How to launch a token: Operational guidelines from creation to custody

As mentioned in the first guideline, if you need stakeholders to participate in staking and governance to secure your protocol, then you may need to coordinate with custodians ahead of time. Protocol developers should not assume that custodians will support staking and governance for their tokens by default. Custodians need time — often months — to build out staking and governance support.

Here’s a list of questions you may want to ask yourself if your protocol relies on stakeholders for staking or governance.

Staking questions:

Will the custodian allow arbitrary delegation to staking providers or will the custodian have a preselected group of providers? (It may be helpful to work with staking providers that explored the protocol and provided feedback in the testnet phase.)

If the custodian has preselected a group of staking providers how will this affect the security of the network and decentralization efforts of the protocol? (Choosing a variety of staking providers that have validators globally can help decentralize the protocol.)

Do rewards compound or will stakeholders need to restake? (Ideally, the rewards are automatically – rather than manually – restaked.)

Is there a minimum/maximum amount to be staked per wallet?

Are there token minimums/maximums for validator nodes, and will this change over time?

Governance questions:

If you are expecting your stakeholders to participate in governance, is the custodian going to enable this participation technically or will it execute votes on stakeholders’ behalf?

Will there be onchain or off-chain (e.g., via Snapshot) voting for the protocol?

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To recap, if you’re preparing to launch a token and if that plan includes SEC-regulated stakeholders, make sure to leave enough time for high quality custodians to build out support for your protocol. Expect the development time frame to vary by custodian and to depend on the complexity of the protocol. The build-out can range anywhere from three-to-five months for more standard tokens, like Ethereum ERC-20s or Solana SPLs, to nine months for new blockchains, or even longer for tokens involving SNARKs, privacy features, or interactions with layer 2 (L2) networks. Start conversations early.

After establishing realistic timelines, prepare for the next steps. You can allocate tokens either by embedding wallets in the genesis block pre-launch, or by doling out tokens in tranches post-launch. Either way, all stakeholders should be subject to the same token lockup periods and vesting schedules to ensure alignment. Get in any necessary audits and security assessments. And finally, work through the staking and governance details of your protocol, which custodians and other stakeholders will need to know and prepare for to help ensure its security.

If you follow these steps, you’ll have a good handle on the logistics required for a successful token launch.

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