As many Web3 founders already know, token sales marketing is fundamental to the growth of the Web3 project. Token sales will affect how your token operations run. From who holds the tokens, how the market reacts, and what kind of community you attract.

In this process, many Web3 founders focus only on the price and its increase. Many Web3 founders actually miss this 1 important thing. That is the token sale structure. The token sale structure is just as important as price or marketing. If the founder chooses a structure model that is not in accordance with the project objectives, it is a negative thing. Such as triggering oversubscription, bot attacks, or unequal access. By making structured sales, Web3 founders can give you control, trust, and sustainable demand.

In this article, we will cover five common token sale structure. You'll learn how each one works, when to use them, and what you need to prepare before choosing one.

1. Capped First-Come, First-Served (FCFS)

This model works by selling tokens at a fixed price. However, there is a clear hard fundraising cap for the sale.  As the name “First Come, First Serve” suggests, the fastest buyer will get the token until the sale ends. This token sale structure is one of the simplest and most frequently used token models. Projects commonly use this structure because there is no bidding or complicated logic. Just a fixed price and a clear limit.

Why choose this model:

• Token sale structure with simple and fast setup process. This model does not require complex technical requirements. 

• The “First come, First served” model creates urgency for potential participants as there is momentum through limited-time participation.

• Great for teams that prioritize speed over price discovery

Read also: Designing token economics for ICO

2. Capped Auction

This model allows buyers to bid instead of paying a fixed price. The process starts with the web3 project which has the authority to set the fundraising limit. Tokens are then awarded to the highest bidder until the limit is reached.

In the process, the project will not set a price in advance. Instead, instead of the project or founders, the market will decide how much each token is worth during the auction window.

Capped Auction Variation: Dutch Auction

Instead of providing competitive bidding, in the Dutch Auction the price starts at a high price. This price will then drop over time. Participants will wait until the price reaches a level where they are willing to pay. When bidding is done, tokens are allocated at that end-market clearing price.

These Dutch auctions are seen as more transparent and less rushed. They reduce the pressure on buyers to bid excessively and prevent large buyers from dominating early.

Why choose this model:

• This model allows projects to conduct transparent price discovery. This process will be done transparently based on market demand.

• Since there is a fixed cap, this model can maintain control of fundraising. 

• Participation in this model tends to be more targeted and planned. It is not a rushed and speculative participation.

3. Uncapped Auction

There is no fundraising cap set in this token sale model. Participants can place bids and the sale will continue based on the total demand. There is no upper limit to how much a Web3 project can raise. The market and participants will determine the price and scale of fundraising.

Why choose this model:

• This model allows projects to raise the maximum amount of capital possible. 

• With bids, this model can reflect how much your token is valued in the real market.

• This model is best suited for projects that anticipate broad investor interest.

4. Capped with Redistribution

This model is slightly different from the other models. In this model, participants will deposit funds upfront. And after the fundraising process is complete, tokens are distributed proportionally based on the total contribution. This process ensures that there will be no excess funds, as all unused funds will be returned automatically. Everyone can join this fundraiser on equal terms, regardless of the timing.

Why choose this model:

• This model can enable fair access and balanced distribution for all participants.

• As the name “redistribution” implies, this model will automatically return funds if there are excess contributions. This avoids the problem of oversubscription.

• Ideal for community-focused or high-demand token launches.

5. Capped with Parcel Limits

This model sets a hard fundraising limit. In the process, participants will be limited to how many tokens they can buy. This model ensures that no buyer or participant will dominate the token sale. Each participant will get an equal and fair chance within the specified maximum allocation.

Why choose this model:

• This model can encourage token distribution to a wider audience. 

• Because it uses a fixed fundraising cap, it can prevent over-concentration by a large number of participants/buyers.

• This model supports community-led and decentralized growth.

Token Sale Structure Risks and Trade-Offs

Each token sale structure has advantages for each project's preferences. But each model also has disadvantages. Some models allow for a fast fundraising process but may be unfair. Others are fair but complicated to navigate.

What may seem ideal for fundraising may undermine long-term trust. Therefore, before choosing a token sale structure for your project, know the following risks. This can help you avoid negative effects and be able to run the token sale process more smoothly. 

Founder's Checklist for Token Sale Structure

Before you choose a model and start the token sale process, it would be better if you ask the following important questions. Each token sale model comes with a key challenge.

Use this list to check if your team is ready to handle it:

Build Smart Token Models with TokenMinds

Your token sale is more than a fundraising event. It shapes your community, your reputation, and your long-term success. Choose a token sale structure that fits your goals, your audience, and your tech stack.

Need help designing the right token sale structure? As a token sale expert we can help your project. Schedule a free consultation with us now.