Understanding the mechanism and reality of TGE

Practical Blockchain funding Evolution Process

The methods for funding blockchain projects have evolved over time. From 2014 to early 2018, Initial Coin Offering (ICO) was the mainstream form of crowdfunding. Initially, ICOs were limited to the launch of native tokens, but with the widespread adoption of Ethereum, it expanded to launches using token standards such as ERC-20.

Subsequently, new methods such as Initial Exchange Offering (IEO) emerged, and the concept of Token Generation Event (TGE) became more clearly defined.

The Essence of Token Generation Events (TGE)

TGE refers to a mechanism where a blockchain project issues and launches utility tokens, raising funding from supporters in the early stages. It is utilized when creating digital assets linked to specific products, services, or decentralized applications (dApps).

Unlike ICOs, TGEs primarily focus on the implementation of utility tokens. They differ from Security Token Offerings (STOs) and have the characteristic of being relatively less affected by regulatory pressure.

The Potential of TGE

Global Participation Opportunities With no geographical restrictions, funding can be obtained from supporters all over the world. This presents an opportunity for startups to break free from traditional bank loans and reliance on investors for funding.

Efficiency through Decentralization By minimizing intermediaries and utilizing Practical Blockchain technology, the liquidity of funds is enhanced. This leads to benefits such as accelerated project development and cost reduction.

Democratization of Innovation An environment has been established that allows a wide range of participants, from beginners to experienced investors, and supports the realization of ideas from innovators around the world.

Practical Risks in TGE Investment

Ambiguity of the Regulatory Environment Since TGE has unclear legal regulations, there remains a risk of fraud and misconduct. Strict due diligence before investing is essential.

Price Fluctuations and Market Risks The volatility of the cryptocurrency market can lead to significant fluctuations in token value. Economic losses during price declines are an unavoidable risk factor.

Project Execution Risk After the funding, there are cases where the promised product development does not materialize or is delayed.

Security Threats There is a risk of investment funds being leaked due to hacker attacks targeting platform vulnerabilities.

Team Reliability Issues If the project team is dishonest, there is also the risk of a “rug pull” where they disappear after funding.

Mindset When Judging TGE

Token Generation Events (TGE) are an innovative funding method that utilizes Practical Blockchain technology. While global accessibility and decentralized capital liquidity are definite advantages, regulatory ambiguity, market volatility, and uncertainty of feasibility always accompany them.

When considering participating in a TGE, it is most important to conduct thorough research on the project's track record, the team's background, and technical feasibility. You need to calmly weigh the opportunities and risks and act based on your own judgment.