How to Prepare for a Crowdsale. Startup Checklist: 25 Things You Need to Do Before Going Public

Crowdsale is a way to quickly raise capital for your project. In the crypto world it is usually done by selling blockchain-based digital assets. It instantly allows a product owner to find an audience, gauge the potential success, and collect funds, all with minimal bureaucracy.

Crowdsales in crypto are great. You can raise capital from anyone, anywhere in the world. Creating tokens is fast, it can take as little as 100 lines of code, and they can be distributed within a very short time frame. But there are some very important steps needed to find success.

We are assuming you already have the team, the idea, and some technical skills to bring your idea to life. Now, what do you need to do?

1. Develop Your Product Roadmap

Whether you’re going for an ICO, IEO, or IDO, the important steps are the same. You need to find your audience, gain their trust, start selling tokens, and then use the raised funds effectively.

Remember that your crowdsale is just a means to an end. Your investors want to know why you are raising this capital, what it will be used for, and where your company is heading. A detailed roadmap therefore is essential to show investors that your business is legitimate and is likely to succeed.

There are many external tools and guides to help you create a roadmap for any product. Remember that it should contain a clearly articulated vision for your project and a set of SMART (Specific, Measurable, Actionable, Realistic, Time-bound) milestones and goals. Preferably with dates for when you want to achieve them.

2. Create a Website and Brand

No matter how hard we try to avoid it, people judge a book by its cover. And investors will inevitably judge your project by the quality of your website. So hire the best web developers and designers you can afford and don’t cut corners. If your project is international and you want to attract international investors, you should consider hiring professional translators to translate your website into the native languages ​​of the jurisdictions you want to target.

And now that you have a roadmap, you already have something to post on your website. This is already the beginning, this is something you can show your potential private investors. At this point, your roadmap might include, for example, the date you will release your white paper and your target sale date. 

The second thing your website should have is a crowdsale landing page. It should contain a brief overview of your project, its main goals and benefits, and clearly identify how you differ from any other crypto startup out there. A well-executed landing page can be a powerful trigger for your IEO/IDO/ICO.

3. Write a White Paper

The white paper is the first big step towards your crowdsale. This will be of primary interest to investors conducting due diligence on your project. This white paper will be vital in convincing them that this project is legit and trustworthy. That’s why you should ideally have your white paper in place before you start building your community and reaching out to investors, whether you’re going for a private or public crowdsale.

Your whitepaper should include your market research, your team, your technology, your tokenomics, and your product roadmap. Do not skimp on copywriters and graphic designers — the better your white paper looks, the better your project looks.

It’s not as difficult as it first seems. If you have an idea you are passionate about, it shouldn’t be too hard to put into words why it deserves to exist. If you are too scared to start writing your WP, just remember that some of the white papers for truly great projects were actually pretty lackluster. For example, you can read the Binance whitepaper to really feel good about yourself. So go out there, explain your idea and ask some good writers to write it down.

4. Find a Community

Before starting a crowdsale, you will need to find people willing to engage with your product and purchase your tokens. This will also allow you to have a reality check and see if there is demand. Which will be useful in calculating tokenomics, choosing sale models and reevaluating your expectations in general.

To find a community for crypto project, follow these steps:

1. Develop Social Networks. Twitter/Discord/Facebook/WhatsApp/Telegram/YouTube. Even Instagram and TikTok, if you think there could be users there who are potentially interested in your product.

2. Engage With Community Groups. There are pre-existing communities on Discord, Reddit, Slack, etc. who might be interested in hearing what you have to say. Learn what their grievances are, find a way to approach them. Hire a knowledgeable community manager to answer questions and promote your product, or maybe do it yourself, at least at the start. Chat on BitcoinTalk, frequently update your GitHub, write your relevant thoughts in a Medium blog. This can all be relevant in many surprising ways: we found some of our best developers and contributors through community groups, because they were engaging with our content.

3. Create Bounty Programs. A simple and useful way to generate interest in your product. Offer users bounties for finding bugs, promoting your project, posting on forums, etc. This can be very cost-efficient: you can think of it as paying for an awesome QA expert or community manager that can work tirelessly and have a thousand eyes. This also allows you to have a free marketing event. For example, when his messaging app Telegram was first announced, Pavel Durov offered a $200,000 bounty if someone could crack its encryption. This attracted attention, and when no one could, it boosted user confidence. Today, the market value of Telegram is estimated at $30 billion.

4. Get on IEO/ICO/IDO Calendars. Make sure you are listed on popular websites people use to check upcoming launches and crowdsales. It’s an extra opportunity for people to find your product, and it is completely free. You can use, for example, Coincodex IDO List, ICOdrops.com, Cryptorank IDO/IEO/ICO, or Coinmarketcap ICO Calendar.

5. Attract Influencers. Especially people with some clout behind them. This could be respected entrepreneurs like Gavin Wood, Michael Saylor, Changpeng Zhao, Charlie Lee, Brian Armstrong, or others. If one of them backs your project, even with just a tweet, it could significantly bolster your credibility and success chances. Ensure that you choose the right influencers, do due diligence — you’ll be tying your reputation to theirs.

