What is a Token Sale?
The team at Aether United is working night and day as we prepare for our token sale. In blockchain, a token sale is an event in which the company sells their tokens in exchange for fiat, real world currency. This has become very popular for start-ups because it provides quick funding for wonderful new ideas that require more initial investment for their project.
Similar to Patreon, the token sale participants are invested into the project and provide long term support for the company. To take part, the participants convert their fiat into cryptocurrencies such as Bitcoin and Ethereum. Then, they send their money to the company’s designated wallet during the event. Token sales are exploding and becoming the next big thing. Many projects are even able to conclude their token sales within an hour of starting! When the token sale ends, either by reaching the cap or by running out of time, the company sends the tokens. These tokens are equivalent to how much each participant invested in cryptocurrency.
The main structure of a token sale is simple: There is an allotted time and participants invest in the company during that time. The company sets a requirement for how much money they must raise (floor). If they do not raise this much, the company refunds all the money back to the original owners. The company will also set a limit to how much they can raise (cap). If they reach the cap, they close the token sale early and distributes the token then. However, this often leaves much to be desired among participants; Often times crypto whales (people who own a lot of cryptocurrency) will invest a lot of money right when the token sale begins. This ends the sale prematurely. The target audience doesn’t get a chance to invest, because they were preparing to invest at a later date.
Therefore, many companies have begun to invent new ways to efficiently solve this problem. Vitalik, the creator of Ethereum, theorized the five natural properties of token sales. New companies use these properties as the requirements for a good token sale:
Certainty of valuation — if you participate in a sale, you should have certainty over at least a ceiling on the valuation (or, in other words, a floor on the percentage of all tokens you are getting).
Certainty of participation — if you try to participate in a sale, you should be able to generally count on succeeding.
Capping the amount raised — to avoid being perceived as greedy (or possibly to mitigate risk of regulatory attention), the sale should have a limit on the amount of money it is collecting.
No central banking — the token sale issuer should not be able to end up with an unexpectedly very large percentage of the tokens that would give them control over the market.
Efficiency — the sale should not lead to substantial economic inefficiencies or deadweight losses.
Some examples are Gnosis’ reverse dutch auction, Angelshares’ ongoing token sale, and Bancor’s market maker.
At Aether United, we’ve also created a unique variance to the token sale. We have decided to introduce a system with a floor, soft cap, and a hard cap. The system is similar to the one used in most token sales: If we don’t reach the floor, we refund all cryptocurrency; If we hit the hard cap, we end the token sale early. The difference between our token sale and the generic one is our soft cap. When we reach the soft cap, there will be a fixed amount of time before the token market ends. This way we warn fans and followers that our token sale will be ending early to give the a chance to invest. If we don’t hit our hard cap, the token sale will close after the countdown is finished.
Join our token sale! If you can’t wait, our presale is starting soon, make sure to sign up on www.aetherunited.com!