What Is a TGE in Crypto? A Complete Guide to Token Generation Events

A TGE can also be referred to as a token sale and is similar to an initial coin offering (ICO), a security token offering (STO), an initial exchange offering (IEO), or an initial DEX offering (IDO). Although this terminology can be used interchangeably, a TGE is typically a token launch, involving a utility token. Increasingly, crypto projects are naming utility token launches and fundraising events TGEs instead of ICOs, which can draw the attention of securities regulators.

The Importance of TGEs in the Crypto World

Like their predecessor and peer, the ICO, a TGE, is part of the process where a blockchain or crypto project launches and raises funds by selling its token. Tokens are a type of cryptocurrency – a digital asset that normally offers buyers some value and utility.

The TGE is a significant milestone in a crypto project’s roadmap. It consists of careful planning and promotion and the development of any associated technology, such as a decentralized application (dApp), a new blockchain network or protocol, a token, smart contracts, governance mechanisms, and the like.

Pre-TGE Preparations 

The build-up to a TGE includes technical development work. This work may also continue after the TGE if a project uses capital raised to fund further development.

Tokens may have their own blockchain and also be crypto coins, like Ethereum (ETH), but are often built on existing blockchain platforms, such as Ethereum’s now expansive ecosystem or the Binance Smart Chain (BSC). There are now thousands of ERC-20 tokens on the Ethereum network.

In addition to building the token and technology, project developers will need to structure the tokenomics and governance, create a whitepaper, and market the project in the hope of substantial buyer interest in the TGE.

During the TGE

TGEs are heavily marketed and rely on community interest and support to garner investor attention. Token launches often have a pre-sale, where early investors can purchase project tokens at a low price. After the pre-sale comes the public sale, during which anyone can buy tokens.

TGEs usually have several stages, with token prices increasing at each stage. At some point, the purchased tokens will be generated on the blockchain and issued to buyers. Depending on the project’s success and goals, the tokens will then become listed on centralized or decentralized cryptocurrency exchanges.

Post-TGE Activities

TGEs round off with token issuance, exchange listings, and the allocation of funds raised for project development, marketing, salaries, and operational expenses. The intended use of the capital raised should be extensively detailed in the project whitepaper, as should the project’s next steps, in a detailed roadmap.

Project Teams

The token’s purpose and project goals will dictate the structure of its team. Some projects have groups of developers, while others also have operational leaders, advisors, finance experts, and marketing personnel.

Investors

Aside from the project team, investors are the most important element of a TGE, as the purpose is to gain support and capital from token buyers.

Regulators

Crypto and blockchain initiatives must comply with regulations that pertain to the TGE, project and token features as well as where the project will operate.

Early Access

TGEs provide investors with an early opportunity to purchase tokens. In the case of utility tokens, investors might want to take advantage of the utility offered, such as participating in governance and earning rewards or using the token to access the project platform or service.

Supporting a Project 

Token launches are an investment opportunity as well as an opportunity to support the development of a project. Owning the token may allow an investor to participate in network validation, facilitate the network, or even vote in project decisions.

Scams and Weak Projects

Illicit actors exist in the crypto space, which means that TGEs and token sales can be scams or weak projects built to profit the creators. Tokens can plummet in value immediately after a sale, or the project can simply be pulled or vanished from the market.

Lack of Regulation

Crypto regulation is still evolving and is often either inconsistent or non-existent, leaving investors with no recourse if something goes wrong. Scam projects and bad actors can easily enter the market and appear to be offering credible opportunities.

Market Volatility

Cryptocurrency prices are inherently volatile. Even if a project is credible and has long-term potential, token values can still go up and down in response to market factors and influences.

Technology

There are also technological risks. For example, if smart contracts are built incorrectly or have vulnerabilities, the project or platform can be hacked. A token’s value depends not only on the market but also on the success of the project with which it is connected. 

1)     Researching a Project

TGEs, like ICOs, can be incredibly risky for investors. Our CoinHint analysts maintain that thorough research and due diligence are vital. Research starts with a good knowledge of cryptocurrencies, the inherent risks and an evaluation of the project, including the whitepaper, team, tokenomics, compliance, technical strength, and community. Investors should always understand their own risk tolerance and never invest more than they can afford to lose.

2)     Setting Up a Wallet

The creation of a cryptocurrency wallet is normally required to buy tokens in a TGE pre-sale or public sale from the project’s website or via an exchange launchpad.

3)     Purchasing Tokens

After thorough research, token purchases can be easily made by following the project or exchange instructions. Investors may need to purchase another cryptocurrency to exchange for the new token.

White Paper

Project and TGE whitepapers, terms, roadmaps, and tokenomics should all be well-written and contain relevant content, clear goals, reasonable timelines, and fair conditions.

Team, Advisors, and Partnerships

A credible project will have a transparent, reliable, expert team. Investors should be able to identify core team members and their histories. Illicit actors have been known to fabricate team experience and partnerships, so it’s vital to verify a project’s team with thorough research.

Business Case or Real-World Application 

The success of a crypto project and token will usually rely on its real-world utility, which should provide genuine value and be detailed ahead of the launch. 

Tokenomics 

Project tokenomics will explain the token’s supply, purpose, governance, lockups, long-term distribution plans, and more. The exact tokenomics will change from project to project and should be thoroughly checked to confirm the token’s legitimacy and long-term viability. Red flags can include a disproportionate token allocation to team members.

Ethereum 

Ethereum’s ICO in 2014 raised over $18 million in two rounds. Its initial token price was around $0.31. Although the price of ETH has exceeded $3,000 it changes with market volatility. Using funds from the ICO, the Ethereum blockchain has developed into an ecosystem hosting thousands of other crypto and blockchain projects.

EOS 

The EOS (EOS) ICO in 2018 raised $4.1 billion, but the project has received scrutiny as to where the funds were invested and how it has been developed.

Filecoin 

Filecoin (FIL) raised $257 million in an ICO in 2017 to develop decentralized file storage. The price of FIL at the ICO was $1.30 and rose above $180 at the market’s peak in 2021 before dropping back to a price of around $3.56.

Emerging Trends

ICOs, primarily associated with securities, can be classed as a type of TGE. Over time, the TGE has superseded the ICO as a way for projects to launch utility tokens. As with the evolution from crowdfunding to ICOs in the emergence of the cryptocurrency market, the space will continue to evolve.

Impact of Regulations

Much regulatory attention is directed at ICOs, which generally launch cryptocurrencies classed as securities. Utility tokens are generally viewed differently, but crypto regulation is still evolving and uncertain, so investors and developers should be mindful of local and changing laws.

Recap of Key Points

A TGE launches a new crypto token, usually a utility token, to the market as a method for projects to gain interest and funds. They are similar to ICOs and share many of the same opportunities and risks, although ICOs are today associated more with the launch of securities tokens.

Final Thoughts on TGEs

TGEs, like any form of token sale, can be incredibly risky for investors as there are many illicit actors and weak projects. Even a credible project has no guarantee of success or of launching a token that accumulates value. That said, there have been several highly successful token or coin launches, including Ethereum.