Project Tokenization: mechanism for distributing digital assets during token generation

Why Blockchain Projects Launch Token Generation Events

Token Generation (TGE) involves creating and distributing digital assets among ecosystem participants. This event serves as a catalyst for project development and attracting the crypto community’s attention. Understanding the goals and mechanics of TGE is critically important for those considering participation in such events.

Projects initiate TGE for several key reasons:

Expanding the user base through asset distribution

When a project issues utility tokens and distributes them among participants, it stimulates interest from new users and developers. Having its own token provides each holder with a specific tool for interacting with the ecosystem — from governance participation to staking and earning rewards. This approach promotes organic community growth and active engagement.

Increasing liquidity and facilitating trading

TGE significantly boosts the token’s liquidity by listing it on cryptocurrency exchanges. High liquidity stabilizes the price and makes trading easier for buyers and sellers, creating a healthy market around the project.

Attracting capital for project growth

The generation event is often used to raise funds necessary for development and scaling infrastructure. Blockchain technology allows this process to be conducted quickly and transparently.

What is TGE and how does it differ from ICO

Although the terms TGE and initial coin offering (ICO) are often used interchangeably, there are fundamental differences.

TGE focuses on the issuance of utility tokens that provide access to project functions and governance participation. Tokens are created on the blockchain and distributed to activate the ecosystem.

ICO is primarily a fundraising tool, similar to an initial public offering in traditional finance. During an ICO, tokens or coins are sold to raise capital.

A key distinction: coins issued through ICOs may be considered securities by regulators, which can have legal implications. Utility tokens from TGE are often perceived differently — as tools granting access to services rather than financial instruments.

This is why many projects prefer to use the term TGE and emphasize the utility nature of their assets, avoiding classification as securities.

How token generation works in practice

During TGE, the project creates a certain amount of tokens on its blockchain and then distributes them among predefined participant groups. These tokens operate based on smart contracts, allowing programmable functionality — voting rights, reward mechanisms, staking systems, and other parameters.

Before the official event, tokens are often available on pre-market trading of futures, attracting early speculators and helping the project “warm up” market interest.

After the TGE launch, tokens become tradable assets. Most decentralized applications (DApp) operate precisely thanks to such tokens issued through generation, which explains the close attention the crypto community pays to these events.

How to properly evaluate an upcoming token generation

Before participating in a TGE, thorough research of the project is essential. Here are the main analysis steps:

Study documentation and founders

Start with the project’s whitepaper, which contains information about objectives, technology, roadmap, and team structure. Analyze the founders’ qualifications — do they have practical experience in blockchain, successful projects in their portfolio, and the right specialists involved in implementation.

Reputable founders with proven experience are a more reliable indicator of successful project development.

Community and reputation analysis

Check discussions about the project on X and Telegram crypto groups. Community activity, quality of discussions, and constructive criticism will help you form an objective view of the project. Pay attention to how open the team is to questions and feedback.

Competitive landscape and risk assessment

Study competitors in this segment. What advantages does the new project offer over existing solutions? Review the current regulatory status of the project and the overall regulatory environment. Understanding compliance requirements is critical for long-term viability.

Notable examples of successful token generations

Uniswap and governance issuance via UNI

Decentralized exchange Uniswap launched in 2018, but two years later, in September 2020, it issued the governance token UNI. One billion tokens were minted with a four-year distribution schedule until September 2024.

The UNI launch was a turning point — token holders gained voting rights on key platform decisions. Simultaneously, a liquidity program was launched where participants received UNI rewards for providing assets to liquidity pools. The current UNI price is $5.45.

Blast: generation on Ethereum Layer 2 solution

Blockchain Blast, a Layer 2 solution for Ethereum, conducted its TGE on June 26, 2024. Four days before the event, the BLAST token was deployed and preliminarily created on the mainnet.

Distribution was carried out via airdrop to users who:

• Transferred Ether or USDB to the Blast network
• Interacted with decentralized applications on the platform

TGE participants received 17% of the total BLAST supply, creating a strong incentive for active network use.

Ethena and revolution in decentralized finance

The Ethena project, which transformed the DeFi landscape with the synthetic dollar USDe, launched its token generation on April 2, 2024. The event involved a mass airdrop of 750 million governance tokens ENA to holders of special shards.

These shards accumulated by users participating in the Ethena ecosystem — the system rewarded early and active participants. The current ENA price is $0.23, and the project continues to attract developers and users.

Risks and safety when participating in TGE

The main risk is rug pull schemes, where project creators sharply liquidate positions at the peak price, leaving other holders with devalued assets. To protect yourself, you should:

• Conduct detailed research on the team and project before participating
• Check founders’ reputation in the industry
• Study contract code (if possible) or rely on security audits
• Be skeptical of exaggerated promises of returns

Remember: participating in TGE does not guarantee any income. The goal of token generation is to develop the ecosystem and stimulate platform use, not speculation or quick profits.

Conclusion

Token generation remains a key moment in the lifecycle of blockchain projects. It is simultaneously a reward for early supporters, an incentive for new users, and a capital-raising tool. TGE differs from traditional ICOs in its focus on utility functions rather than just attracting investments.

For those who believe in the long-term potential of a specific project, it’s important to closely monitor upcoming generation events. This is a chance to become part of a growing ecosystem and potentially earn a stake in a successful platform. However, approach with informed caution — always conduct your own research before any investment.