration with stock exchanges. After the ICO, investors should be able to sell and exchange a token. To do this, you need to agree on the listing on the exchanges. Large exchanges will request money for listing.
How much does the ICO cost?
The cost of an ICO is usually $ 100,000 – $ 500,000 and very much depends on factors such as:
- Is the product ready, or is it necessary to develop MVP.
- How much is White Paper worked out.
- The number and composition of the advisers’ board is how much they are known.
- PR coverage, the number of publications, the number of social channels.
Nevertheless, we can distinguish some works:
- Developing a Smart Contract from $ 3,500.
- Development of a prototype (MVP) from $ 30,000.
- Development of the ICO site with the investor’s office from $ 10,000.
How long does the preparation for the ICO take?
As a rule, preparations for the ICO take 3-6 months, many people from lawyers and advisers to programmers and designers take part in this process. The fundraising itself is usually divided into stages and is held for 2 months.
Questions and answers on ICO (FAQ).
- Should Token be directly used in my project?
- Undoubtedly, investors hope that the demand for a token will grow and they will be able to sell it expensive. Use in the project – a pledge of value growth.
- Is it possible to use the token as a share in the business and with the help of the ICO simply to draw money into the project in exchange for dividends?
- The technology allows this, but such tokens will be of the Security Token type and will be equated to securities. The use of Security Token is prohibited in many countries.
Still have questions? Contact us, we’ll tell you in detail and together we will work out a strategy for entering the ICO!