Transparency Marketing
Empowering Token Projects to Thrive in a Changing Landscape
Projects must establish trust among investors and the broader crypto community as the crypto industry transitions to standards focused on security, compliance, and safeguarding backers’ interests. The strategic use of overt transparency, known as “transparency marketing,” has emerged as a new tool for establishing enduring success for token projects.
In the sections below, I outline transparency marketing tips and best practices you can deploy for your token project.
Phased Launches
Opt for phased launches rather than a single expansive public sale. This approach aligns with a well-defined roadmap, allowing a series of smaller token sales tied to specific project milestones. Safeguard investments with smart contracts that unlock capital only upon successful milestone achievements verified by oracles. Moreover, utilize multi-signature wallets to centralize your project’s bankroll and necessitate consensus among the management team before executing financial decisions.
Compliance
Provide investors with dashboards compliant with prevailing regulations. Should you undertake a token sale utilizing a Simple Agreement for Future Tokens (SAFT) or a similar agreement, adhering to relevant security laws within your jurisdictions is imperative. Construct a token purchase portal on an ultra-secure website subdomain to ensure regulatory compliance encompassing the sale, distribution, and trading of tokens.
Community Engagement
Keep your community engaged and enthusiastic by involving them in your project’s journey. Articulate your dedication to transparency by proactively engaging with your audience through various channels.
Embrace channels like Twitter, contact forms, and monthly Ask-Me-Anything (AMA) sessions to create an ongoing dialogue about your transparency. Talk about — you — talking about it.
Use newsletter updates delivered every 3–6 weeks to encourage the exchange of ideas, nurture constructive debate, and actively seek feedback.
Team Profiles
Instead of leaning on advisors for credibility, channel your efforts into branding your in-house team, spotlighting past accomplishments, and showcasing their current capabilities.
Founders and key team members should establish a visible and candid presence across social media platforms and other relevant channels. This outreach enables direct interaction with the community, bolstering their visibility within the broader crypto landscape and reinforcing trust. Encourage cross-conversation on social media, sharing strides, and celebrating milestones to convey proficiency and confidence.
Roadmapping
Update your roadmap regularly while offering insights into ongoing and forthcoming activities through Tweets, blog posts, and your newsletter. This strategic transparency demonstrates your commitment to openness, reinforces your project’s progress, and resonates positively with stakeholders.
Short-term (6 months): In this phase, lay out meticulous plans for market research and the feasibility assessment of blockchain technology for your use case. This strategic groundwork sets the stage for informed decision-making as you delve into the intricacies of your project.
Mid-term (6 to 12 months): As the project advances, the focus shifts to developing alpha and beta versions. Detail the milestones, enhancements, and functionalities to be introduced, demonstrating your project’s evolution.
Long-term (12+ months): This stage represents the culmination of your efforts, encompassing the platform’s grand launch, token sale events, and the provisioning of liquidity. Outline the steps to be taken and highlight how each endeavor contributes to the overarching success of your project.
Prioritizing Minimum Viable Product (MVP)
Launching a token offering without a sandbox, MVP, and a publicly accessible code repository has become a standard best practice for token projects. Encourage community members to engage as beta testers who share their insights through posts, screenshots, and videos. Develop tokenomic alpha test documentation that illustrates a use case founded upon a readily scalable network effect.
Demonstrating Proof-of-Concept
Deploy testnets and beta versions of your platform well before the token sale. Strengthen your proof-of-concept by actively involving GitHub contributors with a strong repository presence and active commits. Your open-source code should be meticulously documented and subjected to peer review and testing by independent GitHub contributors external to your in-house development team.
Governance Body and Accountability: Formulate a formal board of directors to uphold proactive governance responsibilities, thus holding the executive team accountable. This structure safeguards stakeholders’ interests and cultivates an environment of trust and transparency.
Building Trust through Financial Transparency
When individuals invest in a project through fiat or cryptocurrency, they entrust the project with their capital, anticipating that the funds raised will drive product growth and value generation. In this context, financial transparency emerges as a cornerstone of both accountability and the establishment of trust within token projects.
Project Health: Extend a comprehensive view of your project’s overall health. Spotlight the milestones accomplished via prudent utilization of resources.
