ICO 101 - How to create your first ICO
We are presenting you with a basic guide that will help you understand the basic steps needed to run your own ICO project. We will walk you through the process of planning your project, creating your website, writing your whitepaper, and creating your Ethereum based token.
An Initial Coin Offering (ICO) is a means of seed funding and crowdfunding through the issuance of a new cryptocurrency or cryptographic token. These tokens, which are issued mainly via Ethereum's blockchain, are used to raise capital for a startup or a specific project. Projects sell their issued coins or tokens in exchange for bitcoin and/or ether. An ICO is similar to an initial public offering (IPO). ICOs represent a relatively new financial procedure that has become one of the hottest topics in the financial industry. Many economists and financial observers consider ICOs a form of unregulated fundraising, while others view them as innovative models for venture funding. Moreover, whether or not an ICO token can be considered a security represents a major debate for legislators in many countries across the globe. There are currently more than 1,500 coins available for trading on various cryptocurrency exchanges. Not all cryptocurrencies and ICO tokens are issued on new blockchains. In fact, most of them are created using other well-established blockchains, such as Ethereum’s blockchain. Most of the ICO crowdsales today rely on creating ERC-20 compliant tokens, which run on Ethereum's blockchain. This basic guide will walk you through the process of how to do an ICO.
Is your startup suitable for an ICO?Some believe that an ICO can work for any project, enabling its creators to raise capital while avoiding the alternative long, daunting, and complex means of crowdfunding via more traditional avenues, such as an IPO. In order for your token or coin to gain popularity among crypto investors, it should be an inseparable part of your project's architecture. Potential investors should be able to clearly envision how your ICO's token is supposed to acquire value as your project grows. Investors should be able to answer the following questions regarding your token:
- How will your project benefit from a blockchain-based cryptographic token?
- What can the distributed ledger technology add to your project?
- What are your startup's ultimate goals?
- Why would potential investors be interested in buying your ICO's tokens?
- Are there any competitors to your startup?
Creating the ICO's websiteJust like most other business models today, a website is an important avenue to enable potential investors reach your product with ease, wherever their location in the world is. To put it plainly, investors won't buy your ICO's tokens if your project lacks a professionally designed website. It is pivotal to create an attractive website that includes all the data that potential investors might be looking for. An ICO website should include the following seven items. 1- Website Languages As ICO crowdfunding is becoming a global phenomenon, your website should be translated into a few other languages, in addition to English. We recommend translating your website into Russian, Chinese, French, and Spanish. The more translations you are able to offer, the better. 2- The Homepage Most successful ICOs have websites which contain a professionally designed landing page. On most ICO crowdfunding platforms, more than 90% of the data is present on the website's landing page. Before the actual launch of the ICO crowdsale, most ICO campaigns present a countdown timer on the website's landing page that marks the beginning of the crowdsale. Usually, the website also includes an email subscription form to keep investors up-to-date by opting in to receive news about the project. After the actual start of the ICO, the landing page occasionally adds a counter that shows the total amount raised via the ICO. 3- Detailing the Project The website should include a section that details information regarding the project's goals, technological innovations, roadmap, current status, and other relevant data. Such a section is important for investors, as it helps them understand what they are investing in. This section should include infographics, figures, and other graphics that illustrate the information in an attractive way. 4- The ICO Token The most important segment of the website is where you describe the details of your ICO token. This section should include:
- The token's name and ticker symbol.
- The uses of the token.
- The token's price and offered bonuses, if available.
- The amount of tokens offered for sale during the ICO, as well as the total amount of tokens.
- How to get tokens for free from airdrops (if applicable).
- The start and end dates of the ICO sale.
- The percentage of tokens held by the project owners.
- The hard cap of the startup.
- Bounty campaigns.
The ICO's whitepaperWhitepapers are indispensable parts of ICO ecosystems. An ICO whitepaper is a document that includes the technical properties of the project and token in relative details. Whitepapers are supposed to target professionals, crypto experts, and blockchain developers that can understand the technical details of your ICO token and underlying project. A whitepaper is not supposed to focus on marketing and is more or less a form of educational manual. It is very important to map out the concept of your project before attempting to write a whitepaper. The whitepaper should include the following:
- The project's goals, features, and roadmap.
- The problem the project is aiming to solve, its target audience, and the market where it is supposed to operate.
- The project's team members and advisors.
- The project's financial basics and the economics of the ICO token.
- State the problem that the ICO's project solves. Include relevant illustrations, charts, and infographics that detail the problem. After the problem is clearly presented, the description of the project should be detailed.
- Clearly structure the whitepaper in a clean and linear manner. It should not be colorful or contain a large amount of complex technical jargon or buzzwords. As mentioned earlier, whitepapers are aimed at professionals, rather than newbies or inexperienced investors, and should not include colorful logos or catchy marketing slogans. A whitepaper is an educational document that details the technical features of the token and the project's details, rather than being focused on marketing or boosting sales.
- Thoroughly research other whitepapers of ICOs that are similar to yours. Consider their outlines and try to come up with a similarly professional whitepaper.
- On average, a professional whitepaper is between 15-20 pages. The most important thing is that when a potential investor goes through your whitepaper, they will understand the project, how the token will work, what the prospects of the project are, and how users are supposed to benefit from the offered service or product.
Issuing your ICO tokens on Ethereum's blockchainThe following steps will show you how to issue a standard ERC20 token to use for your ICO project. Note: This tutorial is inspired by Moritz Neto's tutorial on Medium. You will need the following:
- An Ethereum address - We recommend using MyEtherWallet.
- Ether - You will need this to pay for the execution of smart contracts. As your token will be issued first on a test network called "Ropsten network", you won't need real ether.
- A code editor, such as Notepad++ or Atom.
- A solidity smart contract.