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After the Initial Coin Offering is out of the way and the champagne has been drunk, the tough part begins for blockchain projects.
At the top of the do-do list is expediting project development. However, to achieve that overarching goal, the management team will have to pay close attention to several related matters, which can be divided into two parts: keeping the company relevant and managing the coin holding wisely.
Once the press release has gone out trumpeting the fantastic response to the ICO, there needs to be a plan in place that keeps the buzz going and/or rekindles it if necessary.
Public relations is not just for ICOs; it has to be an ongoing effort, and perhaps with a new team of advisors to the fore – after all, its different strokes for different folks.
Keep the project media channels busy
That means resource has to be devoted to filling the company’s media channels with regular updates on progress, such as the milestones reached on the roadmap, the partnership deals being made and so forth. It also means the founders have to be out and about spreading the good news about the company.
Staying on top of Reddit and Bitcointalk is a must for keeping the most engaged investors in the loop but don’t forget the next tier up which is Telegram and to a lesser extent at the moment, Slack, and finally the essential properties of social media, Facebook and Twitter cannot be neglected either.
Being seen at the major blockchain events is a must, but will depend on resources and targeting the ones most relevant to what the company is doing. A scattergun approach will prove to be not just tiresome but ineffective too.
Then we come to the exchanges and major industry websites. Being on the major altcoin exchanges is a key part of keeping the company name in the popular imagination, and the Holy Grail is Bittrex and Bitfinex.
The PR teams will also have to be pestering websites such as CryptoPotato and CoinDesk for coverage, but that will require generating newsworthy stories. A deal with Microsoft would do it, or perhaps a new listing on a major exchange.
Treasury matters – looking after the crypto assets
The second part, looking after the the crypto assets acquired in the crowd sale, could be even more important.
For investors and companies, the question of custody and treasury is a pressing one. The projects must clearly show investors how they intend to securely store the crypto assets, which will be in cold storage.
The treasury services of the professionals could be enlisted, in the shape of Xapo, for example, who specialise in this area and have a vault service thought to be the best in the industry. There are other players, such as US exchange giant Coinbase who are trying to muscle in on the custody business, so a third-party route could be the way to go.
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How much fiat is needed for operations
And definitely before deciding on how to tackle treasury management, the company should have already worked out how much fiat it needs to keep on hand to guarantee the achievement of the roadmap milestones.
Staff and suppliers all need to be paid, probably in fiat, so a portion of the amount raised in the token sale should be converted into crypto to cover the costs two years out, or whatever the timescale is on the roadmap.
But not all of the crypto needs to be converted because a project needs to have a reserve of funds.
Also, holding on to some of the crypto could provide treasury income. There’s no interest to be earned from holding crypto but there is the prospect of price gains.
Economy liquidity, burning and buybacks
Then there is the matter of making sure the ecosystem has plenty of liquidity. Some projects keep tokens back, as part of a carefully calibrated inflation schedule.
Others find they have too many tokens and decide that reducing supply by burning coins gets attention. This is true, as it artificially increases the value of remaining tokens, but it is not typically an indication of a well-run operation, as it points to a lack of foresight in anticipating that tokens would be surplus to requirements, or there is a lack of belief that user number on the platform will absorb the supply.
A blockchain in good shape should be long on its own token, and even be willing to enter the market to buy back tokens if needs be, although this is not really a necessity for projects’ given the early stage of product development where customer numbers are not easily gauged.
Encourage the hodlers
An important consideration for the development of a blockchain asset is the stability of its investor support base. The last thing a project needs is a bunch of speculative short-term investors who are not willing to stay with the project through to product launch. Companies need to give serious thought to how they can keep investors on board.
The most obvious way to encourage a long-term perspective on the part of investors is to incentivize them with token distribution in the same way that traditional companies incentivize shareholders with dividend payments.
Admittedly most blockchain start-ups won’t have any profits out of which to pay dividends but a pot of cash can be set aside from the ICO proceeds for that purpose. Not everything in the financial mainstream is broken and paying shareholders an income is something that can be transferred to the cryptocurrency sector. For example, there is an ICO from CanYa, a project to build a decentralised peer-to-peer marketplace for services which has set up a club that rewards long-term investors with monthly and then yearly payments of the project token.
In conclusion then, even before the ICO ends, blockchain start-ups need to be thinking carefully about the post-ICO issues and making sure they are signposting to their investment community exactly how they are looking after their crypto assets and how they plan to keep industry watchers and investors informed on latest project news. It’s all part of the recipe for lasting success.
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