Staying Ahead Of The Game:  A Web3 Guide For Token Launches

Digital assets are the beating heart of any Web3 project, and when it comes to launching them for the first time, it’s absolutely vital to get it right.

If a token launch is executed correctly, it can draw lots of attention to the project, resulting in serious buying pressure that increases its price, making a ton of cash that can be used to fuel future development and accelerate community growth. But it requires extremely careful planning, with solid tokenomics and an intelligent listing strategy to pull it off, and that’s not easy to do.

If you’re currently prepping for the launch of your project’s native asset, you’re going to need some advice, and that’s exactly what we’re about to provide.

1. Why do you need a token?

First things first, your token needs a purpose, and it’s down to you to define exactly what that is. There are lots of reasons your project might need a token, whether it’s to provide access to specific products and services, creating a currency for your community, governance rights or something else. By defining what your token is for, you’ll be able to design its economics in a way that aligns with your project’s goals.

Bear in mind there are several types of tokens in crypto. They include good old “utility” tokens, for paying gas and other fees to access products and services, “governance” tokens that give holders the right to vote on protocol changes, and “security” tokens that tokenize the ownership of assets.

Others include “stablecoins”, whose value is pegged to a fiat currency or something like gold, and “memecoins”, which don’t have any real utility or tangible value, and are more focused on engagement.

2. Select a blockchain

As a Web3 project, you need to be hosted on a blockchain, and there are many to choose from, including Layer-1 networks such as Ethereum and Solana, and also Layer-2s like Polygon and Arbitrum.

The blockchain choice is critical as it has a direct impact on transaction speeds, compatibility with other dApps and user access, and of course each network has its own advantages, which should be carefully assessed to see if they meet the needs of the project.

3. Design the tokenomics

This refers to the underlying economic model of your token and should be carefully thought out to encourage participation and a healthy price, ensure sustainability and prevent inflation.

The main elements of tokenomics include the total supply, which can be inflationary or fixed, and a distribution plan, which can involve rewards, team allocations, time-locked tokens, airdrops and so on. These days, most tokens integrate some kind of vesting schedule to prevent early investors from dumping assets on the market early and crashing the price, and then there are the utility and demand drivers, which encompass payments, governance and staking. Projects may also consider burn mechanisms to prevent inflation by reducing the supply.

Platforms such as Machinations and Nomiks can be used to create and customize a tokenomics framework.

It’s always a good idea to incentivize token holders, which is why many projects create some kind of staking mechanism. Staking is a vital aspect of tokenomics because it can help to reduce selling pressure and encourage participation and drive community growth. Always remember, a sound tokenomics model can help to drive long-term growth, but a single flaw will likely spell disaster. Everything from staking to vesting schedules and demand drivers must be carefully thought out.

4. Create the smart contract

After defining your token model, it needs to be codified with a smart contract. Ethereum-based tokens generally use the ERC-20, ERC-721 or ERC-1155 standards, while other blockchains will have their own.

With regard to smart contract development, the steps include coding the contract, testing functionality such as transfers, minting, approvals and burning mechanisms, deploying it on testnet for initial testing and, finally, the mainnet launch.

Developers can take advantage of open-source libraries such as OpenZeppelin, which provide secure smart contract blueprints that can be customized easily. Once developed, they can then deploy the smart contract on the target blockchain using a wallet such as MetaMask and frameworks like Hardhat, Truffle or Remix.

5. Audit your smart contract

Security is essential for any new token, because users rightly have worries about investing in a new asset. A single bug in the smart contract can be enough to create exploits and vulnerabilities that can lead to user’s wallets being drained of all their funds.

Initially, developers can use automated auditing tools such as Remix Analyzer, MythX and Slither, but once any problems found using these tools are ironed out, it’s time for a more extensive, manual audit. Most projects approach reputable specialists such as Hacken or CertiK to perform third-party audits on their behalf, where they’ll carefully vet the smart contract’s codebase for re-entrancy attacks, integer overflows, unauthorized minting or burning, logic bugs governing supply control and more.

Once the audit is complete, it should be published on the project’s website and ideally advertised too, so as to create more trust and confidence among investors.

