10 Steps to do an ICO Series: Step 9 How to Get Listed on an Exchange
From the contributor’s point of view
The cryptocurrency exchange dimension is what makes the difference between crowdfunding and an ICO.
As a crowdfunding contributor, after contributing to a campaign you simply sit, wait, and hope that the project that you contributed to is completed. With an ICO, since you get tokens after contributing, you wait for the project to get listed on an exchange. If there is still ample demand for the project, or in the future after the project becomes popular if there is continued demand for their service, there is a chance that the token value will increase.
Therefore, from the contributor’s point of view, getting listed on a reputable exchange is key. In fact, whether or not a project looks like it will get listed on a reputable exchange is the deciding factor in contributing to a project.
Traditional cryptocurrency exchanges do not list security tokens. If you are creating a security token, this guide may not be helpful for you.
From the exchange’s point of view
Since exchanges make money by charging fees when a trade is made, it’s pretty safe to say that all exchanges want to have as many daily active users as possible. One strategy to attract new users, is to list ICO projects that have a big following. If you have a big community, exchanges will be contacting you weekly to list on their platform.
Whether you are a b2b, b2c, b2b2c, or whatever, the bulk of your marketing should be focused on achieving a large community. Go back to the ‘Grow Your Community’ section to revisit how to do this effectively.
Some cryptocurrency exchanges charge upwards of $5,000,000 USD to list your token. That money is better spent on growing your community, then having that exchange approach you to list for free.
What to Prepare
If your token is a utility token, every reputable exchange will require you to have a legal opinion drawn up by a US based securities attorney. This will typically cost you from 1,000 USD to 5,000 USD. You should be able to find a US securities attorney via LinkedIn or through a Google search.
The exchange will also want to see some kind of proof that you got your token smart contract audited by a blockchain security firm. You can make the case for having your code publicly available on GitHub to be crowd-audited.
Many exchanges will ask to see your project’s GitHub page in order to determine what stage of development you’re in. Binance in particular only lists projects with a demo version available. The key is to show that your team is actively growing and developing your product.
When Should You Approach an Exchange?
When your community size is reasonable, and you’ve created a bit of buzz is a good time to approach an exchange. Perhaps one month before the start of your ICO is a good time to make approach them.
By now you should know other companies that have gone through an ICO and have successfully listed on an exchange. Ask them for an introduction and ask them for the listing requirements.
Initially I would target 3 exchanges to list on. Depending on their fees, this is not only expensive but time consuming. From my experience, on average the application and listing process takes 45 days from start to finish.
How Much Does it Cost?
10,000 USD to 1,000,000 USD (today’s market). When the market was higher, the range was 300,000 USD – 15,000,000 USD.
Paying over 100,000 USD is somewhat out of step with today’s market. Spend your money on marketing to grow your community instead.
Some exchanges charge you for trading promotions as well. These trading promotions can provide a bump in price and or a bump in trading volumes your first few weeks after listing. These promotions are anywhere from 50,000 USD to 150,000 USD. Trading volumes are quite important to exchanges (obviously since this is how they make money). This is where market makers comes into play.
Market making is the practice of making sure when someone puts in a buy or a sell order on an exchange that there is a counter-party to fill the order. There are companies that provide market making services for your token after you get listed on an exchange. These services cost about 15,000 USD/month per exchange your token is listed on.
As you can see the costs add up rapidly.
Per exchange you can expect to spend about 200,000 to list (listing fee + trading promotion) + 15,000/month in market making.
3 exchanges = 600,000 USD + 45,000/month
FYI, the going development costs for building an exchange are about 200,000 USD..
Typically exchanges have their listing applications as a Google Sheet that you tediously fill out over and over when applying at different exchanges. We created this checklist so that you can have your staff fill out multiple applications for you by cut and pasting the information from this document to the exchange’s Google Sheet.
First of all, congratulations for making it this far! You now have your MBA in how to run a blockchain business. Your post ICO strategy should be focused on delivering on the promises that you made during your ICO.
The cryptocurrency exchange dimension is what makes the difference between crowdfunding and an ICO. As a crowdfunding contributor, after contributing to a campaign you simply sit, wait, and hope that the project that you contributed to is completed.
This is a technical team’s webapp/website checklist for running an ICO. Note: Some of these steps are relevant only for ICOs with ERC20 tokens. While the rest is applicable to all ICOs.
Unlike typical startups, ICOs usually use advisors to help with various functions of the company. We have new projects signing up to our platform daily, so I have seen and evaluated over 400 ICOs.
You've got your product in place; you're implementing your marketing strategy, speaking with lawyers, building your community, now it’s time to hit the road.
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