Tokens 3 items
Recommended: The perfect token sale structure – The GDAX Blog (
With a new blockchain token sale happening every few days, it’s a good time to examine the different ways that token sales can be structured.

It’s important to remember the differences between (1) how the token and the network actually function, (2) the problem that the application or protocol is trying to solve, and (3) the structure of the token sale. This article focuses only on the third point. I am a lawyer, but this article isn’t about legal issues.

What is a token sale? What is an ICO?

‘ICO’ (Initial Coin Offering) is a misleading term for a token sale. This is especially true for many people who are exploring the blockchain and token space for the first time right now.Unlike an IPO— which is a well understood and rigorous process for taking a private company public — a token sale is an unregulated sale of digital assets that represent the potential value of an early-stage project or concept.

The investment thesis is much closer to venture capital than investment in a public company.
There are many phrases that describe this better: ‘token sale’, ‘token launch’, ‘crowdsale’, ‘pre-sale’, ‘token generation event’, ‘token sale offering’ or really almost anything other than ‘ICO’.

A properly designed token sale doesn’t promise ‘investment returns’, ‘dividends’ or ‘profits’. Instead, it focuses on selling a digital asset that will have a clear use case in a decentralized application, as a means of bothincentivizing development and solving the chicken-and-egg problem for the network.

A properly designed token actually serves a purpose: it is required in order to participate in the network, rather than just being a funding mechanism.

We designed the Blockchain Token Securities Law Framework to explain how this distinction also affects the securities law treatment of a token... continue reading: