Are you wondering how startups can raise funds without having regulatory issues? If that has crossed your mind, then you're in the right place.
Join us as we take a look at the meaning of TGE in crypto, how Token Generation Event differs from other fundraising platforms like ICOs, and why it is important in the crypto space.
No matter your level of expertise in the crypto community, having a clear knowledge of TGEs will help you spot meaningful events in crypto and early opportunities.
What is a Token Generation Event (TGE)?
When it comes to the cryptocurrency market, a Token Generation Event (TGE) occurs when a cryptocurrency project develops and distributes new utility tokens to gather funds for development.
The term TGE in the crypto project is well planned to maintain regulatory compliance which makes them different from Initial Coin Offerings (ICOs).
In this event, the blockchain technology team usually gives a digital token that is for a particular purpose on their network. These types of tokens can be governance tokens, uni tokens, or access to services on the blockchain platform.
Note that after these tokens are designed, the tokens become available to early investors, and then be used for trading within the project.
How Does a TGE Work?
TGE helps with crowdfunding in cryptocurrencies. Here is an overview of how it works in the crypto-economic system:
- Preparation Phase: Before public sale, projects launched through TGEs may need to have a roadmap, outline its vision, and make sure that the tokens created obey the legal regulations. This can be a whitepaper creation that shows the technical generation and business plans for token holders at an early stage.
- Token Launch: After the preparation phase, the tokens are issued on a network like the Ethereum blockchain. During the TGE, a specific number of tokens are given to early investors or through an Initial Public Offering (IPO) with the help of a smart contract.
- Post-TGE Phase: After launching tokens to the public, the tokens go live and can be tradable in the blockchain network. This due diligence is the main component of the project's decentralization.
What’s the Difference Between Initial Coin Offering (ICO) and TGE?
The major difference between TGEs and ICOs is in the area of regulatory compliance. When it comes to ICOs, the tokens that were sold were considered as security tokens and this led to a lot of legal scrutiny.
TGEs were designed with utility in mind and to avoid the market dynamics and problems of ICOs. Thus, making it a safer method used by blockchain projects and investors in cryptocurrency exchanges.
In simple words, Token Generation Event offers tokens as utility tokens which means that they are mainly for certain features and services in the platform. ICO tokens, on the other hand, are seen as stocks or security token offerings.
Why TGEs Matter in the Crypto World
When it comes to tokenization, TGEs are very important because:
- It is a means of raising funds by blockchain projects in a way that complies with regulations and is decentralized.
- By issuing and selling tokens to early investors, it creates a community that is loyal and interested in making the project successful.
- TGEs are usually seen as entry points for startups into the bigger cryptocurrency system. This helps new projects gain liquidity and recognition.
How to Join a TGE
There are few involved when it comes to joining a Token Generation Event. These steps allow you to take part and secure digital assets during the event. Here is how you can join such an event:
1. Research the Project
Before choosing to join any event, ensure that you have done your research about the project that is hosting it. You can read the whitepaper to know their goals, technology, and token's store of value.
Furthermore, ensure that the event complies with the regulations in your country. Note that some TGEs are often based on locations because of legal restrictions.
2. Prepare a Digital Wallet
You will need a Bitcoin wallet that is compatible with the blockchain the token runs on. This ensures that the tokens are tradable and often used interchangeably.
For example, If the tokens raised during the TGE are ERC-20 tokens (Ethereum-based), You will need A MetaMask or Trust Wallet to support the tokens.
Fund your crypto wallet with BTC or ETH to cover the gas fees and cost of buying tokens from exchanges like Binance.
3. Join the TGE
Before tokens are distributed, most TGEs allow users to register on their websites. Some projects allow users to pass the KYC verification before they can join the platform.
It is always advisable to know the dates for token sales and perform the tasks that are assigned by the project. Make sure you follow their official channels on various social media platforms like Telegram and X for updates.
4. Participate in the Token Sale
During the event, you will be required to connect your wallet to the platform, and this process is done by the interaction of a smart contract on their platform.
Based on the TGE, you might be asked to buy tokens or NFTs through a specific platform that conducts sales or by sending crypto to an address that is provided by the platform.
After buying the tokens, you may get them in a few minutes or after a period once the transaction is confirmed. It is important to check your wallet to know if you have gotten the tokens or not.
5. Stay Updated
To avoid being left out, always keep in touch with the project via their official channels to identify when the tokens will be listed on crypto exchanges and any other important information that might happen.
6. Be Aware of Scams
Be aware of scams and fake events trying to steal your wallet address or any other personal information. It is better to get your information from their verified channels than using a third party.
Sticking to these steps will help you join a TGE and increase your chances of getting tokens before they are listed.
For more detailed guidance, you can refer to CoinMarketCap’s TGE guide
Real-World Examples of TGEs
Many projects on the blockchain network have used this type of crowdfunding to successfully launch through TGEs. For example, Chainlink used the method to distribute their LINK tokens which has become secured in its decentralized oracle network.
Another real-world example is The Sandbox which issued many tokens called SAND tokens during its TGE to finance its virtual environment and in-game economy.
These real-life examples showcase the importance of TGEs in boosting decentralized projects through funding and token utility.
These examples highlight how TGEs can fuel the growth of decentralized projects by providing both funding and utility to their tokens.
Risks and Considerations
There are risks to consider before joining a TGE. For example, the success of a project mainly depends on its operation, the team that developed it, and market volatility.
Although the main aim of TGEs is to comply with regulations, it does not remove the legal risks in areas that have strict laws when it comes to cryptocurrency.
Conclusion
Understanding the role of TGE in crypto will give you a stronghold on how to stay current in the blockchain industry. These events create opportunities for crypto lovers and investors to gain tokens before they are launched.
Doing the right research can give you leverage before joining any promising projects in the DeFi and crypto industry. It is advisable to stay updated and spend your money wisely on projects that have potential.
FAQs
What’s the difference between a TGE and an ICO?
ICOs, which frequently offer tokens that are categorized as securities, are not as focused on regulatory compliance as TGEs are.
Are TGEs safe to invest in?
Though their goal is compliance, TGEs are not without risk. Before investing, it is essential to learn about the project, the team, and the potential uses of the coin.
Can anyone participate in a TGE?
The majority of TGEs are public, albeit due to regulatory concerns, participation may be limited in some nations.
How are TGE tokens typically used?
TGE tokens are frequently used as a utility in decentralized platforms or applications, such as for transactions or governance fees.
