Successfully launching a token can be an incredibly complex process, as it often involves multiple moving parts, a long list of external partners and dependencies, and a small execution window to get things right. Furthermore, unpredictable timelines can often leave teams scrambling to ensure everything is in place prior to launch.
While token launch mechanisms can vary substantially (e.g., whether conducted through an initial exchange offering, launchpad, airdrop, or liquidity bootstrapping pool), the token generation event (TGE), or when the token is first made available to the public, typically involves:
- Distribution - teams must ensure tokens are sent to predetermined network participants in a fair and secure manner.
- Exchange Listing - listings on centralized (or decentralized) exchanges enables price discovery, amplified distribution, and sufficient liquidity with the help of market makers.
- Marketing and Community Building Efforts - launches attract attention, and serve as an opportunity to generate awareness and build community for the project and its token.
- Token Functionality - if applicable, teams must also ensure token utility such as staking, governance, and/or bridging is functional.
While all of the above are equally important to get right, in this blog we’ll aim to focus on how leveraging Magna drastically simplifies token distribution at launch - allowing teams to better devote their time to the other aspects of a successful token generation event (TGE).
What do distributions at token launch look like?
At its core, launching a token involves distributing or transferring ownership of a project’s tokens from the team’s wallet to the protocol’s contributors based on a predetermined supply breakdown and schedule.
Depending on the tokenomics and supply allocation, projects may need to deliver tokens to a range of stakeholders across its ecosystem, including:
- Team and Employees
- Early Supporters (e.g., community members, incentivized testnet participants)
- Public Sale Participants (if applicable)
- Eligible Airdrop Recipients
- Foundation Treasury
- Other Ecosystem Participants (e.g., validators and miners)
Diverse unlock schedules
Thoughtfully designed tokenomics and supply emission schedules will also dictate different unlocks for each stakeholder, meaning the tokens are made available to each stakeholder on different schedules. For example, some participants like investors may have a one-year lockup before their tokens unlock gradually over time, while others like airdrop recipients may be fully unlocked at launch.
For example, refer to the vesting schedule for ARB, the native token of the Arbitrum Network, taken from Token Terminal below.
Each stakeholder is slated to receive tokens unlocking on different schedules - which teams will need to account for when determining the amount of tokens to send to stakeholders at launch and beyond.
To further complicate matters, some token allocations may involve additional limitations which alter the amount of tokens available to the stakeholder. For example, tokens allocated to employees are also subject to a vesting schedule (much like equity grants) based on their start dates, which may not align with the unlock schedule.
Necessitates robust and secure infrastructure
Generally, a substantial proportion of the total token supply is on the move at launch. Not to mention, any distribution mechanisms established will also need to account for future vesting occurring over the several years beyond TGE.
This poses substantial security risks, whether that’s (1) risk of human error if manually distributing tokens, (2) exploit risks in the deployed smart contracts facilitating the unlocking and claiming of tokens, or (3) the inevitable scam attempts as bad actors look to capitalize on unsuspecting stakeholders with fake claim portals.
Facilitating a coordinated distribution of substantial amounts of tokens requires robust and secure claim portals, gas-optimized vesting smart contracts, and foolproof processes for the team to manage edge cases. These all take substantial time and resources to build - particularly smart contracts, which require extensive audits.
Transparency and fairness are important
Transparency and fairness are vital during a token launch, as they can avoid any potential perception of favoritism and contribute favorably to project sentiment. This can mean making sure all stakeholders gain access to their tokens at the same time, or publishing the token contract address and explaining any pre-TGE movement of tokens ahead of time.
How does Magna Help?
Magna offers a set of robust, turnkey solutions that allow projects to securely automate often-complex distribution and vesting schedules,
With Magna, projects can easily set up and initiate their distributions for launch all at once. Our team recognizes that thoughtfully designed tokenomics are often critical to aptly incentivizing network participants, which can translate to often complicated distribution schedules. With self-serve tools and white-glove support, our platform makes the distribution and claiming experience simple for the team and the stakeholder regardless of schedule complexity. Feature-rich functionality is also readily available to meet project needs for specific workflows (e.g., tax reporting for employee distributions)
Secure and robust
Projects can deploy trusted and audited smart contracts from their own wallet - ensuring no other parties have control over the tokens at any point during the distribution process. Furthermore, dedicated portals with robust security features (e.g., MFA) enable users to easily claim their allocations with minimized risk of tokens being compromised. Our token management tools also allow project teams to manage distribution processes securely in-app - whether that be collecting wallet addresses, cancelling allocations, and spinning up additional distributions as needed.
Built with your launch in mind
Timing can often be critical for a token launch - ensuring distributions coincide with exchange listings and other events makes for a fair experience that is more likely to be better received by the community. Magna allows timed enabling of claims, so that teams can set everything up ahead of time, and then open claiming for stakeholders once ready.
Distribution, or delivering tokens to the network’s stakeholders, is a universal core component of any token launch. It is also often an overlooked component, as teams are more focused on securing exchange listings, building community, and working towards mainnet launch. As a result, its complexity can often be underestimated. Choosing Magna as a launch partner enables teams to leverage secure, turnkey smart contract infrastructure, streamline their distributions, and manage unlocks and vests - all in one place.
Gearing up for your token launch? Reach out to us today.