ICOs present certain key characteristics. Their relevance for each project and each business model must be carefully assessed.

Although ICOs may be an appealing alternative business financing method, one should not underestimate their specific key issues and those raised by the token economy.

Considering the great flexibility in framing ICOs, their relevance for a specific business must be assessed on a case-by-case basis. Relevance depends on:

• the kind of activity involved and the characteristics of the tokens under consideration,
• the way a project is structured: does the issuer use intermediaries to market its tokens? Has it put in place mechanisms to manage the tokens’ volatility? Will a secondary market be created to exchange tokens and under what conditions? etc.
• the capacity to adequately evaluate tokens, which is of utmost importance for the credibility of the operation and its success with investors and users.

Among the strategic issues to address, a vital one is anticipating the secondary market’s operation, with for instance the issue of the tokens’ liquidity and valuation method. Indeed, tokens generally grant their holders specific prerogatives in a given project’s functioning (voting rights, usage, etc.) in exchange for their financing. However, for one given issue, certain holders, and sometimes the issuer itself, commonly safeguard the tokens without using related rights or usage capabilities.

If an issuer withholds a number of tokens, the purpose is generally to ensure enough token liquidity on the secondary market.

It should be noted however that certain holders might refrain from exercising their prerogatives for purely speculative purposes.

Accordingly, the tokens effectively used to sustain a project may represent only a portion of the tokens issued. This situation is observed in existing ICOs, and it is crucial to anticipate it to address the following issues:

• ensuring that tokens remain liquid enough to support the sound functioning of the project they finance. If the number of token holders with speculative purposes becomes too significant, it may threaten the proper operation of the project.
• whether ICOs should finance all or only part of a project, taking into consideration the nature of the tokens to be issued and the project to be financed. It is worth considering whether an ICO should not be supplemented by more traditional sources of financing (banking and financial markets) for certain aspects of the project, where they may be more appropriate than ICOs.