Token Generation Event (TGE) represents a decisive turning point in the lifecycle of any blockchain project. This is not simply a technical operation to mint and distribute digital assets onto the network, but also a strategic capital mobilization mechanism, establishing a foundation for liquidity and establishing the first market valuation for the project.
In the context of the digital asset market being strongly transformed from an early speculative stage to a highly structured era, Tan Phat Digital sees understanding the nature of TGE, the variables in token economics and the role of market makers become paramount for professional investors in 2025-2026.
The Nature and Evolution of Token Generation Event
TGE is essentially the process by which a blockchain project creates its tokens on a distributed ledger and distributes them to its supporters early, seed round investors and user community. Unlike initial coin offerings (ICOs), which are often closely monitored by regulators as securities offerings, TGE often focuses on issuing utility tokens. These tokens are designed to grant access to a specific product, service or decentralized application (DApp), thereby creating a layer of legal protection and emphasizing the actual use value of the ecosystem.
The distinction between ICO and TGE lies not only in the name but also in the mindset of the investor and the level of product maturity. While ICOs in 2017 often took place when the project only had an idea or whitepaper, modern TGE events are often held after the project has partially completed the infrastructure or even launched a testnet, helping to minimize risks for participants.
Detailed comparison between ICO and TGE
Project phase Project:
ICO: Usually takes place at a very early stage, sometimes there is only an idea or white paper.
TGE: Usually held after the project has an actual product or the network is ready to operate.
Type of asset to be developed issue:
ICO: Often considered a security, susceptible to legal risks.
TGE: Mainly issues utility tokens (utility tokens) associated with the ecosystem.
Risk for investors:
ICO: Very high due to product uncertainty and commitment from the team.
TGE: Lower thanks to transparent vesting mechanism and realistic development progress.
Execution method:
ICO: Usually distributed manually after the semi-finals
TGE: Complete automation through smart contracts.
Main goal:
ICO: Focus maximum on capital mobilization (Fundraising).
TGE: Focus on creating ecosystem, creating liquidity and establish administrative rights.
See more: What is token unlock, what is Vesting
TGE implementation process and strategic capital calls strategy
The TGE implementation process is often divided into four main stages: planning, pre-TGE (Pre-TGE), TGE implementation and post-TGE. During the Pre-TGE phase, the project will conduct capital calls structured in order of priority:
Seed Round: For large venture capital funds (VC), providing bait capital at the most preferential price in exchange for long-term commitment.
Private Round: Open to strategic partners and reputable investors, the price is higher than the seed round but still lower than the public price.
Public Sale: Conducted via IEO (centralized exchange) or IDO (decentralized exchange), where the community can participate in buying and then trade freely in the market.
At the time of official TGE, smart contracts will automatically mint and distribute tokens. Many projects today use the Merkle Tree solution to optimize claiming/airdrop, helping users receive tokens effectively and safely against fraud attacks.
Tokenomics structure and key valuation variables
According to analysis from Tan Phat Digital, professional investors need to deeply analyze the supply and demand structure through two important indicators: Market capitalization Market Cap - MC and Fully Diluted Valuation - FDV.
Analysis of valuation index and circulation rate
Market capitalization (Market Cap - MC):
Features: Reflects the actual demand and existing liquidity of the token in the market market.
Meaning: This index often fluctuates independently of unlocks and reflects the actual value that investors are holding.
Fully diluted capitalization (FDV):
Characteristics: Reflects long-term dilution pressure based on the maximum total supply multi.
Significance: Inversely correlated with prevalence rate. FDV too high compared to MC warns of the risk of a sharp price drop when supply increases in the future.
Prevalence ratio (%CS):
Characteristics: The lower this ratio, the more easily FDV is inflated by media stories.
Significance: The prevalence explains about 11.3% of the variation of FDV but only has a very small impact (about 3%) on MC fluctuations.
In the period 2024-2025, the "Low Float - High FDV" trend (Low Float - High Diluted Pricing) has created large inflation risks for many projects, causing continuous downward pressure on prices when unlocks take place.
See more: Initial Coin Offering (ICO) 2025-2026: Global Analysis & Institutionalization
Token payout schedule and mechanism Cliff/Vesting
Lock-up and vesting are the most important supply management tools. An unreasonable vesting schedule can cause the price to decrease by 10-15% right at the time of unlocking due to the fear of releasing goods from the community.
Popular types of Vesting structures today
Cliff Vesting: The token is completely locked for an initial period of time (cliff phase), then begins to be released. This is the best choice for the founding team to demonstrate long-term commitment.
Linear Vesting:Tokens are released regularly on a monthly or quarterly basis. Often used for employee incentive packages to maintain personnel stability.
Milestone Vesting: Release based on achieving specific goals (such as Mainnet launch). Suitable for strategic partners to directly contribute to project results.
Hybrid Vesting: Combination of partially unlocking right at TGE and the rest in installments. This method helps reward the community early but still maintains the long-term commitment of the parties.
The Role of the Market Maker and Pump & Dump Risk
The Market Maker (MM) plays the role of maintaining liquidity and minimizing price slippage. However, some MM tactics can pose risks to individual investors:
Price Marketing: Creating strong increases/decreases to attract attention (FOMO).
Spoofing: Placing huge virtual orders and then canceling them right before matching to manipulate supply and demand psychology.
Wash Trading: Self-buying and selling to create virtual trading volume, artificially increasing the token's attractiveness.
