Token generation events: how a new token launches
A token generation event launches a project's own token and first gives out its supply through a sale, an airdrop or a listing, with vesting to watch.
Vahe HakobyanEditor-in-chief
Updated Oct 5, 20263 min readFact-checked
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- Smart contracts mint the first token supply.
- A TGE launches a token; an ICO raises funds.
- Participants may get tokens for use, voting or staking.
- Lockups and vesting can let early holders sell later.
- US securities law and taxes can apply to tokens.
Projects use a token generation event, often shortened to TGE, to put a token into circulation and reach the people who will use it. The event is a planned launch, not a promise of a market or a price.
How does a token generation event work?
The project writes the token rules into a smart contract. When the event runs, the contract mints the first supply. The project then sells tokens, sends airdrops, lists them on exchanges, or does a mix. Participants may receive tokens to use in the project, to vote on decisions, to stake for rewards, or to get access to a service.
How is a TGE different from an ICO?
A TGE launches a token and starts its supply. An ICO is mainly a fund-raising sale, and an airdrop gives tokens away free. One TGE can include a sale, an airdrop, or both.
What risks come with a TGE?
A new token usually has a short history and few holders, so its price can swing sharply. Early buyers and team members often face lockups and vesting, which hold their tokens for a set time. When those tokens unlock, more supply can reach the market and push the price down.
What US rules apply to a TGE?
US securities law can apply to a token sale. The SEC looks at whether buyers expect profit from the work of others. The IRS treats cryptocurrency as property. Airdropped tokens are usually taxable income when received; tokens you buy are not income at purchase and get a cost basis.
Frequently asked questions
A presale is an early sale of tokens before the public TGE. Buyers often accept a lockup that keeps their tokens from being sold right away.
A vesting schedule releases tokens to a holder over time instead of all at once. The stages limit how fast early holders can sell.
The token may never launch at all. Refunds depend on the project's terms; buyers may have no right to a refund and may lose their money.
