TGE in crypto is — what you need to know about the generation and issuance of cryptocurrency tokens

Token generation, or TGE (Token Generation Event), is the issuance and distribution of digital assets by a crypto project among users. In crypto, TGE is not just a technical procedure but a key moment in the project’s lifecycle, often becoming a turning point in its development. Although TGE is frequently confused with an ICO (Initial Coin Offering), these are fundamentally different concepts with distinct goals and mechanisms.

Main mechanisms and differences between TGE and ICO

TGE typically involves creating utility tokens on the project’s blockchain, which are then distributed to qualified users to access the ecosystem. These tokens operate based on smart contracts and can be programmed to perform various functions—from governance and staking to participation within the ecosystem.

In contrast, an ICO is usually conducted to attract investment into a project through token sales. The difference between these approaches may seem minor, but it is quite significant. Many crypto projects deliberately choose TGE over ICO because utility tokens are viewed differently by regulators—they are not classified as securities and thus do not require the same level of regulation. This allows projects to avoid excessive legal complexities and accelerate asset issuance.

Real examples of successful token generation

Let’s look at three prominent examples of how major crypto projects used TGE to develop their ecosystems.

Uniswap and its revolutionary UNI

Decentralized exchange Uniswap, launched in 2018, conducted its TGE in September 2020, releasing the governance token UNI. One billion tokens were created at launch, with distribution planned over four years. UNI holders gained voting rights for platform development decisions. Simultaneously with the token release, Uniswap launched a liquidity mining program, rewarding participants with UNI for using their assets in the four largest liquidity pools. The current value of UNI is $3.36 per token.

Blast: Layer 2 solution with an ambitious TGE

The second-layer solution for Ethereum called Blast conducted its token generation on June 26, 2024. Prior to the main event, the token BLAST was deployed and pre-created on the mainnet. Distribution was carried out via airdrop to users who transferred Ether or USDB to the Blast network, as well as those actively interacting with decentralized applications on the platform. Participants in the TGE received 17% of the total BLAST supply.

Ethena: revolution in decentralized finance

The Ethena project, which transformed the DeFi space with its synthetic dollar USDe, launched its token generation on April 2, 2024. During the TGE, 750 million governance tokens ENA were distributed among shard holders—special NFTs awarded for activity within the Ethena ecosystem. The current value of ENA is $0.12 per token.

Why crypto projects choose TGE over other methods

Token generation addresses several tasks for developing crypto projects. First, it incentivizes the influx of new users. A solid project can attract early adopters even before the TGE, but the issuance of tokens itself becomes a powerful magnet for a broader audience. Distributing tokens provides users with a tangible asset to participate in the ecosystem and gain various benefits based on smart contract logic.

Second, TGE significantly increases token liquidity. When tokens become tradable on cryptocurrency exchanges, it stabilizes the price and enables fair price discovery between buyers and sellers. High liquidity makes the asset attractive to investors and traders.

Third, token generation often attracts capital for the project’s further growth and development. Using blockchain technology, projects can quickly and securely raise funds, speeding up the journey from idea to implementation.

What you need to know before participating in TGE

If you are considering participating in an upcoming token generation, thorough research of the project is essential. Start with the whitepaper—a comprehensive document containing detailed information about the project’s goals, technology, roadmap, team, and tokenomics. This is a good way to understand what contribution the project makes to the crypto ecosystem and where it is positioned within the Web3 space.

Pay particular attention to the founding team. Study their experience, successful past projects, and professional achievements. Founders with deep knowledge and practical experience are much more likely to successfully advance the project than teams without a proven track record.

Also, check the activity of the community on social media, especially on X (Twitter) and Telegram groups. Here, you can get an objective assessment of the project from real users and developers. Active discussions and questions will help you form a complete picture of the project’s pros and cons before making a decision.

Critical risks not to ignore

Any participation in TGE involves certain risks. The most dangerous is a rug pull scheme, where project owners issue tokens, inflate the price, and then abruptly exit, leaving other holders with devalued assets. To protect against this scenario, it is necessary to thoroughly investigate the team’s reliability and verify the reputation of the founders.

It is also important to understand that participating in TGE does not guarantee any income. In the crypto sphere, there are no guarantees of profitability. TGE is conducted primarily to create utility tokens and attract more participants to the ecosystem. The motivation is to strengthen the ecosystem, not to guarantee profits for individual investors.

Additionally, familiarize yourself with the legal situation surrounding the project and the crypto space in general. Regulatory environments are constantly changing, and this can significantly impact the viability of the project.

Token generation is the future of the crypto ecosystem

Token generation (TGE) is a critically important stage in the development of most crypto projects. It is not just a mechanical process but a catalyst for project dissemination, increased token liquidity, and often attracting necessary capital. TGE in crypto is a way to reward early supporters who helped shape the ecosystem and to attract a new wave of users.

For those who believe in the long-term prospects of certain crypto projects, it makes sense to closely follow announcements of upcoming TGE events. This can be a unique opportunity to participate and support the project’s development. However, always remember the importance of thorough analysis and a cautious approach when making investment decisions in the crypto environment.

Frequently Asked Questions about TGE

What is the key difference between TGE and ICO?

Although both methods involve issuing crypto assets, they serve different purposes. TGE is typically used to release utility tokens (e.g., for governance), while ICO is conducted to raise investment funds, similar to an IPO in traditional finance. Projects often prefer TGE because utility tokens are viewed differently by regulators—they are not classified as securities.

What are the main risks associated with token generation?

The most serious risk is a rug pull scam, where project creators issue tokens, manipulate the price for their benefit, and then disappear with the raised funds. To minimize this risk, it is essential to thoroughly research the team’s reputation and the founders’ background, and verify information through reputable sources.

Does participating in TGE guarantee profit?

No. In the crypto sphere, there are no guarantees of profitability, especially when investing in new projects. TGE is primarily aimed at ecosystem development and attracting active users, not guaranteeing returns for investors.

Do all crypto projects conduct TGE?

No, not all. Some projects do not require tokens for their operation. However, the vast majority of crypto projects use tokenization as a core part of their business model and conduct token generation in one form or another.