ICO and Vesting tips for the blockhain projects
At the start of every startup, the challenge is finding investment for growth. Imagine rallying supporters ready to back your vision.
In every startup at the initial stage, the question always arises: where to get investments for the project growth? Suppose you've gathered a crowd of people who believe in your project and idea and are ready to invest in you. How do you organize this process in the most convenient way? In this article, we will talk about ICO and Vesting as the most convenient tools for investing in the growth of a blockchain startup.
ICO vs. Vesting: What Are They and Why Do I Need Them?
At their core, both ICOs and Vesting are based on the same principle: raising investments from users who believe in your project or see a personal benefit in it. Users provide the project with funds, either in cryptocurrency or fiat, in exchange for your startup's tokens. This is where the similarities between ICOs and Vesting end, and the differences begin.
In the first scenario, a promising blockchain project with a transparent and fresh idea gathers a certain number of followers willing to give the project a chance to emerge fully, hoping to earn a bit themselves in the process. Great! The next step is to organize this process in a way that's most convenient for all parties. The classic and currently most popular method is to deploy your token and, before releasing it to decentralized markets, conduct a pre-sale for a stablecoin or fiat at a fixed and investor-friendly price, lower than the expected market price post-launch. This influx of funds allows further project development, while users acquire tokens at a lower price, which are likely to increase in value once the platform launches. This is the purpose of an ICO.
Another example involves you, the startup leader, seeking funds to develop new iterations of great features for an already somewhat established and stable project. You could proceed similarly by offering investors the chance to buy a large amount of your token at an attractive price, thus securing immediate development funds. However, any investor would naturally want to profit from their investment as soon as possible. This presents a significant risk of investors collectively selling their tokens on the market, potentially crashing its price, to the detriment of both investors and the project. This is where Vesting becomes invaluable. Vesting addresses two issues at once. Firstly, it spreads the distribution of purchased tokens over time and in portions, reducing the market risk for your token. Secondly, Vesting increases investor engagement in the project, as it's in their interest for the locked funds not only to retain value but also to grow over time.
First Rule of ICO Club: Don't Mention the ICO Club
We've gotten to grips with the purpose of an ICO and its primary use case. But how do you implement this in practice? It's actually not that complicated. There are platforms specialized solely in conducting ICOs for other projects, and you can utilize their services for this task. You provide them with your tokens, and they provide you with funds. The advantages include these platforms having a significant user reach, which theoretically could increase attention and trust towards your project, as well as the amount of investment in it. They also handle all payment-related issues for users, which can be beneficial and convenient. On the downside, they will charge you a fee, likely depending on the platform's popularity. I won't list the market players here; they're easy enough to find with a simple Google search and by contacting their customer service.
The second method involves probably having a sleek landing page for your startup at this stage. If you have additional funds, you can create an investor cabinet on or alongside this landing page. Here, users can contribute to your project's development and receive a portion in tokens. This way, you don't have to share any commissions with others. The investor portal can be as minimalist as you wish, requiring only a day or two of work from a frontend specialist and a designer, depending on your taste and budget. However, you'll have to handle payment issues yourself. Generally, accepting a variety of stablecoins is straightforward, but dealing with fiat can be more complicated.
You could go even further and lead the charge by developing a new platform for conducting ICOs. Help grow the market by conducting ICOs for young startups and earn a bit from the commissions. But be aware, competition in this segment is fierce, and you need a truly unique offering to displace the established giants.
Vesting: Divide and Conquer
To reiterate, if you're currently at the "super-mega-ultra cool idea" stage with, at most, a landing page as your functional output, then ICO is likely what you need right now (though there can be exceptions depending on your idea, so consulting with business analysts in this domain is advised). However, if your product is already live, your token is trading on decentralized markets, and you have a group of regular users but things are moving slower than anticipated, with new plans and ideas continuously emerging, then vesting is the way to go.
If all the above conditions are met, companies specializing in investments in this market segment have likely taken notice of you. Perhaps even one of your regular users, seeing tremendous potential in your project, is willing to invest. The challenge again is how to gather funds for further development of your idea in the most pleasant and safe way for both you and the investors. The primary risk here is to prevent greedy investors from crashing your token's value by dumping it on the open market. Vesting precisely addresses this issue.
As with ICOs, the fastest and easiest route is to turn to platforms that will carefully and meticulously handle this task for you. But in my opinion, when it comes to vesting, that's not serious—you're capable of solving this challenge with your own resources.
The most classic method is to create an investor portal within your platform, where users can gradually receive their token allotments and do as they wish with them, without significant risks to your token. By collecting the necessary funds at the start, you can expand your team and delight your investors and users with new, cool features. If all goes smoothly, the value of the funds locked for users will only increase, along with the popularity of your project and the price of its token.
Essentially, this requires updates to the frontend for a couple of screens and a smart contract (with both ready-made solutions and the possibility of custom vesting solutions to fit your needs), and, of course, investors eager to throw money at you now, hoping for future benefits. And that's pretty much it, with everyone benefiting.
Conclusion
I believe this information should be more than enough for you, my dear and innovative startup enthusiast, to understand exactly what you need to make your remarkable project or idea even better! I deliberately avoided using too much industry-specific jargon to show you that all of this is not as complicated as it may seem, but very much achievable. Because the world is driven by ideas, and that's the engine and the key! Good luck to you, and I look forward to our next encounter!
Free technical consultation on ICO or Vesting
Book a quick sync up with our CTO if you need a helping hand or visit our website:
Last updated