Treasury Composition and Expenditures: Present a breakdown of your treasury holdings, encompassing fiat, Bitcoin, Ether, and native assets. Categorize year-to-date expenditures by type across varied operational domains. This disclosure underscores the diversity and resilience of your financial resources.
Burn Rate Metrics: Illustrate the project’s current burn rate — a reflection of your spending velocity. Extend this disclosure by forecasting the anticipated burn rate for the upcoming quarter.
Should these figures have yet to undergo external auditing by a third-party accounting firm, acknowledge them as your best estimations.
Consider the following template as a guiding framework for constructing a semi-formal quarterly update and an outlook for the forthcoming quarter’s funds allocation:
Between January 1, 20__, and April 1, 20__, our user base has grown to _._ million registered users. During this period, __Our_Project__ has spent approximately $__.__ million, with the breakdown as follows:
USD $__._K allocated to marketing, advertising, public relations, and events
USD $__._K allocated to employee and contractor salaries
USD $__._K allocated to legal, compliance, and accounting
USD $__._K allocated to general and administrative costs (office rent, utilities, accounting, development tool subscriptions, employee computers, etc.)
USD $__._K allocated to travel, including roadshows and conferences attended by founders
Looking ahead to 20__ Q3, we have secured several partners and plan to launch monetization during 20__ Q4. Based on our calculations, the average burn rate for Q3 is projected to be approximately USD $___–___K per month, while the average burn rate for Q4 is expected to be around USD $___–___K per month. We anticipate maintaining a burn rate proportional to user growth throughout 20__–20__.
At [_Our_Project_], we currently have ___ employees and ___ contractors. The average employee salary is $____K, with a potential 15% yearly bonus based on individual and company performance. All employees receive full benefits.
Our co-founders and executives, [_____________] (CEO) and [_____________] (CTO), each earns a salary of USD $_____K and have the potential to receive an added 25% of their salary as a yearly bonus. Their bonuses are calculated based on employee and company performance, with corresponding payouts.
Additionally, every employee will receive a package of [_Our_Project_] tokens. The distribution of tokens will occur monthly over four years, contingent upon continued employment.
Over the next eight months, [_Our_Project_] aims to fill ___ positions, bringing our employee count to approximately ___ by the end of 20__. The roles we are looking to hire include VP of Product, VP of Operations, Backend Engineer, UX Designer, Android Engineer, iOS Engineer, Business Development Lead, Mobile User Acquisition Lead, SMM Manager, Content Producers, Accounting Manager, and General Counsel.
Continue the quarterly update by discussing milestones achieved thus far, such as the number of GitHub commits, test-netting data, and any regulatory hurdles overcome.
In challenging situations, maintain composure, communicate effectively, and remain transparent to foster trust and confidence. Emphasize that your project is long-term, refer to the roadmap, highlight achievements, and underscore near-term goals.
While it is inevitable to encounter speculators and individuals seeking fast profits within your community, it is essential to discourage speculative behavior. When questions arise about the token’s predicted valuation and listing on exchanges, respond in a matter-of-fact manner that does not fuel speculation.
Navigating Regulatory Complexities: Building Bridges with Regulators
Acknowledge the nuanced reality of regulatory compliance and outline the proactive measures you’re undertaking to surmount these obstacles. By transparently addressing regulatory complexities, actively engaging with regulators, and documenting your journey, you exhibit a steadfast commitment to compliance and foster a sense of trust and assurance within your community.
Consider engaging directly with regulators. Seeking clarification and insights can prove invaluable, enabling you to align your efforts with prevailing regulatory standards and fortify your position as a responsible participant within the ecosystem.
Translate your regulatory interactions into tangible documentation. Share insights garnered from meetings with regulators through blog posts, press releases, and updates on social media platforms.
Conclusion
The current trajectory toward crypto ecosystems marked by security, transparency, and reliability is compelling private equity firms and institutional players to engage more actively. This evolutionary shift benefits stakeholders by enhancing their interests and driving the industry’s maturation.
Transparency marketing emerges as a fundamental strategy, molding the promotion of token offerings and the creation of dynamic token communities and ecosystems. As projects embrace the principles of transparency marketing, they establish the bedrock for sustainability, trustworthiness, and growth.
Article by Jay Derenthal
