How To Create An ICO Token
Creating a digital token for your ICO is an important step. It’s in the name: Initial Coin Offering.
There are many platforms, like Ethereum and Stellar, that you can use to launch your own token. You can also build your own blockchain and use that to create a token.
Here are a few things you should consider regardless of which approach you decide to take.
Questions to ask yourself
Here are some questions to ask yourself before setting out to create your ICO token:
- What is the overall aim of your business?
- How will it benefit from blockchain technology?
- Why do you need a token system?
- What value does it bring to users?
- Is it legally compliant?
- Will it be possible to list the token on an exchange?
- Who are your competitors?
What is the purpose of your ICO token?
Your ICO token should be closely related to the product or service you’re offering. There are three main types of ICO tokens.
1. Security tokens
A security is a very broad term that covers pretty much any asset that can be traded. In the context of an ICO, security tokens can represent tangible goods like gold and property. Make sure to read up on security regulations if you will be issuing these tokens.
2. Utility tokens
The Howey test requires tokens to meet three criteria in order to qualify as securities. Tokens that do not meet these criteria are usually considered utility tokens. Utility tokens tend to be an integral part of a blockchain platform or application that enables users to use it or enjoy premium benefits.
3. Equity tokens
Equity tokens are the latest in ICO tokens and function more or less like shares in an IPO. Investors will receive tokens that allow them to vote on decisions taken by the company running the ICO. Regulations for equity tokens are still unclear.
How much should the Initial Supply of Tokens be?
You will need to decide how many tokens there will be, and how they should be distributed. Remember that you have several options:
- Private sale
- Pre-ICO sale
- ICO sale
- Post-ICO sale
You also want to allocate some tokens to your team and advisory board, as well as for business expenses and reserves.
How many funds you aim to raise will also help determine the Initial Supply of Tokens. Most ICOs have both a soft cap and a hard cap on how much they want to raise.
How to create your ICO token
The vast majority of ICOs use Ethereum (ETH) as their platform to generate tokens. There is, as a result, a lot of guides available on how to do just that. Creating a token on Ethereum can take as little as 20 minutes.
Alternatives have sprung up, due to the transaction limitations on the Ethereum network. One of those alternatives is Stellar Lumens (XLM), and there’s also guides on how to create a token on their system.