During the 1849 California Gold Rush, few prospectors found enough gold to make themselves rich. Most of the people who made money back then were those who sold shovels, jeans, tents, pickaxes and the likes of, to the miners at astronomical prices.
Fast forward to today’s ICO gold rush and you will find that many high-volume exchanges are charging exorbitant fees to list the issued tokens from ICOs. A recent report by Autonomous Next (a financial research firm) suggested that exchanges charge fees of up to $3 million USD to give ICOs access to quick liquidity. It should be noted that this information was garnered by sleuthing on the crypto rumour mill, from Telegram groups to whispered numbers between entrepreneurs. The true figures are not actually known but given the current market conditions the figures being suggested are in no way unrealistic. Tokens have a greater value proposition and become more appealing if the purchaser knows they can trade them easily, meaning a successful ICO can at least in part come down to getting listed on a major exchange. It is clear that the exchanges managing these ICOs are getting fat off the proceeds of these coin offerings whilst ICOs are having to significantly overfund to cover these costs.
Compare these fees to those of a traditional IPO on the NASDAQ and you will see that they charge as little as $125,000 USD with a $25,000 application fee. It is quite apparent that all of the large costs that came with the old ways has found its way to the new crypto financial ecosystem. But what ways are there of listing your coin with little or no cost?
Fortunately, there is hope. Decentralized exchanges offer the opportunity to list your ICO for a tiny fraction of the cost of getting yourself listed on some centralized exchanges. An example of such a decentralized service is Bisq. Although, exchanges such as this are still in the very early stages of development it looks like the general industry trend is moving away from centralized exchanges and towards the decentralized exchanges.
The process of listing a coin on an exchange varies significantly from site to site and by the nature of your unique coin. But generally, a strong team with a better product that is upfront with information should have a relatively simple time getting listed on most exchanges.
In the USA and some other countries, paying an exchange to fast track your tokens listing raises some very difficult regulatory questions. Particularly if you are claiming your token is a utility token. If you pay an exchange to list your token it is essentially creating a secondary market. This is a factor that the United States Securities and Exchange Commission (and other regulatory agencies) consider when determining if a token is a security. This is not just a problem for ICO operators. The SEC has announced that it is illegal for exchanges to list security tokens without registering themselves as a securities exchange.
Falling foul of the SEC is not the only way you can find your ICO on the wrong side of the law. When dealing with other people’s money it is recommended you take legal advice whilst preparing a campaign.
You should also be careful about losing the trust of your audience. Due to the unregulated nature of blockchain there have been many scam ICOs. Investors are therefore cautious. Any inference of fraudulent activity will be a huge red flag to potential investors. It is important to remain genuine throughout the process.
Merely getting your ICO listed on an exchange is not enough. It is very important that potential investors get to hear about your ICO. Some exchanges will help you with this and even allow you to pay to increase your listings visibility within their platform. However, there is still much work to be done. You cannot just assume that investors will flock to your ICO. Instead, its success (or failure) is directly tied to your marketing strategy.
The first step as an ICO organizer is to ensure that you place all the information about your upcoming token release on special calendar sites. There are a multitude of resources available to publish a schedule of a planned ICO. A quick Google search should bring up the most popular ones. If your project is built upon a popular blockchain technology such as Ethereum you should look for the calendars that mark the projects that are run on it.
It is important to interact with both your potential investors and potential customers. You need to share with the world how interesting your project is. Social Networks are a great way to get your message across and receive valuable feedback from a wide audience.
After these steps have been taken it is important that you work with on and offline media. You will need a website with a decent blog to publish news, issue press releases, get in to relevant industry publications and use these to provide details about your business.
Investors like to see a good team behind a project. It is important to have a list of all major team members and provide details of their social media profiles. It is important to the success of your ICO that you do not have significant changes to your team before and during your campaign. Getting relevant industry professionals on board as advisers is a great way to garner trust from your audience.
Avoid making unrealistic or unclear goals in your proposition as it gives the impression your team is either incompetent or dishonest. It is imperative that your ICO has a white paper that clearly outlines the technical aspects of your proposition. It should clearly detail what problems your proposition solves and how it is going to do it. Your roadmap should include clearly defined realistic goals and achievable timeframes.
Finally, it is incredibly important that you are fully prepared before launching your ICO. It can be very tempting to try and launch as soon as possible. In most cases ICO’s are limited in time and all foreseeable problems should be ironed out before launch.