Not all projects will benefit from the issuance of tokens. Founders should ask themselves if an existing mainstream token such as ETH or USDC could be swapped in place of their token with limited to zero negative consequences in their token ecosystem. If this is the case, the issuance of a new token may not be strictly necessary. Some projects may not benefit from the use of tokens at all, for example, where using a token increases the friction to an end user or does not create any additional value or incentive for the user. Founders and developers should be acutely aware of what tokens and coins are – transferable cryptographic units that are tracked through a permanent, public, append-only ledger. Thus, the use of the underlying technology should be carefully examined vs. treating tokens merely as currencies. Do the project and end-user benefit from the distributed ledger technologies their tokens operate on?
Tokens should be designed to complement an ecosystem or drive real-world utility. Their use should be frictionless and users should benefit from their implementation and issuance.
While the issuance and sale of tokens may be a great way to raise capital from a wide and decentralized audience, this should never be the sole and exclusive rationale for their issuance. Founders should also be aware of the securities laws in the jurisdictions they are issuing and selling their tokens. Many countries have special regulations and handling requirements for the issuance and sale of tokens in their country or to their citizens.