6. Plan the launch and distribution strategy

With the contract done and dusted and secured, the next task on your lists is to plan for the token’s launch and distribution, and this is a key step. Some of the most common token launch/distribution methods include token presales or IDOs, giving early investors a chance to buy in at a lower price. The best way to do this is to use a specialized launchpad platform, such as DAO Maker, Polkastarter, Binance Launchpad or DuckSTARTER, to name just a few.

Other possible distribution methods include staking rewards, where the tokens are given out to those who stake the tokens they bought at presale, or liquidity mining, where those who provide liquidity on DEX platforms can receive additional tokens. Airdrops, for completing tasks that can help to market Web3 projects, are also effective, and then there are general listings on centralized and decentralized exchange platforms.

Most projects set and publicize a token launch date to try and generate anticipation and build hype ahead of time, communicating this through social media channels. You’ll also need to set the token launch price and sale terms, being careful to make it attractive to investors but also realistic, ideally based on the project’s valuation. Whatever the sales terms and vesting conditions are, these should be clear, fair and transparent.

Depending on your target audience, you may want to establish some kind of regulatory compliance to attract big-ticket investors and bolster credibility in your project and token.

For this, it’s best to seek counsel from attorneys and other experts that specialize in the legalities of blockchain and digital assets. Important things to remember include never guaranteeing profits for investors, implementing KYC and creating legal documents such as Terms of Use, Privacy Policy and Token Sale Agreement. By following these best practices, you’ll minimize the risk of enforcement actions targeting your project.

7. Execute the listing

It’s at this stage that you’ll want to consider bringing onboard some professional expertise in the shape of a market maker such as Kairon Labs, which has established a reputation for providing ethical services for crypto projects, without engaging suspect activities like wash trading. Rather, it relies on proprietary algorithmic trading software and a network of hundreds of exchanges to ensure sufficient liquidity to meet trading demands.

Kairon Labs can help projects to develop a focused listing strategy, covering liquidity pool creation and incentives, ongoing management and locking, plus handling verification on trusted platforms such as Etherscan and Coinmarketcap.

Market makers are essential for creating a healthy trading environment across multiple exchange platforms. Some of the most popular DEX platforms include Uniswap, PancakeSwap and SushiSwap, and listing on these platforms will require the creation of a liquidity pool, where your token is paired with an established asset such as USDT, USDC or ETH, with incentives for users to deposit funds ino it.

The advantage of listing on a DEX is that it’s much faster, but for greater exposure you’ll likely want to make your token available on some CEX platforms too. For CEX listings, there’s no need to worry about creating a liquidity pool, but these platforms have strict guidelines that must be adhered to. Projects will have to undergo a rigorous and lengthy application process that involves a thorough legal review, and there may be expensive listing fees too. Once again, a partner like Kairon Labs can provide assistance in meeting these requirements.

Understand that when it comes to the actual launch of your token, experience is priceless. The listing process can be extremely unforgiven for first-timers, and any mistakes made will likely be extremely damaging and costly, perhaps even irrecoverable. As such, an experienced hand who has already walked this path can dramatically increase your chances of success.

8. Grow your community and establish governance

Following your token launch, you’ll have to go all out in your efforts to grow your community, as this is the secret to accelerating adoption and carving out a path to success.

Community building can be done on multiple channels, with the most obvious ones including Discord, X and Telegram. Once you’ve established a nascent community, you’ll ideally want to get them involved in governance as soon as possible, to give them an extra incentive to participate and stack up on tokens.

This means creating a decentralized autonomous organization or DAO using a tool such as DAOHaus, for community members to create proposals and discuss them in depth, and a platform such as Aragon to handle the actual voting process.

When growing your community, understand that regular engagement and incentives are vital, so be sure to conduct regular AMAs, create lots of educational content, bounties for bug finders and other initiatives that promote long-term token holding and participation in the project.

Final thoughts

It’s key to understand that launching a digital token is both a technical and a strategic process, involving economic modeling and smart contracts, as well as community building and legal planning. The ultimate success of your token launch hinges on multiple aspects, including, but not limited to, clear utility, fair distribution, price stability and robust security.

There are dozens of tools and frameworks to help you target started, but the most successful projects understand that token launches are a serious business, and often require specialist expertise. So don’t be afraid to seek out expert, outside help if you want to boost your chances of success.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.