TGE Crypto: Everything You Need to Know About Token Launches and How They Work

A token generation event (TGE) represents a critical moment in the evolution of any decentralized project. It is the process by which a protocol creates and distributes digital assets to eligible users, often marking a decisive milestone in its development. Contrary to popular belief, TGEs are not always synonymous with fundraising; they often aim to incentivize participation, decentralize control, and expand the project’s community.

What differentiates a TGE from an ICO?

Although the terms are often used interchangeably, there are important nuances to understand.

A token generation event typically involves the launch of an asset with specific functionality: governance, utility within the ecosystem, staking, or access to services. The main goal is to unlock features that require users to hold those tokens to participate fully.

In contrast, an initial coin offering (ICO) was historically a crowdfunding mechanism where projects sold tokens primarily to raise capital. Subsequent regulations have led many projects to prefer labeling their launches as TGEs, thus avoiding classifications that could subject them to stricter securities regulations.

In summary: TGEs usually focus on distribution and access, while ICOs historically concentrated on fundraising.

Why do projects opt for token launches?

Expanding user base through incentives

When a project distributes tokens, it offers new users a tangible reason to participate. Tokens serve as an onboarding mechanism: they can grant voting rights, enable rewarded staking, or simply serve as entry into the ecosystem. In this way, what was once a platform used by pioneers becomes a project with genuine participation from thousands of users.

Reaching new audiences and strengthening communities

A TGE generates market excitement. When token launches are announced, the attention of developers, speculators, and committed users converges on the project. This visibility is crucial for attracting talent, capital, and community support that drives long-term innovation.

Improving market availability

When tokens are listed on decentralized or centralized exchanges, liquidity increases significantly. A token with high liquidity experiences reduced bid-ask spreads, more stable prices, and greater accessibility for buyers and sellers. This is essential for the asset to be viable as a medium of exchange.

Strategic funding

Although not the main purpose of many modern TGEs, some projects still use launches as an opportunity to raise capital. The difference is that they do so more directly, through special allocations for investors rather than broad public sales.

Evaluating a TGE: How to research before participating

Before engaging with any token launch, consider these key steps:

Start with the whitepaper. This document should explain the vision, technology, roadmap, and tokenomics of the project. If there is no clear whitepaper or if it is filled with jargon without substance, it’s a red flag.

Research the founding team. Who are they? Do they have a verifiable background in crypto or technology? Teams with clear backgrounds and built reputation tend to be more trustworthy than anonymous teams with no track record.

Listen to the community. Review social media, discussion forums, and specialized groups. What does the crypto community say about the project? Are there legitimate criticisms or just FUD? Genuine consensus is usually more reliable than corporate marketing.

Analyze regulatory risks. In which jurisdictions do they operate? What legal restrictions could affect the project? Regulatory uncertainty can significantly impact long-term value.

TGE cases that set trends

Uniswap: The launch that redistributed governance

Uniswap, the decentralized exchange that started operations in 2018, launched its governance token UNI in September 2020. One billion tokens were created with a four-year distribution schedule. The launch included special rewards through liquidity mining, where users providing capital in specific pools received UNI as a reward. Currently, UNI trades at $5.45, reflecting the protocol’s importance as one of the most used DEXs.

Blast: The Layer 2 TGE that arrived in 2024

Blast, a Layer 2 solution for Ethereum, conducted its token distribution on June 26, 2024. 17% of the total BLAST supply was airdropped to users who had participated in the bridge to the network or interacted with applications. BLAST currently trades at $0.00, although the project continues to solidify its position as Layer 2 infrastructure.

Ethena: Rewarding early participation

Ethena revolutionized decentralized finance with its synthetic stablecoin USDe. On April 2, 2024, it launched its ENA TGE, distributing 750 million tokens to “fragment holders” — users who had completed specific activities within the ecosystem. ENA trades at $0.23, demonstrating how community engagement translates into valuation.

The real risks to avoid

There is no guarantee of profitability in any TGE. The biggest danger is the “rug pull”: developers artificially inflating the value, then massively selling their own tokens, collapsing the price, and leaving investors with total losses.

To minimize this risk:

• Verify that founders have publicly linked reputations to their real identities
• Check if there is a security audit of the smart contract
• Evaluate whether the team has locked their tokens for a period (which suggests commitment)
• Be wary of promises of guaranteed returns

Is participating in a TGE right for you?

Not all projects launch tokens, nor are all TGEs viable opportunities. Some projects operate perfectly fine without tokenization. However, those that do often aim to build decentralized and self-sustaining ecosystems.

If you identify a project you believe in long-term, a TGE can be your opportunity to get involved from the early stages. But remember: rigorous research is not optional, it is essential.