ICOs managed to raise more funds within the first three months of 2018 than they had done through all of 2017. In just the first quarter of 2018, ICOs raised a whopping $6.3 billion or 118% of the total amount raised in 2017, according to data published by CoinDesk. However, statistics also reveal that 81% of the ICOs in 2017 were frauds, with scamsters making the most of the ignorance of the general investor to defraud them.
The good news is that all these scams have made the public much more aware of crypto tokens and what accounts for a trustworthy token. So, if you want to establish the genuineness and value-add of your blockchain project, you will need to establish the viability of your crypto token, how it works within your ecosystem and how you intend to drive demand. And, all of this is what we essentially call “tokenomics.”
Whitepaper: Informing the World about Your Project
Writing a good whitepaper is a crucial part of any marketing effort for a new blockchain project. This is what informs the public about the problem that your project addresses, the uniqueness and efficacy of your solution and how the entire ecosystem will work to bring benefits for everyone involved.
This is also a good place to establish that your crypto token is not just a means of raising funds through an ICO but goes much beyond that to become a viable, financially robust alt coin. This is where you can explain how the entire economics of your solution flows via the token.
What Should Tokenomics Include?
With Google announcing that it is banning crypto-related ads to protect investors against “unregulated and speculative products,” blockchain marketing needs to establish the viability of the project being promoted. A good way to reassure investors is by focusing on four key aspects of your tokenomics.
1. The Functionality of Your Token
This is the first thing investors will be interested in – why you are creating a crypto token, how it will be used within your ecosystem and who will be able to use these tokens. You could also talk about how users can benefit from using the tokens. For instance, certain products could be available at a discounted rate when bought using your tokens. This will also prove useful in incentivising people to use your tokens.
2. How will the Token be Distributed?
Here, you can talk about how many coins will be available during the pre-ICO sale, how many will be sold via the ICO and whether there is any other means of acquiring tokens. For instance, just like you can earn Bitcoins via mining, your platform might have some Proof-of-Work basis for users to earn your tokens. You should also provide information regarding whether there is a limit to the number of tokens that will be issued or a roadmap for when future tokens will be issued and how many. Consider all the different ways in which tokens will flow through your ecosystem and provide information about this flow in your whitepaper.
3. Token Governance
Although blockchain-based projects aim to make the most of the decentralisation that comes with using this technology, your token will be governed by a set of rules and guidelines. This is not about the government regulations, such as the MiFID II, that cryptocurrencies need to comply with. These are the rules within your ecosystem on which the token functions. This could include the pricing of the token in terms of a specific fiat currency, guidelines regarding transactions on your platform and more. These guidelines are usually managed by the ecosystem’s community.
4. Workflow of the Token
By providing clear information about the entire workflow of your token, you will create transparency and earn the trust of investors. By working out the entire loop of how the tokens flow, you will also be able to identify and solve any back-feed issues. This is also one way to establish the long-term value and viability of your token. This is also a good way to provide details of your business model.
By establishing that you have designed sustainable tokenomics, you can set your project apart from the incessantly growing crowd of blockchain projects and their ICOs.