Establishing the Steps to Create an ERC-20 Token

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Establishing the Steps to Create an ERC-20 Token

Ever since the launch of the Ethereum network and other blockchain platforms that allow token creation, ICO (Initial Coin Offerings) have been a popular fundraising mechanism for startups. A majority of successful ICO’s today are ERC-20 compatible tokens created by Ethereum’s virtual machine.

Launching an ERC-20 token does not take much time. The Solidity programming language will be utilized for creating a custom token using the Ethereum network. OpenZeppelin contracts will act as the foundation for the smart contract. The contract will set all the parameters of the coins such as storage of the tokens, name of the token, its symbol and supply issues.

A text editor such as Sublime or Atom is needed for modifying the copied Solidity code. Certain elements such as the maximum supply, name of the token, address output and symbol of the token can be changed within the code.

Further, wallets such as Mist, MyEtherWallet (MEW) can also be used to create a token contract. A certain amount of Ethereum would be required for paying the network fee. The code created should be run on the platform. Then, the metamask address would be tethered and will be deployed. Errors in the contract would be displayed through red or yellow warnings. The issues will have to be fixed before deploying the code. On a trial basis, a transaction will be sent across the network. If it is executed smoothly, then it indicates that there are no errors present in the contract.

Hence, a token contract can be implemented on an Ethereum network with an Ethereum supported wallet, real Ethereum, a Solidity token contract, Javascript as the programming language for unit tests, a text editor and a platform to deploy and test the functioning of the contract either on testnet or mainnet.

The simple process of launching an ICO token

Different solidity contracts would make this process of launching an ICO token work smoothly. A simple website with an attractive layout and a well-written whitepaper will be required. While coding the ERC-20 token will not take time, it does not imply that every project offers great value. Hence, research about the project and the team members involved before giving the green signal.

Define the rules and regulations for issuing tokens. Have a solid business plan to determine how the collected funds from the investors will be utilized in the future. A landing page for ICO should be created and a marketing campaign must be implemented.

Regarding the ICO, certain details like the start date and the end date, minimum and maximum cap on issuance, currencies in which they will be expressed, determination of time for mining a block and the amount of work needed for verifying a transaction should be fixed.

For the token, the number of tokens would have to be fixed initially. Its name, decimal places and the symbol will have to be determined.

Security is important for the ICO due to the intense competition. Hence, strong codes should be applied for freezing the contracts of clients in case of an emergency. Certain conditions can be fixed in this regard.

Conditions to impose for getting access to the tokens

Tokens can be accessed by the investors only after the ICO ends or after the completion of the transaction. The ICO can be offered in the form of a closed pre-sale to a set of invited people. Early buyers can be given an attractive bonus scheme. If the fundraising goal of the firm has not been met, the firms should return the raised funds to the investors. Under special circumstances or extraordinary situations, the funds raised under the ICO can be released. It can be stored either in a contract or transferred quickly to some secure wallet.

Regarding the coding, every line of code has to be extensively tested before going live as it cannot be changed once finalized. It has to be tested against a working blockchain network.  While the terms and conditions written in the contract can be changed anytime, it will lead to decrease in the trust of the community while purchasing the coins listed on the exchange which would ultimately affect the entire fundraising process.

Hence the code review process is crucial. Every peer has to check each line of code before committing to the repository. It would help in discovering incorrect implementation and inconsistent contract behaviour through static code analysis and audit.

Further, the source code for the token contract will be verified by analyzing the contract address and the official website.

Benefits of launching an ICO token on Ethereum

There are plenty of advantages of launching an ICO token on Ethereum as it uses a complex data structure permitting quick modification and verification of the various states for executing an ICO. The smart contract monitors the amount of funds raised, confirms transactions and distributes new tokens after a crowdsale. Ethereum is equipped with Turing completeness preventing infinite loops and Denial of Service (DoS) attacks against ICO’s. Blocks can be created fastly without compromising on security using the GHOST (Greedy Heaviest Observed Subtree) protocol and transactions can be processed fastly. Hence it can be verified and added to the crowdsale at once. Then, the tokens can be distributed to the respective investors without sacrificing the integrity of the blockchain.

Make sure to keep in mind the above-mentioned guidelines to create an ERC-20 token.

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