Transcript – BlockYard 2018 | Jan Sammut
If any of you have spent any reasonable amount of time on Telegram chat you’re gonna see a question many, many times, “When exchange?” The reason is very obvious, people enter an ICO with the plans of making a profit and they can only sell on an exchange.
But before we get started, I need one favor, we have a marketing team at RefToken and they always tell me that they never get enough photos of me on stage. Does someone have the clicker, the remote? Thank you. Can someone take a photo of this? And tweet it to the handle I’m going to give you next. After that, we can shut them up. And just tweet it to that, and I will owe you a massive favor. And we will pick up one of them, one of the people that tweets, and send them some RefTokens for free.
So, let’s start. So what are we going to discuss? We’re going to go over the importance of getting your token on an exchange – why it’s so crucial to your project. We’re going to identify what the exchanges look for when they are judging whether a token can be listed or should be listed on their exchange or not. And we’re going to explain how we can engineer that so when they look at your project, it’s like “check check check check check”, easy.
So, who am I? As introduced, I am of the founder and CEO of RefToken. I’m the founder of ICO Launch Malta. I’ve advised ICOs, I invest in crypto and I’m a holder, and we are based out of Malta.
So, this is the main thought that you need to bear in mind when thinking about exchanges, “A token that isn’t traded anywhere is worthless, regardless how much and how great your technology is. If there isn’t price discovery on an exchange, it is worth zero”.
Most ICOs don’t even make it to an exchange. Fifty-two percent of all tokens are not even listed on an exchange, which means, again, they are worthless. Most that are listed are not even listed on more than two exchanges. Now, it’s fine if one of the two exchanges you’re listed on are in the top five because there’s a lot of volume and they have a large reach. But if you’re listed on two small exchanges, again you really need to be working on moving up the exchange ladder, because it’s going to increase liquidity, it’s going to increase the reach. And, if you’re listed on more than two exchanges, good work, now what you need to do is start working on increasing trade volume and trade depth, so you don’t get slippage during trades. If you are listed on more than two exchanges, and at least one of them is in the top five, now what you should be working on is making your token go up to the top 100 on Coin Market Cap.
So the roadmap, you have to…
Work Your Way Up the Liquidity Ladder
It is very rare that a project can go straight in and get listed on Binance unless they are super well connected or have $1.5 million to $3 million US dollars to throw at Binance to get the listing.
You have to treat each new listing as a major news event. So you start working your way up from the smaller exchanges upwards, and, you know, press releases, marketing, get your influencers to push it out on YouTube, etc.
You should try to earn listings rather than pay for them. Throwing money at exchanges is not going to get you very far even if you have a hundred million in the bank. You need to keep pushing. The big exchanges of today will be the small exchanges of tomorrow. We all remember Poloniex being the biggest exchange in the world, remember Bitfinex being the biggest exchange in the world. It’s constantly changing.
So, this is what the process looks like. You generally start off by submitting your application, it’s a long Google Doc, probably there’s an NDA, you fill in all your details. This is where you provide the exchange with the information on which they’re going to make their first assessment. “Is this worthy of being listed on our exchange?” They review it, if they like you, they will get back to you and then you start to negotiate, and if it works, well, you get listed and happy days.
So, what are the…
Benefits of Multiple Listings
Well, first of all, you have a larger allocation base. The more people that hold your token, the harder it is for a group of holders to sell and crash the price, or pump the price up and then dump it.
It increases access. A lot of exchanges are very big in a specific market, and so, basically, if you’re not on many exchanges you might be limited to a few markets or you might be excluded from, say, the US for example. It creates an option B, exchanges get hacked, they go down, they get closed down, they get bought out, they fall out of favor. So one of your two exchanges goes down or gets hacked, well then you’re back on just one exchange.
It prevents slippage. Exchanges cross-reference pricing. So if there’s a massive sale on one exchange, what will happen is, if the price drops on that exchange, they will arbitrage between exchanges to bring the price back up. If you’re just on one exchange and someone drops, one of your pre-sale investors for example goes and drops $200,000 worth of your tokens, it will cause a massive drop, if you’re on one exchange.
What is the secret to getting listed? These are the…
Criteria That Exchanges Look For
Marketing and Hype
Everyone wants the popular kids at their party, so, the more media there is, the more hype there is about your project, the more likely you are to actually have the exchanges come to you and tell you “hey, do you want to list with us?”
Wide Holder Base
The more people hold your tokens, the more attractive you are to an exchange, because, basically, they know that there are more users that are likely to come and open an account and start trading with them.
The larger your community, the more recognition and legitimacy you have. The more people talking about you, and, by extension, about the exchanges on which you’re token is traded.
Obviously, no exchange is going to bother listing the token with very little trading volume because that’s where they make a chunk of their fees. So, you need to make sure that you have really good trading volumes.
No exchange, no serious exchange, is going to list if they think you’re a legal threat to their existence.
We’re going to break it down piece by piece, each one of those we’re going to explain, a checklist of exactly what you need to do.
We break this down into six steps.
We start with the…
It’s a ground zero for everything. This is where the people that have been around since 2009 hang out. And this is where the sentiment of your project is made or broken.
