What is a cryptocurrency token launch (TGE)? From basics to real-world examples

In the cryptocurrency industry, the question “What is a launch?” is extremely important for investors. Especially understanding token launches (TGE) is the first step to grasp the essence of blockchain projects. A token launch is not just an event; it is a crucial process that connects the project to the world and is the culmination of months or years of development and preparation.

Why Token Launches Are Important in Cryptocurrency Projects

A token generation event (TGE) is the historic moment when a native token is first created and distributed on the blockchain. This process lays the foundation for the project to raise funds, attract early supporters, and build a community.

The term “TGE” is used in many token issuance events and crowdfunding scenarios, particularly in connection with the distribution of utility tokens that serve specific purposes within the project’s ecosystem, such as products, services, or dApps. In other words, a token launch in a crypto project is a strategic process combining technical token creation with public issuance, encompassing fundraising and community participation.

TGE vs. ICO: Understanding Their Fundamental Differences

While both token generation events (TGE) and initial coin offerings (ICO) are mechanisms for raising funds in the crypto sector, there are significant differences.

An ICO is a crowdfunding method where a project develops and sells its own cryptocurrency tokens to raise capital. It was very popular in the early days of cryptocurrencies but has come under increased regulatory scrutiny due to concerns over investor protection and potential securities law violations.

The main differences are summarized as follows:

Opportunities and Challenges of Token Launches

For crypto projects, a token launch offers unique opportunities for both companies and investors. However, there are also various challenges.

Opportunities Brought by Launch

Firstly, blockchain technology streamlines fundraising processes, increases liquidity, and reduces costs. Next, geographical restrictions are eliminated, allowing direct funding from investors worldwide, greatly expanding growth potential.

Furthermore, decentralized crowdfunding methods that do not rely on traditional financial intermediaries enable more democratic and accessible capital raising. Broad participation from diverse investors democratizes investment opportunities in the crypto space, creating chances to support innovative and promising new projects.

Main Risks of Token Launches

On the other hand, the regulatory framework remains unclear, and there is always a risk of scams or fraudulent projects. Security vulnerabilities are also a major concern, with hacking and security breaches potentially leading to investor fund losses and personal data leaks.

The inherent volatility of the cryptocurrency market can cause token values to fluctuate sharply, resulting in significant losses for investors. Additionally, some project teams have misused raised funds, making thorough due diligence essential. Lastly, not all projects launched through token sales succeed; many fail to deliver on promises, which can lead to financial losses for investors.

Learning from Successes and Failures in Crypto Projects

Understanding the realities of token launches through actual projects is crucial. Examining both successful and failed cases can improve investment decision-making.

Notable Success Stories

Uniswap conducted an innovative launch as a decentralized trading protocol, establishing a strong position in DeFi. Blast, as a layer 2 blockchain, has gained market support and is steadily growing. Ethena, which offers synthetic USD (sUSD), has created new financial primitives.

Lessons from Failures

Tezos (XTZ) raised over $230 million through an ICO but later faced internal conflicts and legal disputes, leading to delays in development and loss of investor trust. This case highlights the importance of clear governance structures and legal preparedness.

The 2017 Parity Wallet hacking incident resulted in the freezing of $150 million worth of ETH. This event underscored the importance of robust security audits and testing procedures during token launches. It also revealed the risks of underestimating vulnerabilities in smart contracts and token issuance.

Essential TGE Knowledge for Cryptocurrency Investors

Token generation events (TGEs) are central components of the crypto ecosystem, providing a platform for new projects to debut, raise funds, and engage with a global community.

Those considering participating in a launch should continuously gather the latest information related to the project. Prepare a reliable wallet solution to securely store digital assets. When participating in a token launch, it is crucial to thoroughly investigate the project’s credibility, team background, and technical feasibility.

Crypto investment opportunities are full of potential, but always remember to understand both the potential returns and risks involved in participating in a token launch.