Airdrops & Token Generation Events (TGE) in Crypto: What Are They?

Rivalry in-house copywriter and chronically online. Reading all the facts and condensing it down so you don't have to.

January 29th, 2025

If you're new to the crypto world, you may have come across the terms "Token Generation Event," "TGE," or "crypto airdrops." No, this isn't a different language. These are different methods crypto projects use to grow and attract new investors. While they may seem similar on the surface, airdrops and TGEs serve very different purposes with their own risks and rewards.

Understanding the difference between a crypto airdrop and a Token Generation Event can help potential investors make more informed decisions, so let's get into it!

Key Takeaways:

TGE stands for 'Token Generation Event.' TGEs have the ultimate goal of raising funds or capital for the projects future development by selling them to early investors at lower prices.
In contrast, crypto airdrops are given to supporters for free, typically with the goal of rewarding loyalty or for marketing purposes.

What is a Token?

If you don't know what a token is, we're wondering why you're even here. But we'll run through it anyway. A token is a digital asset that's built and managed using blockchain technology.

Unlike cryptocurrencies like Bitcoin or Ethereum, which have their own blockchain-based networks, tokens are built on existing blockchain platforms (e.g., Ethereum's ERC-20 or the XRP Ledger).

Tokens power decentralized applications (dApps), allow smart contracts and serve as currency within blockchain networks. Here are the main types of tokens.

NFTs (Non-Fungible Tokens): Unique tokens representing digital art, collectibles, or ownership rights, like Pudgy Penguins or President Donald Trump's' 'Trump' cards.
Utility Tokens: Provide access to a product or service.
Security Tokens: Represent real-world assets like stocks or real estate and are subject to regulations.
Governance Tokens: Give holders voting power in decentralized projects, like Uniswap's UNI.
Stablecoins: Pegged to assets like the USD to maintain price stability, like USDT.

What is a Token Generation Event (TGE)?

A Token Generation Event, commonly referred to by the acronym TGE, involves the technical generation of digital tokens in a blockchain network. It also involves them going to market, usually through a public sale via different methods, like an ICO, IEO, or IDO, with the goal of raising funds to further support the project.

TGEs present a golden opportunity for investors and the general public to get in there early, with the hopes of a return on their investment.

What Types of Token Generation Events Are There?

On paper, TGEs can take on multiple different forms, each with unique frameworks. Here are the most common types of Token Generation Events (TGEs) you'll encounter with token launches and crowdfunding events.

Initial Coin Offerings (ICO)

Initial Coin Offerings, or ICOs, are the most popular crowdfunding methods in the crypto space. With an Initial Coin Offering, the crypto project sells newly minted tokens to investors to raise capital.

All token sales during this time finance further development of the project's tokens. While ICOs are open to the public, they can face regulatory scrutiny in many countries.

Security Token Offerings (STO)

Security Token Offerings (STOs) are the technical act of creating tokens that reflect ownership or interest in a company or its tokens, like stocks or real estate. These comply with securities regulations, offering legal protection. As such, the token holders will have rights to dividends, profit sharing, or other financial benefits, depending on the specific project.

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Initial Exchange Offerings (IEO)

With an Initial Exchange Offering (IEO), new tokens are directly offered to early investors via a centralized exchange (CEX). These types of Token Generation Events are typically the safest since the CEX will usually vet and verify the project before listing the token for public sale.

Initial DEX Offerings (IDO)

Initial DEX Offerings are similar to IEOs, except these tokens are sold via decentralized exchanges (DEXs). These offer a more community-based approach to Token Generation Events with decentralized funding, as opposed to CEXs.

Fair Launch

With a Fair Launch TGE, there are no private sales or pre-mining—everyone has equal access in the beginning, meaning there are no insider advantages at play. These types of events are used in decentralized finance (DeFi) projects.

What are the Pros and Cons of Token Generation Events (TGEs)?

Pros	Cons
Fundraising: Allows projects to raise capital easily for future project development.	Regulatory Uncertainty: TGEs are subject to evolving and uncertain legal frameworks.
Liquidity: TGEs provide immediate market access for tokens, allowing trading.	Market Volatility: Tokens generally experience extreme price fluctuations, especially in the early stages after the TGE.
Decentralization: Distributes token ownership across a wide range of people in the crypto community.	Security Risks: Potential investors need to be wary of hacks, scams, or phishing attempts with new projects.
Community Building: Attracts early supporters and incentivizes participating, often with loyalty bonuses and rewards for early investors.	Speculative Nature: TGEs may attract short-term traders looking to cash in on early prices as opposed to genuine supporters.
Early Investment Opportunities: Investors can buy tokens at early prices, potentially leading to high ROI if the project succeeds.	x

What are Crypto Airdrops?

Crypto airdrops are taking over the scene from Token Generation Events (TGEs). While they both involve distributing tokens, they operate in different ways.

As mentioned, TGEs are fundraising events where tokens are sold, often to raise capital and kickstart its ecosystem. Investors buy these tokens, usually through a presale or public sale, expecting future value or utility.

In contrast, a crypto airdrop is a free distribution of tokens, typically used for marketing, community engagement, or rewarding loyal users.

Unlike TGEs, airdrops don't require potential participants to invest money—just to meet certain conditions like holding a specific token or engaging with the project. For example, $NUTZ (Rivalry's native token) can earned by betting on the platform, either on the sportsbook or casino.

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Final Thoughts

The different Token Generation Events (TGEs) work well as a fundraising mechanism for new projects, offering unique benefits and features for those willing to gamble and invest in them. However, attention is now turning towards crypto airdrops as the newest thing in the space since they're often distributed for free.

Always do your due diligence when researching new projects and TGEs before making an investment decision to protect against potential losses.

Interested in more crypto content? Our blog page is a gold mine of opportunity, with guides on how to spot promising meme coins early, Ethereum price predictions, the best altcoins to buy this week, and the best AI wallets to protect your digital assets.

Disclaimer: This article is intended for entertainment and informational purposes only and should not be considered investment advice. Always conduct your own research and consider consulting a financial advisor before making serious investment decisions. The author and publication are not responsible for any losses incurred from reading this article.