January 31, 2022
2004
0What is a Crypto Launchpad?
In just a few years, the sphere of cryptocurrencies has significantly transformed and opened up a vast scope for investment to new participants in this market. Unfortunately, many Initial Coin Offerings (ICOs) have shed light on early access to crypto projects for investors. However, this has made it difficult for many small crypto projects to access capital safely.
Everything changed with the advent of the crypto launchpad model.
In this article, we will talk about what a crypto launchpad is and which crypto launchpads are the most promising today.
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What is a crypto launchpad?
A launchpad is a platform that allows investors to buy tokens of new cryptocurrency projects before they are publicly released.
A launchpad is usually managed by a cryptocurrency exchange or another project dedicated to this purpose. To fully understand how these platforms work, you need to understand how new crypto projects raise money for their product or service.
And so let’s assume someone has a new blockchain-based project that they want to develop. The project creates a token that will become an integral part of the planned platform.
First, developers sell these tokens to early investors to raise money. Then the token is released to the public market. As the project grows and the token price rises, all investors earn money, but the earlier investors who entered at a lower price earn the most.
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Why did launchpads appear?
Before 2017, most new projects carried out token sales directly on their websites, distributing tokens to investors who buy their coins at a specified price. This process was known as the Initial Coin Offering (ICO), and investors had to hold the token until it was brought to the exchange.
However, after 99% of ICOs turned into frauds and the cryptocurrency market collapsed, investors were no longer sure about investing in such projects.
The main problem was that most new investors lacked the knowledge and experience to analyze new crypto projects. Therefore, they invested money in literally everything that looked flashy.
Meanwhile, crypto exchanges saw an opportunity to generate income and seized it with both hands. They took on the work of researching many new projects and, based on their findings, became project partners to conduct token sales on their exchange platforms.
This method has worked out since users and potential investors on the exchange wanted to buy new projects. In addition, investors also relied on the verification process used by the exchange, thereby reducing the risks of their investment in obvious fraud.
The new process of conducting token sales on Centralized Exchanges (CEX), such as Binance, was then called the Initial Exchange Offering (IEO), and the platform used by the exchange to process such sales was called the launchpad.
Recently, Decentralized Exchanges (DEX) have appeared, offering investors the opportunity to participate in new crypto projects. This token sale process is called the initial DEX offering, and the platform or service that a DEX uses for this is also called the launchpad.
Thus, any platform that raises funds for new crypto projects, allowing you to buy tokens before they are publicly released, is known as a crypto launchpad, or simply launchpad.
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The best crypto launchpad
Binance
Binance is the world’s largest cryptocurrency exchange in terms of trading volume and number of users. In addition, Binance was among the pioneers of the DOE process, launching its launchpad platform to help new crypto projects earn money from token sales.
As with most of its products, Binance has included its own IDI token in the token sale process. Interested participants keep the days preceding the token sale in the BNB, while payment for newly purchased tokens must also be made in the BNB at the end of the subscription period.
Projects include Binance Launchpad, Polygon (MAGIC), Perl (Perl), Java Labs (BCAA), Axis Infinity (AXIS), WazirX (WRX), FC Barcelona (BAR), and many others.
MakerDAO Pad
MakerDAO is a popular decentralized application for lending and borrowing, built on the Ethereum blockchain. In 2019, the MakerDAO project launched, which allowed future projects to sell tokens and ERC-20 to interested investors.
To receive a distribution for the sale of tokens, users must lock the project’s own token, DAO, in their account storage. The token sale process can occur in two ways, including the offer of a strong holder (SHO) and a SEED (special initial rounds through which investors can increase their allocations.) SHO is aimed at all DAO token holders, the “SEED.”
Several projects have reportedly raised a total of $40 million on the Creator DAO platform. Famous ones include the Elrond Network, My Neighbor Alice, and the ORION Protocol.
Polkastarter
Polkastarter allows crypto projects to raise funds by launching pools in which investors can invest their funds. This process is unique because Polkastarter is a protocol and does not control the listing or verification process, unlike communities that run pools. As a result, the token price can be fixed or dynamic, and everyone can participate in most offers.
However, like most of the launchpads discussed earlier, the Half Starter also has its token. At the time of writing, Polkastarter is already working on Ethereum networks and the Smart Balance Chain.
Popular projects that raised funds through Polkastarter include Ethernity, Convergence, and the Cuties Blockchain.
Kucoin Spotlight
Spotlight is a version of the Binance startup platform from Kucoin. It provides investors with early access to various projects. The scheme of work is similar to the Binance scheme. Therefore, anyone can easily understand the principle of operation.
In addition, users need to lock their KCS in the days leading up to the sale, and then log in to their account again during the action to make a purchase. By the way, to make a purchase, the user needs to have only 10 KCS (about 51 pounds sterling) to participate in the sale of Spotlight tokens.
Kucoin provides instant access to liquidity after the token listing. At the time of writing, Kucoin has conducted ten token sales on its launch pad with the most notable projects including Chromia (CHR), Trias (TRY), Bitbns (BNS), Coti (COTI). Although the return on Kucoin Spotlight projects is not as explosive as Binance’s, investors have received a decent return on participation.
PancakeSwap
PancakeSwap is a decentralized exchange platform built on the Binance Smart Chain (BSC). The project’s main goal is to allow users to trade tokens and increase liquidity.
In addition, the project has its own launchpad, which helps various startups raise funds for the development of their products.
To participate in the token sale, it is necessary to provide liquidity to the CAKE-BNB pool. This is done by buying CAKE tokens and BNB tokens and then adding them to the liquidity pool on PancakeSwap.
Users receive Liquidity Provider (LP) tokens according to their contribution to the entire pool, and then use these tokens to participate when a token sale is conducted.
Upon completion of the token sale, the amount allocated to the user is deducted. The remaining LP tokens are returned as soon as they receive the new tokens.
