The ICO
NovaDAO ICOs are structured, transparent token sales with built-in investor protections. This page explains how the sale works, what happens with the funds, and the performance package that keeps teams accountable.
How the ICO Works
Sale Opens
The ICO opens for a fixed duration (typically 7-14 days). Participants send XLM to the sale contract and receive project tokens at the fixed ICO price. All contributions are recorded on-chain.
Discretionary Cap Applies
The project sets a discretionary cap — the maximum amount the sale will accept. Once the cap is reached, the sale closes automatically. This prevents over-raising and ensures disciplined capital allocation.
Minimum Threshold Check
When the sale period ends, the contract checks whether the minimum raise threshold was reached. If yes, the sale is successful. If not, all funds are returned automatically.
Funds Are Distributed
On a successful sale, funds are distributed according to the pre-defined allocation: Bid Wall reserves, project treasury, performance package escrow, and protocol fees.
Why a Discretionary Cap
| Without Cap | With Discretionary Cap |
|---|---|
| Teams raise more than they can deploy | Raise is matched to actual needs |
| Token dilution is excessive | Dilution is predictable and bounded |
| Treasury mismanagement risk increases | Capital discipline is enforced |
| Community trust erodes over time | Transparency builds long-term confidence |
Token Distribution Example
Here is a typical token distribution for a project raising 1,000,000 XLM with a 10,000,000 token supply:
| Category | Tokens | % | Vesting |
|---|---|---|---|
| ICO Participants | 4,000,000 | 40% | None (immediately liquid) |
| Team & Founders | 2,000,000 | 20% | 12-month cliff, 36-month linear |
| Treasury / DAO | 2,000,000 | 20% | Governance-controlled |
| Performance Package | 1,000,000 | 10% | Milestone-based (5 tranches) |
| Ecosystem / Community | 1,000,000 | 10% | 24-month linear |
What Happens After a Successful Sale
- Bid Wall is funded: A portion of the raised XLM is deposited into the Bid Wall contract, establishing the NAV floor. See Bid Wall documentation.
- Tokens are distributed: ICO participants receive their tokens immediately. Team and other vesting allocations are locked in the vault contract.
- Trading begins: The project token is listed on the NovaDAO AMM and can be freely traded. External DEX listings may follow.
- Performance tracking starts: The milestone clock begins and the team must hit their first tranche target to unlock escrowed funds.
What Happens When a Sale Fails
- All contributed XLM is returned to participants automatically via the smart contract.
- No tokens are distributed.
- The project may reapply for a future listing after a 30-day cooling-off period.
- There are no fees charged on a failed sale.
Performance Package
The Performance Package is an escrow mechanism that ties fund releases to measurable milestones. It ensures that teams remain accountable and deliver on their promises.
| Tranche | % of Escrow | Timeline | Unlock Condition |
|---|---|---|---|
| Tranche 1 | 10% | Month 1 | Initial deployment and setup complete |
| Tranche 2 | 20% | Month 3 | Core product milestone achieved |
| Tranche 3 | 25% | Month 6 | User growth targets met |
| Tranche 4 | 25% | Month 9 | Revenue or TVL targets met |
| Tranche 5 | 20% | Month 12 | Full roadmap delivery and audit complete |
Key Parameters
| Parameter | Value |
|---|---|
| Sale Duration | 7-14 days (project-defined) |
| Minimum Raise | Set by project (must be realistic) |
| Discretionary Cap | Set by project (maximum raise) |
| Protocol Fee | 2.5% of total raise |
| Bid Wall Allocation | Minimum 50% of raise |
| Failed Sale Refund | 100% automatic, no fees |
| Cooling-Off Period | 30 days before reapplication |
Learn about the STAMP agreement: The STAMP