Price Propping: Temporary buying to protect the project's reputation during strong sell-offs.
The "Pump and Dump" phenomenon usually takes place through three steps: Accumulating goods - Pumping prices to create FOMO via social networks (especially Telegram) - Discharging goods to exit positions, causing inexperienced investors to suffer heavy losses.
Actual analysis of typical projects in 2024-2025
Starknet (STRK):
negative).
Hamster Kombat (HMSTR):
Unlock rate: Very high, accounting for about 64% of total supply.
Performance: Reduced about 13-15% in 30 days.
Cause: Supply saturation, people Tired of using the Tap-to-Earn model and the exhaust pressure from the huge airdrop.
ZKsync (ZK):
Unlock rate: High (priority for the community).
Performance: On-chain activity drops to as low as 90%.
Cause: More than 40% of the largest wallets receiving airdrops immediately sold off and left the network.
Market Context 2025-2026 and Vietnam Focus
Entering 2026, the market shifts strongly towards financial institutions with support from regulations such as MiCA (Europe) or GENIUS Act (USA).
Notably, in the domestic market, Vietnam has officially legalized crypto assets from January 1, 2026 when the Digital Technology Industry Law takes effect. This provides legal protection to approximately 17 million holders. Digital asset exchange projects such as TCEX (Techcombank) and CAEX (VPBank) are expected to create a turning point for capital mobilization through real asset tokenization (RWA).
Important events to note in early 2026
CfC St. Moritz (Switzerland - January 14-16, 2026): Focus on Tokenization and regulation for institutional investors.
Wallstreetbets Live (Miami - January 28-30, 2026): Market and community sentiment analysis.
Digital Assets Forum (London - February 5-6, 2026): Discussion on financial infrastructure and digital banking.
Consensus Hong Kong (February 10-12, 2026): Gateway to virtual asset policy in the Asian region.
ETHDenver 2026 (USA - February 17-21, 2026): The largest conference for Web developers supply.
Token payout schedule is too short:Development team is unlocked early (less than 1 year).
Lack of practical usefulness:Token is only based on promises without a clear role in the ecosystem.
The gap between MC and FDV is too large: Extreme potential inflationary pressure high.
Lack of transparency: Anonymous team, no audit reports from reputable units such as CertiK or PeckShield.
Answers to frequently asked questions (FAQ)
1. How is TGE different from ICO? TGE often issues utility tokens tied to a partially completed product, while ICO often takes place at the idea stage and is easily considered an unregistered securities offering. TGE focuses on creating an ecosystem and liquidity rather than simply raising capital.
2. How to avoid the "Pump and Dump" trap after the token is listed? Investors should keep a "cool head", avoid chasing when the price is skyrocketing due to FOMO and absolutely not invest all capital in a single token. Please research the project carefully and prioritize reputable exchanges instead of believing in offers from unverified groups on Telegram.
3. Why is high fully diluted capitalization (FDV) a big risk? High FDV while low effective capitalization (MC) (Low Float - High FDV phenomenon) means that a large number of tokens remain locked. When these tokens are unlocked in the future, a sharp increase in supply will create selling pressure and dilute the value you are holding.
4. What is the real role of Market Maker? Do they manipulate prices? Market Maker helps maintain liquidity by listing buy and sell prices side by side. Although their presence is necessary to reduce slippage, some MMs may use tricks such as "spoofing" or "wash trading" to create artificial market effects.
5. How are Vesting and Lock-up different? Vesting is the process of releasing token ownership gradually over time (for example, paid monthly). Lock-up is a period of time where the token is completely prohibited from being traded or transferred, even if the user has theoretical ownership.
6. Has Vietnam officially legalized digital assets yet? Since January 1, 2026, when the Digital Technology Industry Law took effect, Vietnam officially became the 46th country to legalize the ownership and use of cryptographic assets, providing a protective legal framework for millions of domestic investors.
7. How to check the credibility of a project about to TGE? Read the White Paper carefully to see if the token has practical usefulness. Additionally, check wallet holding lists on on-chain tools (like Etherscan) to see if there is an excessive concentration of “whale” wallets, and always look for audit reports from CertiK or PeckShield.
8. Is TGE the best time to buy tokens? TGE is usually the time of the strongest price fluctuations. Despite the high profit opportunity, selling pressure from airdrops and early investors often causes the price to drop sharply immediately afterward. Investors should consider buying when the price has stabilized and the market has absorbed all the initial pressure.
9. What is the difference between IEO and IDO in the TGE process? IEO (Initial Exchange Offering) is carried out on centralized exchanges like Binance, where the exchange will play the role of moderating the project. IDO (Initial DEX Offering) takes place on decentralized exchanges, providing transparency and faster access, but investors must take full responsibility for risk assessment.
10. What are the outstanding features of the LIT (Lighter) project, which was just launched in early February 2026? Lighter is a decentralized derivatives exchange that has reserved up to 50% of the total LIT token supply for the ecosystem and airdrop. This project attracts attention thanks to its fair distribution model, buyback mechanism (token buyback) from product revenue, and backing from large funds such as Founders Fund.
In short, through Tan Phat Digital's analysis, TGE is a comprehensive test of the project's economic model and integrity. In the new era of 2026, token value will increasingly depend on its practical usefulness and support from major financial institutions. The safest strategy is to focus on projects with realistic, transparent cash flows and always perform thorough research (DYOR) before investing.
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