Understanding TGE: What Is a Token Generation Event and How Does It Affect Your Investment Decisions?

What is a TGE (Token Generation Event)?

TGE, short for Token Generation Event, is commonly translated into Chinese as “代币生成事件”. It refers to the point in time when a crypto project officially creates and distributes its native Token. TGE marks the point at which the Token officially becomes tradable, allowing it to be held, transferred, and even listed on exchanges.

Rather than saying that the TGE is a single event, it is more accurate to say that it is a milestone in the entire project financing and launch process. Typically, on the day of the TGE, investors will receive tokens based on their previous subscription amounts, and the tokens for team members, advisors, and other roles will also initiate the calculation of lock-up or vesting periods.

What is the process of TGE?

A standard TGE process typically includes the following stages:

1. Private Placement/Angel Round Financing: The project signs an agreement with early investors to distribute tokens at a specific price during the future TGE.
2. Public offering/community round: Open purchase opportunities to a broader range of users.
3. TGE event occurs: Token smart contract deployed, tokens generated and distributed to investors’ wallets.
4. Exchange Launch: Tokens have market liquidity and can be traded on DEX or CEX.

These stages revolve around the pricing, fairness, and transparency of the TGE, serving as an important window for investors to assess the project.

Why should investors pay attention to TGE?

TGE is the time point of the token’s first “unlock”, meaning that the price is discovered by the market for the first time. It has the following important significances:

• Price discovery: TGE is the market’s first response to the token price, which can be highly volatile.
• Liquidity Release: Investors can freely transfer or sell tokens.
• Risk Window: Short-term price fluctuations may lead to FOMO (Fear of Missing Out) or FUD (Fear, Uncertainty, Doubt).

Therefore, understanding the timing of the TGE, the token allocation structure, and the lock-up rules is key to controlling investment risks.

What are the differences between TGE, ICO, and IDO?

• ICO (Initial Coin Offering) is an early form of financing where investors directly exchange ETH for tokens.
• IDO (Initial DEX Offering) is a method of issuing tokens through decentralized exchanges, focusing on decentralization and community participation.
• TGE is a more neutral term that emphasizes the technical act of “token generation,” which usually includes the “coin issuance” action that follows behaviors such as ICO, IDO, and IEO.

So it can be said that ICO/IDO is the preceding stage of TGE, and TGE is the moment of final delivery.

How to assess the risks and opportunities of a token generation event?

1. Token allocation ratio: Does the team hold an excessively high proportion? Do early investors have ultra-low cost chips?
2. Lock-up and release mechanism: Is there a Cliff and linear release? Are different investors treated fairly?
3. Exchange arrangement: Is it a self-built DEX listing or has it received support from mainstream CEX?
4. Community Heat: The attention on social media and the activity level in TG groups can reflect the level of market expectations.

Carefully analyzing the above information can help you make more rational investment decisions on the day of the TGE.

Summary and Suggestions

TGE is the starting point for every crypto project and the first battle in market competition. New investors need to assess from multiple dimensions such as token allocation structure, release mechanism, and market expectations to determine whether there is a “dumping risk” or “hundredfold potential” in TGE.

Investors are advised to make the following preparations before participating in the TGE:

• Read the white paper and token economy model;
• Pay attention to the lock-up time and ratio;
• Reasonably control your position and do not follow the trend blindly;
• Beware of the “pseudo TGE” scam.