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The Real Cost of a Blockchain Token Release (Initial DEX or Initial Token Offering)

by | Jan 16, 2023 | ICO, ICO Whitepaper, IDO, Token Offering | 0 comments

“What’s an ICO?” I asked my friend Marco when he told me that I needed one for Voice of Humanity. His answer was something like: it’s this new blockchain thing where you just write a whitepaper and then you can raise 30 million dollars. That sounded implausible, but at the time it was pretty close to true. Fortunately or unfortunately, I didn’t take his advice to run an ICO, but I did take his advice and get into the industry.

Four years and 150 whitepapers later, we still get calls from founders who think that all they need is a blockchain whitepaper to raise millions, or at least hundreds of thousands. Now that there are decentralized exchanges, the thinking goes, releasing a token is even easier, and it’s possible to raise money with no major investments.

Unfortunately, that’s not the case. If you take a look at the major launchpads, you’ll find out quickly that most of the IDOs are raising in the range of tens of thousands of dollars, which might sound like a lot for a sh*tcoin, but it’s barely enough to cover the costs of the issuance. Of course, if you don’t really issue a token, or you just send out a simple ERC20 or BEP20 token, and you have the connections in the pump-and-dump world (or Vitalik tweets about your token), you may be able to get away with a whitepaper and a bit of liquidity for your IDO or token offering. But if you’re looking to do a real project, a whitepaper won’t get you very far.

This article goes through the costs of blockchain token releases. By the way, you’ll find plenty of websites out there which offer you different packages for your blockchain token issuance. Oddly, each package is quite different. In other words, even the experts don’t seem to agree on the minimum basic package for a successful initial token offering. Maybe that’s because they don’t care. Once you’ve bought that package, it’s no longer their problem whether you raise money or not. Long gone are the days where consultants would just take a percentage of your tokens in return for their services.

In fact, as always, your largest expense is marketing. Marketing can cost anywhere from $50,000 to $2,000,000. The most successful token launches tend to plow most of the money from presales into the marketing for the next sale rounds. Whenever we’ve talked to multi-million dollar blockchain founders about how they succeeded, the answer is the same: marketing and biz dev. Either they already had great relationships with the whales before the release, or they plowed hundreds of thousands of dollars into the best marketing firms in the industry—usually both. So don’t be fooled by those who tell you that you just need a good launchpad. As much as this industry waves the flag of transparency, you’ll find little of that when it comes to honest talk about token launches. IDOs don’t require much transparency when it comes to figuring out where the money went, but if you do a deep-dive into the transactions or if you ask anyone who has raised more than a million dollars, you’ll quickly learn that marketing is where all the money goes.

Here’s the short list of the expenses that go along with token issuance and the associated costs. Depending on how you approach the token sale, you might not need all of these services. The costs listed are based on research in 2022 from companies offering these services.

  • Whitepaper: $4,000-$12,000 (IwriteICO Whitepapers charges right in the middle of that range)

  • Token development: $10,000-100,000

  • Smart contract (to collect funds): $2,500-20,000

  • Smart contract audit: $5,000-$15,000

  • Website: $1,000-10,000

  • Token economics: $1,000-5,500

  • Investor deck: $800-5,000

  • Token launch and KYC: $7,000-40,000

  • Community building: $3,000-50,000

  • Legal: $10,000-50,000

  • Marketing: $8,500-2,000,000

  • NFT Marketing: $35,000

  • Liquidity: $50,000-$500,000

  • Exchange listing: $50,000-$500,000

  • NFT Creation: $4,000-20,000

  • DAO Development: $30,000

  • Wallet development: $10,000-40,000

  • Launchpad: Varies, one estimate said $20,000

  • Patent: $85,000

If you went with the bare minimum: a website, whitepaper, smartcontract, a token and an audit, and you did it all with low cost providers, you’re looking at a minimum of $25,000, not including DEX liquidity or any legal costs. If you don’t care about legal fees, you should be planning to stay small enough and/or anonymous enough to never draw the attention of the authorities. Almost every organization we’ve worked with does have some kind of legal advice involved, even if they aren’t doxxed. It’s just the smart thing to do.

The most important thing you need to manage is the smart contract and smart contract audit. The number one scam we see is smart contract developers who write in their own wallet addresses for the token sale funds. This rug is so simple that any smart contract developer can do it. If you go for the low-cost developers, you are in great danger of falling for this trick.

Also note that your smart contract auditor is not responsible for this. Smart contracts are often audited before the final address is in place, so that they can test the contract with dummy addresses. And once that smart contract is released, there’s nothing you can do if the developer has a backdoor to drain all or some of the funds. If you’re wondering why you have never heard of this it’s because nobody talks about it because it makes them look stupid, and they can never get their funds back anyway. Who are you going to ask to help you? The police? The Fed? If some overseas anonymous developer grabs your funds through a code twist, you have no legal recourse. In other words, do not skimp on your smart contract development.

The bottom line is that most of the successful token launches cost in the order of $250,000-$2,000,000 when all is said and done. A presale or discounted initial token sale can provide that initial boost to raise the funds for the full launch.

And watch out.

There are tons of companies out there claiming they can do your launch for less, that they can get you the traffic you need, and that their one-size-fits-all package will cover everything. No matter how many successful launches they’ve had, they aren’t going to tell you how many of their launches were unsuccessful. In the four years we’ve been in business, our guess is that approximately 30% of our whitepaper clients actually got to the point where they launched a token, and of those, about a third of them were successful in raising more than they spent on the launch. Those stats may be discouraging for some, but if you are forewarned, you are better prepared to be in that 10% who successfully launch an ICO, IDO, STO, or other type of blockchain token launch.