Generally, the way we do it, at our agency is we put up a miniature version of your site in a thread. We have contacts with a large community of very well respected members. Then we send them the white paper, we pitch them your project, we incentivize them. Generally, they write a lot of nice stuff about it, and they ask a lot of flattering questions, it helps the project a lot. It creates ten to twenty pages of Bitcointalk forum threads.
The exchanges will go and look at this forum thread, they will ask you for the link, and they will come in and they will see twenty pages of comments, and they will say “Hey these guys have a community around them, people are genuinely interested in the project.”
From there we go onto…
This is where trader’s, investors, influencers scout for new picks. It’s where things go kind of viral in the crypto world. Again, we have a large community of long-term members which can help increase the sentiment and drive and discussion around your project.
There are some really smart tools nowadays in crypto which allow you to scan Reddit, scan Facebook, Twitter, and pick up topics and the sentiment around them. Positive words, negative words, and also how much it’s being mentioned, and the authority of who is talking about them, and create a score for them. Venture capitalists and funds are starting to use them a lot, so this is really powerful.
We go next to…
Twitter and Facebook
This is a casual audience, they don’t really necessarily know what they’re doing, they follow the hype, but there’s 2 billion of them, so it’s important not to ignore them. This is where we build your more mainstream community.
From there we spill out into…
So we start hitting, spreading your project around all the major crypto news sites, so The Merkle, Coin Telegraph, Coin Speaker, etc. This again brings you a huge amount of traffic and validation in the eyes of the community, because if you’re featured in these news outlets, then you must be legitimate.
Happening more or less in sync at the same time with…
YouTube personality, these guys have hundreds of thousands of viewers, they can drive huge amounts of traffic and people trust them. Millennials we all know don’t read, they watch videos, a large section of the marketplace is millennials, a lot of them made a lot of money. So you can’t ignore them like we did in traditional markets. You need to go out to these guys and they will, you know, they can be the key to your success.
And, at the very large stage, we generally push our clients out to mainstream news outlets, so…
Forbes, Huffington Post, Wall Street Journal
This is where either an exchange or even an investor looking and doing their due diligence on you, Google you, and you will come up in Forbes and Wall Street Journal and they say, “These guys are the real deal, we want them on board.”
Expanding Holder Base
So how do you expand your holder base? You need to create an incentive. We’re humans. We don’t do tasks unless there’s a reward. So, generally, people are in this for the money, so you offer them money, except you don’t offer them ether or dollars, you offer them your tokens because those are relatively free for you. So you create the incentive which is an airdrop for free tokens, you then define the actions that you want them to do in order to receive the tokens. So, “Join our Telegram, follow us on Twitter, Facebook,” etc. You promote this along with the channels that we created earlier, so as you can see now — we’re starting to stack the levels on top of each other, so it becomes, you know, cumulatively more powerful.
You collect all the data, you’ve validated it, you’re going to have thousands of Asians and Indians putting in their address a million times, and first name last name, so you have to validate that.
You execute the transfers now. Traditionally, this is really painful, you’re going to have 10,000 Ethereum addresses to send out tokens, so you can either push it out one by one with all your team working around the clock for two weeks. Or you can come to us and we can do it for you with an automatic script and a smart contract.
And the last step is you need to…
Incentivize Them to Hold Their Tokens
…rather than just go out and sell them. There are four ways of doing this:
Expanding Holder Base
Offer them a bonus if they hold it for another, say, three months. But another way is to be a bit smart about it, and forecast the airdrop so that each recipient receives less than the minimum deposit amount in an exchange. So, if your minimum deposit amount in an exchange is one token, send them point five. That way if they want to deposit and sell it they need to go to an exchange and buy one whole token, and some ether to put in their address and send out, and most of these bounty hunters are too cheap to do that, so it’s almost like a burn, the token stayed there forever. But, when the exchange looks through the blockchain and sees how many wallets have your tokens, there are thousands.
This one is a bit more complex. Exchanges love promotions. Exchanges, by nature, I come from the gambling industry, by nature they’re like a sports book. It’s basically sports betting but on crypto. They like promotions, trading competitions, Lambo runs, call it whatever you want. But for them it builds volume, they go up in Coin Market Cap, they get more traffic, it looks good to their investors. So they will like you for that. After that, market making – you need to ensure that there are no gaps in your trading, so market making is when you have constant price discovery, even if it’s just fractions, even if it’s just a couple of dollars at any given time. But at least are no gaps, and, that way, if someone comes in for a trade, there’s a current price at which the token is trading.
This is a bit more complex. Basically it revolves around creating increasingly large trades. What that means is, if at any given time your trade size is $10 and someone comes in and throws in an order for 10 grand, what’s going to happen, the price is going to shoot up or down. You need to work really hard on building an order book around your token so that it is not volatile and there isn’t that much slippage.
