SNS Tokenization Considerations
Tokenizing an application via the SNS requires planning and consideration for optimizing its effectiveness. The following steps can be used by a developer or founder to better prepare for the launch of a token.
Step 1: Identify The Tokenization Goal
The first step of a tokenization strategy is identifying the goal of launching a token. The act of tokenizing an application is an intentional decision by a developer or founder to sacrifice ownership and/or control over their application. The tokenization goal should provide justification for that sacrifice. Application owners will choose to tokenize for many different reasons, including:
- To raise funds for further development or growth
- To attract additional developers to the application
- To increase the user base of the application
- To align the company to a specific mission
- To serve as a utility token within the application
Tokenomic decisions will present many trade-offs and it is difficult to optimize to multiple goals. Identifying the main goal of launching a token will help the developer or founder in further steps.
Step 2: Identify and Plan the Token Audience
Once a tokenomic goal is identified, identifying the target audience for owning the token is next. Think through the type of person or entity who would best achieve the identified goal. Consider whether the intended audience should have a skill set or contain certain knowledge. Consider whether the strategic goal is more achievable with few token holders or with millions.
Next, plan a communication strategy for how your target audience will become informed about the token. How will they know about your token launch? Consider what their goals will be in owning the token and craft your communications to highlight them. Understanding the goals of your intended audience and the best methods to communicate with them is necessary planning to having a successful launch.
Step 3: Determine Level of Ownership and Control
The act of tokenizing an application is an act of giving some percentage of ownership and control over the application. The founder or developer should consider how much ownership and control to give up. This decision will directly impact the initial token distribution. Some considerations that should factor into this decision include:
- How aligned are the initial token holders to the core mission of the application?