6. Do General Marketing. Including SEO for your website, Google or Facebook ads, mobile ads. There are also a lot of crypto publications that survive on paid articles. If a project is truly unique, sometimes you can get an article there for free. In general, do all the things you can think of. Some brilliant projects still died early because of their lackluster marketing efforts. You’ll be best served by PR and marketing agencies specializing in IDOs and crypto. The cryptoverse is unique, and most corporate and traditional practitioners won’t have a sophisticated enough understanding of the ecosystem, investors, or media.

7. Try to List on Crypto Exchanges. It’s no good to have a brilliant project and token that everyone wants to buy, but absolutely nowhere to sell it. This is why it is critical to have the token listed on exchanges, preferably ahead of your ICO/IDO date. Listing on high-quality, secure and legally compliant crypto exchanges will also help to promote your project organically.

8. Get Help From a Launchpad. There are all sorts of established companies helping newer products launch for a commission. Starting through IEO or IDO is standard now. It is fast, free, and helps founders find their market. By launching on an exchange through IEO or decentralized exchange through IDO you can instantly have a place to trade your token on, creating a value for it. Some launchpads also help with technical expertise, verification (KYC/AML), fund collection and token distribution. For example, if you want to launch on the Polkadot or Kusama network, Polkapad offers crypto startups great help.

5. Design Your Tokenomics

An improperly designed tokenomics (token issuance strategy) can kill the economy of the project and rapidly destroy the trust of the community. This is why this stage is very important, and you should take it seriously.

Firstly, tokenomics involve only token sale structure. You have to decide how many tokens will go to the team (usually 10-20%), how many will be minted for your crowdsale (15-30%), how many will be left for the external audience (40-60%).

Secondly, tokenomics means you have to find the right balance between the supply and the price of your token. If the supply is too high, then the price of each token will be lower, and it can become less attractive to investors. On the other hand, if the supply is too low, there might not be enough tokens to fully satiate your future user base, meaning the project won’t reach its full potential. Too high of a price also means that investors might be put off by the amount of funds they have to spend on the token.

For a quick napkin math, to balance token price and supply, you can use this ROI calculator. Set your target price and the amount of tokens you want to be distributed before the crowdsale, and calculate your yearly emission and potential gains.

You have to also think about:

  • Allocation and distribution. How do you allocate tokens? How many should be in one hands? Will you launch a public or a private crowdsale, or maybe both? For how long after the sale will the token be locked, so people can’t just instantly sell it and would have to try using the product first? Should you focus on big pocket whales, or try to build up a wider user base by providing some advantages for smaller investors (like employing a regressive allocation model, for example).
  • Total supply. Will your token have a supply limit? What should ideally be its total supply (i.e. the amount of tokens that exist) and a circulating supply (amount of tokens that are not locked or burned)? Will you put in place mechanisms to somehow control its supply, like staking or burning?
  • Should your token be deflationary or inflationary? Should its supply be capped or always increase? This depends on the nature of your project. In general, investors value deflationary tokens (like Bitcoin) more highly: their value in USD has increased over time, so HODLing them is great. However, for tokens with real use cases that are aiming at wide adoption, an inflationary model could be safer in the long run. It encourages users to spend and creates a more active market. The price of the token in this case doesn’t necessarily go down, since it can attract new users faster than its supply inflates (like Ethereum, which was purely inflationary up to 2021).

You also, of course, need to define the token use case, schedule the vesting process and not be too hungry with the distribution, leaving more than 55% for the public sale + ecosystem. Otherwise, if barely anyone is using the token, the project could be DOA.More in-depth about designing your tokemomics and defining your token utility you can read here.

6. Choose Your Token Sale Model

After designing the tokenomics of your project, you’ll need to decide how to manage the actual sale. Your goal should be to guarantee the best possible allocation, so you have a lot of funds and your project has a fresh and engaged user base. Your model needs to balance simplicity with diversity and help entice a variety of investors. There are a lot of strategies you could choose from, and people are always inventing new ones. For example:

