Initial Coin Offerings (ICOs) were immensely popular in 2018. However, most projects that used this funding method weren't exactly projects. They were just well-thought-out ideas in the form of whitepapers. They neither had the human resources nor the capital to take the project to fruition. Instead, they depended on ICO funding to turn their potential into a functioning platform.
Creators of such projects would usually distribute ‘placeholder’ tokens that were issued on another blockchain. They promised investors that, as the project developed and became successful, it would be transitioned to its own proprietary blockchain. And a major part of this transition process is token migration.
What are token migrations?
Token migration refers to the transfer of tokens from one blockchain to another. When entrepreneurs and creators want to gather investments based on a whitepaper, the most feasible option is to use an existing blockchain. Why? That's because creating an entirely new blockchain takes a lot of time and comes with exorbitant expenses, a risk that most creators are unwilling to take.
Back in 2018, most creators used ERC 20 tokens on the Ethereum blockchain to create and distribute 'placeholder' tokens. ERC 20 tokens have wide utility and are almost universally accepted in smart contract protocols. After raising funds and achieving a fair amount of success, these projects tend to migrate to their own blockchains. One shining example is TRON which migrated from Ethereum to an independent blockchain.
Note that token migrations don't always have to be from a host blockchain to a new blockchain. It can also be from one popular blockchain to another. A case in point would be KIN, which migrated from Ethereum to Solana in 2020.
The process of migrating your tokens
When a project jumps to a new blockchain, it may require investors to participate in token migration, also known as a token swap. This involves transmitting a token holder's balance from one blockchain to another.
The effort involved in the migration process depends on where you're holding these tokens. For instance, if your tokens are held on a well-known crypto exchange, you wouldn't have to do much as the exchange itself will take care of everything.
However, for those storing their tokens in a custodial wallet, there might be a few steps that need to be completed. Projects generally publish tools and instructions for the migration process. This typically includes connecting your wallet to the new protocol and following a few simple instructions.
Ensure that these instructions come directly from the project's official website and remember to read them carefully before beginning the process.
A project may also create a dataset that records the balance of each user's holdings and accordingly distributes new tokens once it moves to the new chain.
Further, when migrations are announced, they also come with a particular end date. If the tokens aren't migrated by that date, they turn to nothing. Projects are generous with time to ensure that all investors migrate, but it is always better to be safe than sorry.
