Are you a business owner? If you are, you will understand certain sales, customer service, or customer retention strategies that one has to engage to grow and stabilize their client base. However, even if you don’t know anything about business, you will understand better here, while learning more about cryptocurrency. When you are venturing into a business or you want to improve your sales, you come up with ideas like, discount sales, buy one get one free, refer to get a gift, and various other concepts. These ideas are all encaptured into this popular saying “You lose some to get more”. Even if you are just an investor or consumer, to get the value of a product, you have to bring out some of your assets (that is pay for the good or service).

How then do these illustrations correspond with cryptocurrency, you may start to wonder. Let’s dive into the definition of a token generation event (TGE).

Token Generation Event (TGE) is a sales strategy in the blockchain network and its launching, which involves the new crypto project selling its native tokens to investors, to raise capital. Hence, as the business owners, the new developers push out their native digital assets in exchange for funds to work on the project. The investors as well, put in their resources to own a stake in the project to be developed. Can you see the value in return for money as a consumer?

In the event of a token generation, the token issued does not have a certain value yet, that is, although it is worth something, you don’t know the exact worth of this token. It is designed as a utility token, which applications will eventually be built around to define its worth. The distributed token is a portion of the finished product.

Process Involved in Token Generation Events (TGEs)

Some processes must be in place before a TGE can be executed. These processes can be simplified into six stages or steps. They are:

The concept of the project: A blockchain project requires a properly structured concept for a decentralized application (DApp) or service. This idea has to offer a worthy value to the potential investors or the cryptocurrency market at large. This is what makes it acceptable when it is launched. That is, a new crypto project is launched with a concept that offers a solution to an existing problem or a value that has not existed before. This strategy is the catch for anyone who is putting their assets on a new project.
Whitepaper: When the ideology behind the new concept is established, a document with in-depth information about the project. This document highlights the vision, goals and milestones, technological improvement and specifications, and all other information about the project, including the developer’s crew (team members). The essence of this document is to prove the transparency of the project, giving users and investors adept knowledge of the blockchain network, thereby attracting them, by earning their trust.
Token Creation: In TGE, it is essential to note that the main activity is the distribution of the utility token. For this to occur, there is a need for the token to exist. That is the essence of this process. The distributed tokens can be built around various platforms like Bitcoin, Ethereum, etc. But it must be a reputable existing platform. These tokens are only a portion of the finished product, hence they are created in a limited quantity, and ownership of these tokens represents a share in the project.
Smart Contracts: The essence of a smart contract is to ensure automated dissemination of the digital assets created to investors, based on laid down standards. This could be a proof of payment or a generated code. That is, the system is designed to deliver tokens to users after a requirement has been fulfilled.
Sales of Tokens: During TGEs, there is a set time frame for distributing tokens to buyers. There are various means of implementing token sales, these are:
- Presale: This kind of sale is done before the token is made available on exchange platforms. The token is sold at a discounted value to investors.
- Public sale: In public sale, the token is announced on general exchange platforms at a large discount, this is to make it available to a larger audience. This could also create a form of publicity for the coin so that when it is fully launched, users are already familiar with it.
- Private sale: Private sales only make the token available on a first-come, first-serve basis. That is, the token can be bought only by early investors. The number of tokens created for this sale is not large and the period of sale is usually a short one.

The token sale is aimed at fundraising, and the funds from it are used to develop the project.

Token Distribution: This is the last stage. After the conclusion of The TGE, the tokens are now officially distributed based on the smart contract pre-set conditions. It could be effective immediately after payment or based on a scheduled distribution.

Merits and Demerits of Token Generation Event (TGE)

There are several benefits to Token Generation Events, but majorly it is a fundraising avenue for the developers of a new blockchain network to raise capital for the growth and development of their projects. In addition to this TGEs also helps in the creation of a community for the new project, so that when it is launched officially, it already has a group of users or supporters who are involved in it. It further aids token distribution, market liquidity, and innovations, as TGEs have been able to fund many innovative concepts and DApps.

Although TGEs have proven extremely relevant in the development of new projects, there are certain blockers on its path such as market volatility, regulatory doubts and uncertainties, and the well-known risks attached to cryptocurrency, scams.

Conclusion

In the blockchain network, TGEs will continue to be a relevant activity because of the pivotal benefits attached to them. However, users and investors must be wary of the risks attached to them. This is the essence of belonging to a reputable crypto community where you can get first-hand information s on the market trends and happenings. To enjoy the exciting benefits of the Crypto world, you must be wary, informed, positive, and ready to take risks.