  • Uncapped sale with fixed rate. Investors exchange their existing tokens (or fiat) for your tokens at a predetermined fixed ratio. Ratio could be lower for early contributors, and gradually increase during the sale process. This is a very basic model; however it is simple and straightforward, which is why it is often preferred for mass market launches.
  • Hard caps. You set one predetermined limit on either the total funds gathered or the number of tokens sold. After reaching this limit, the sale stops. Usually it also has a limited period for contribution. This model is indeed a very rare sight, because few projects are willing to limit their potential income like this. However, it can also be a sign of a project that knows exactly what it needs and is not just chasing money.
  • Soft caps. You set a cap, after achieving which the sale doesn’t immediately stop, but instead there is a time-based closing period. Everyone who wants to get in still can do so, but now they are on a timer. This creates pressure on investors, and can lead to a much higher crowdsale proceeds.
  • Hidden caps. You can have either soft or hard caps, but with participants not knowing when the allocation will be finalized. This can be revealed during the crowdsale itself.
  • Dutch auction. A very common and successful crowdsale model, which involves collecting all the bids first and only after that determining the price of each token. Bids are sorted in order from highest to lowest, and the highest bids are accepted until there are enough of them to sell all the offered tokens. All bidders whose bid was accepted receive the last bidder’s price for each token (i.e. the lowest). Whoever didn’t make the cut doesn’t get any tokens — after all, they were not willing to pay any more than they bid. This is a very fair model that encourages higher bids and, with enough users involved, ensures you don’t sell tokens too cheap.
  • Reverse dutch auction. Usually this means the sellers get to bid instead of buyers, but in the crypto world there is another meaning to this. In reverse dutch auction a sale is capped in terms of raised funds, but the portion of tokens sold to buyers is dependent on how long the sale lasted. For example, if all tokens are sold on the first day, then a smaller proportion, let’s say, 20%, would be distributed among participants, and the rest retained by the project team. If the sale finishes on the second day, then 30 % would be distributed, and so forth. The more popular the crowdsale, the more tokens the team can hold onto while still raising enough money to fund future development.
  • Dynamic ceiling. A mixed model that creates a series of hard caps and aims to raise capital in multiple stages. It also limits the amount of tokens one person can buy at any given stage. If a transaction goes beyond the limit, it is rejected. Therefore, larger contributors have to split up their transactions into much smaller chunks, ensuring whales won’t dominate the general user base quite as much. This can potentially create a more sustainable and diverse ecosystem, and ensure your “audience” isn’t just a few people with large crypto wallets. Can be especially important if your tokens give governance rights.

These are just a few common examples. There is also a collect and return model, proportional refund, and of course regressive allocation, which is explained in detail in Polkapad Whitepaper. It is important to understand the differences between sale models and know which one fits best for your intended allocation and future product use case.

7. Work On The Technical Stuff

Once you have everything set up and figured out, it’s time to actually conduct the sale. To create and deploy a real crowdsale event, you will typically need to:

16. Create a mintable token. If you are doing IEO, ICO or IDO, first you have to have your own token. Which you will sell in exchange for other tokens or even fiat. “Mintable” means blockchain has an ability to produce new tokens, if certain conditions are met. This stage is somewhat optional, since sometimes you can have an agreement with DEX to mint its tokens for you, or some other way to distribute your currency.

17. Make your token pausable. If it’s paused it means the token can’t be transferred to other wallets. This will allow you to freeze tokens during the event so that users can’t sell new tokens “on the side” while some people are still buying them from you. 

18. Create a crowdsale Smart Contract. This is not as hard as it sounds. Usually a smart contract can involve just 100 or 200 lines of code, and there are plenty of guides for each network. You just have to ensure blockchain triggers and creates new tokens whenever someone purchases them during the crowdsale. Afterwards this smart contract can be updated and expanded to do different things.

19. Implement a cap on your crowdsale. Whatever sale model you are going for, you need to reflect it in your smart contract. For example, you can set a hard cap for the amount of BTC/ETH tokens you need to collect. Or set a “minimum limit” for the lowest possible purchase transaction request that will be accepted (so you don’t get spammed with 0.001 offers).

20. Add a timer to your crowdsale. You need to add an opening and a closing time, so the blockchain knows you have a crowdsale going. A smart contract needs to only allow users to buy tokens within this time frame. 

21. Add refund support. If your sale goal is met, your wallet will keep the funds and your contributors will receive their tokens. But if the goal is not achieved, and your project has not raised enough funds to work, you will be able to return the money to your investors.

22. Make a whitelisted crowdsale. If you want to do a private crowdsale first, you need a mechanism to whitelist certain people so they can participate. To do this, your smart contract must be able to distinguish between at least two groups of people.

23. Complete the crowdsale. Add a function to end the crowdsale so that no more tokens are minted or distributed after it ends. This needs to also unpause the token so that people are free to do their transactions.

24. Test everything on testnet! You can’t edit stuff that goes onto the blockchain, so thoroughly check if everything works correctly. For the Ethereum chain the most popular testnets are Kovan, Görli, Ropsten, and Rinkeby.25. Deploy your contract on mainnet. Hurray! You’ve completed and tested your code for the crowdsale smart contract. Now you just need to deploy it to the live network — and you can start raising funds in your first real crowdsale. To deploy a smart contract on a live network, you need to create a migration script. It will transfer your code from the testnet to the live block chain.

Don’t squander it

Remember, even after a successful crowdsale, it’s not the time to go to Hawaii yet. Now is the opportunity to truly kick your project into high gear, and put collected funds to good use.

You can start by delivering on your promises from the next stage of the road map, improving the UI of your Web2 components, or marketing your project to a wider audience. A successful crowdsale doesn’t equal a successful product (although this works both ways). Even decentralized projects that put most of their trust in the community still need ongoing support.

By the way, if you want to develop a project for Polkadot or Kusama networks or their parachains, we might be able to help. Polkapad is a fundraising hub that helps startups organize a crowdsale for their project on any parachain. Write us at hello@polkapad.network, or fill out the form here, and we will see how we can help. It’s totally free; we take fees only from the launch of successful projects.

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