What is TGE: How projects distribute tokens and why it matters

Simple Explanation of Token Generation Event

The (TGE) token generation event isn’t always easy to understand, but its core is quite straightforward: it is the moment when a cryptocurrency project issues digital tokens to users. Unlike creating a coin (considered a store of value), tokens usually serve specific purposes such as governance, payments, or staking within an ecosystem.

Why differentiate this? Because tokens are created through smart contracts on the project’s blockchain, allowing them to be programmed to fulfill various functions. This makes TGE a significant milestone — it marks the point when the project begins to “live” with a real user community.

TGE and ICO: Are They Really Different?

This question often causes confusion. An ICO (initial coin offering) and TGE seem similar, but their purposes differ:

• ICO: Mainly used to raise funds. The project sells tokens to investors, and these tokens may be considered securities under regulations.
• TGE: Focuses on distributing utility tokens. The goal is to give users access to the ecosystem and enable them to participate in governance.

Many projects today choose the term “TGE” precisely for this reason — to clearly indicate they are not selling securities but distributing tokens for practical use.

Why Do Projects Conduct TGE?

Expand the user community

Issuing tokens encourages participation. When you hold tokens, you have a specific reason to care about the project’s development. Additionally, if tokens enable governance voting, you have a say in future decisions.

Increase liquidity

Tokens issued via TGE will be traded on cryptocurrency exchanges. Higher liquidity helps stabilize prices and creates a healthier trading environment for both investors and users.

Extract value from staking

Some projects allow users to stake tokens to earn rewards. This mechanism helps retain long-term commitment from users and creates a positive feedback loop.

Raise funds when needed

Although not the primary purpose, TGE can also help projects gather capital for development. This method is faster and safer than traditional channels thanks to blockchain technology.

How to Evaluate a TGE Before Participating

Before investing in any TGE, do your homework:

Start with the whitepaper

Read the project’s whitepaper to understand its purpose, goals, core technology, development roadmap, and token (tokenomics). This document will give you an overview of what the project aims to achieve.

Check the team

Who are the founders? Do they have experience in this field? Founders with notable track records are more likely to lead the project to success.

Listen to the community

Search on X (Twitter) and Telegram groups to see what the community is saying. These discussions often reflect honest opinions and help you understand the project’s strengths and weaknesses.

Understand the risk landscape

Consider the current and future (regulatory landscape). You should also research competitors to gauge how saturated the field is.

Notable Past TGE Events

Uniswap (UNI)

Uniswap launched in 2018 and held its TGE in September 2020. The project minted 1 billion UNI tokens, scheduled to be distributed over four years (ending September 2024). This token issuance grants governance rights to the community. The event also launched a liquidity mining program, rewarding UNI to users who provide assets to liquidity pools.

Current UNI price: $5.32

Blast (BLAST)

Blast, a Layer-2 solution for Ethereum, held its TGE on 26/6/2024. Four days prior, the project pre-minted BLAST tokens on the Blast mainnet. These tokens were distributed via airdrop to users who linked Ether or USDB to the network, as well as those who traded on decentralized applications on Blast. In total, 17% of the total supply of BLAST was allocated to the community through this TGE.

Ethena (ENA)

Ethena gained recognition when introducing USDe, a decentralized synthetic stablecoin. The project held its TGE on 2/4/2024, distributing 750 million governance tokens ENA. Users received “shards” by completing various activities within the Ethena ecosystem, and eventually, these shards were converted into ENA tokens.

Current ENA price: $0.22

Risks to Know

TGE is not without risks. Rugpull — when project owners issue tokens, inflate the price, then suddenly sell out and disappear — is a real threat. That’s why thorough research on the team, legality, and project reliability is essential.

Additionally, there are no guarantees of profit in cryptocurrency. TGE is designed to strengthen the ecosystem, not to make you rich quickly.

In Summary

A token creation event marks an important milestone for a project. It not only distributes tokens but also encourages user commitment, increases liquidity, and creates incentives for long-term growth. If you believe in a project’s long-term prospects, participating in TGE can be an early opportunity.

However, remember: knowledge is power. Before joining any TGE, read the whitepaper, check the team, listen to the community, and understand the risks. Only then will you be ready to make informed decisions.