You’re going to have quite a few seed investor’s, pre-sale investors that have a large amount of holdings. At some point, they’re going to want to liquidate and cash out some of their profits if not all of them. You want to create a mechanism where these guys don’t need to go out and sell a few millions worth of your tokens, right at once, or else it’s going to cause massive drops in price. All the technicals will look against you, the bots will start dumping you, start getting shorted, and then it’s like a ride down to the bottom. You need to create a network where you can arrange these sales on an over-the-counter/off-network basis.
Marketing and Hype
We’re not going to turn this into like a Marketing 101. We’re going to keep it very high-level. The first element, the first part of this is…
You need to lead the opinion, you need to lead the sentiment, and you need to lead the narrative around your project. People notoriously don’t have an opinion and they will just repeat and take on the most authoritative opinion on the topic that they’ve heard as their own. It’s a normal human behavior. So, basically, the trick to this, is you need to recruit your influencers, thought leaders. You need to get them to evangelize your project. It happens by basically incentivizing them, and treating them very nicely, giving them information and access to products, not necessarily inside information. But when you send out a press release, send it to them too, so they can, you know, push it out ASAP, and they don’t have to learn about the from the news sites.
This is how you pay them back. You need to promote them, you get them interviews, get them speaking jobs, buy them a better webcam, whatever you need to do.
Work Up the Chain
So you can start off with lower-level influencers and work your way up to bigger ones. But, also, impress. It’s really important. The large news sites always look at the smaller news sites, to find the next story. It’s like when CNN looks at the national news, the national news looks at the regional news, and the regional news looks at the local news to see exactly what’s worth running in their papers. You need to start with small, rather medium-sized crypto outlets, and then start working your way up, until suddenly you have a system where you can push out favorable content on the largest media on a regular basis.
You form informal partnerships with other teams, with other projects, strategic ventures, joint ventures, strategic investors, etc. This is all this partnership buzz we see all the timing in crypto. There’s a reason for – it is because it creates hype.
The first step to any project is…
You need to have a team that knows what they’re doing, with a good past history. You need to have a solid ICO partner that can guide you and create a token mechanism that isn’t simply “We make token, we get paid, happy days,” because that doesn’t fly anymore. It needs to have a unique proposition to it. People need to say, especially when we’re approaching VCs and institutional investors, they need to look at it and they need to say, “These guys really have a smart token system. There is a valid reason why they are using their native token, not Ethereum or Litecoin or whatever.”
Legal & Regulatory
You need to have a really good firm with experience in ICOs. They need to issue a legal opinion on your project, and they will probably get called with the exchange’s legal firm. The exchanges legal firm will do what lawyers do, so they’re trying to be smarter than each other, and, so, basically the firm you engage needs to be experienced in this, otherwise they are going to be torn apart. The exchange’s lawyers do this three times a day. If you have a lawyer that never did ICO before in his life, you’re not going to get anywhere.
If you’re creating, launching an ICO to disrupt the airline industry and decentralize it etc., you better have either loads of experience yourself in the sector, or have advisors and a board that are really, really experienced in the field, otherwise you are simply not credible.
Sounds like a lot of work? You can speak to us – ICO Malta.
I’m way ahead of time. If there are any questions…
Q: “I am not that familiar with the topic, but, one of the first slides was the negotiation with the exchange. It intrigues. Tell me about it.”
A: Okay, so exchanges are basically abusing their position quite severely in the ecosystem at the moment. They are the bottleneck between ICOs realizing their true value because they understand that unless your token’s on an exchange, it’s worth zero. Their reasoning is simply, “You raised a 100 million euros, 50 million, why shouldn’t you give me 1 or 2 million of them to list you on an exchange. If you don’t give them to me, you’re screwed.” So, that is basically the negotiation. You will notice that if you go to list a token on Binance, for example, the first thing they make you do is download an NDA, sign it, and send it back to them. Why? Because they’re going to ask you for something outrageous and they don’t want people, the general public, to know that they’re going to ask you for something outrageous. So the negotiation with them is simply, as I said, you start on the smaller exchanges, you work your way up, when you approach them you have to be in a position of strength, so to them “Look, we’ve got two million people holding our token, we have three hundred million a day in trades, we’re in the top 100 already on this and this and this exchange. If you want us, will pay you that, if not, well, it’s take it or leave it.” Strength is always in the groundwork. You only get one shot at it. That’s why all that work we do before is so important.
Q: “Google and Facebook have banned advertising of crypto and ICOs. Do you see any changes on this?”
A: Okay, so far we’ve been managing to get our way around it, especially with Facebook. It’s a bit slow. You need to put in a manual appeal for it. Generally, if you don’t, if your advert isn’t is worded in a specific way, it does not violate securities laws, so that it is not an offering in itself, you can get away with it. It does reduce the efficiency because there isn’t, it is structured as an informative ad. But then there’s a lot of other stuff we do. For example, we never we never put ads for our clients which are kind of, you know, soon moon then Lambo kind of thing. We promote the press that they get. For example, if we get your ICO featured in Forbes, that’s what we’re going to feature, is going to be a story, the story informs about your ICO and that creates trust in people’s eyes. and they are more likely to go and check it out and then see that you’ve got an ICO running and participate. It’s always easier to get something out of someone if you pull them in towards you rather than push yourself onto them.