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what is it in simple words and who will need it?

Any cryptocurrency is originally someone’s project. The creators are trying to make it useful for society and the world of cryptocurrencies. Information about the benefits and potential of the project is included in the “white paper” and “road map”. These documents are transferred to investors who, based on their contents, decide to invest their own funds in a cryptocurrency startup.

Investors are looking for such promising projects using special platforms called launchpads (launchpad). Such platforms allow tokens to “fly up” and investors to earn. How it works launchpadwho can take part – in the current article we will consider this phenomenon in detail, and also identify the 5 most popular sites.

What is a launchpad and what is it for?

Cryptocurrency launchpad – what is it in simple words? This is any platform created to provide users with access to new and very promising coins. Launchpads support promising cryptocurrency projects by providing initial launch assistance and advertising. Ultimately, this helps raise awareness cryptocurrency enthusiasts about the new coin and create a strong “community” for the newly minted token.

Speaking directly about what is a launchpad in crypto is a place to raise funds for new crypto projects. At the same time, users and investors can purchase tokens and subsequently earn good money. Crowdfunding is already known to many Internet users. So, the launchpad is considered its analogue in the cryptocurrency world. Next, we will consider two fundraising formats that are used most often.

IDO

Initial DEX Offering (IDO) is an initial token offering on a decentralized exchange. IDO is the most efficient mechanism that allows participate investors in the sale of coins and increase their capital. Cryptocurrency is just appearing on the market and this is the first offer to buy for starting price.

To facilitate the sale, initial offers are posted on DEX services. The whole process from start to finish is as follows:

  1. The new crypto coin is being tested before being placed on the DEX platform. Coin creators open a liquidity pool, coins are blocked in smart contracts. Buyers also lock their own funds in exchange for a certain number of tokens. Coins are given to large investors after the token generation procedure (TGE).
  2. Distribution assets occurs between whitelist members. You can enter it by completing certain tasks or transferring the cryptocurrency wallet number.
  3. A certain part of the raised funds goes to the development team, and the rest of the funds go to the project’s liquidity pool. Liquidity is blocked for a certain period of time, and the exchange of tokens becomes available only after they are generated.
  4. During the generation, the coins are transferred to the owners, and the pool is unlocked and opened for trading. The coin begins to be actively placed on decentralized exchanges, and then comes to more well-known crypto exchanges.

There is an alternative way, which is called the lottery. The user purchases a “ticket”, the average allocation which ranges from several tens to several thousand dollars. Then new coins are randomly distributed among the participants. Depending on the platform, the order may vary slightly, but all processes are protected by smart contracts and take place automatically.

For participation in IDO digital purse, which hosts cryptocoins. They need to pay for the purchased tokens, as well as the network commission. Before buying, you should study the project team, its relevance and usefulness for society. Invest only those funds that you are not afraid to lose. The classic trading rule says that the transaction should not exceed 5% of the total deposit (the sum of all savings). This postulate will protect your funds during IDO as well.

In general, IDO has the following advantages:

  • instant listing – after IDO, the coin is instantly listed on the exchange, participants can sell it at a better price;
  • accessibility – there are no identity checks and other obstacles;
  • honesty — all smart contracts are in the public domain;
  • The DEX platform acts as a reliable and authoritative intermediary between the investor and the creators of the project, so you do not need to directly trust the developers of the new blockchain;
  • high availability of coins even for beginners in the world of cryptocurrencies;
  • there are restrictions on the number of coins that are sold “in one hand” – protection against large “whales”.

There are also certain disadvantages:

  • bots buy a large number of coins using multiple addresses – as a result, the coins also go to the whales, which accumulate a significant part of the supply;
  • users may encounter rug pull – a situation occurs when the creators of the project fraudulently withdraw liquidity from the pool, and the price of the purchased coins falls to zero;
  • often the offer is fixed – investors are offered to buy only a certain number of coins, although large volumes may not be of interest to everyone;
  • The downside of decentralization is that you can invest in a frankly weak or fictitious project.

IEO

The IEO (Initial Exchange Offering) event is held by a cryptocurrency exchange in order to raise initial funds. The method is similar to ICO (Initial Coin Offering), but has an important difference – IEO does not require the creation of a separate platform, since it is carried out on the basis of an existing crypto exchange. The creators of the new coin transfer the financial, technical and legal documentation to the exchange. If the check is passed, then the token sale (sale of tokens) starts.

IEO compares favorably with ICO for a number of reasons:

  • The exchange is an intermediary that inspires confidence. It concentrates all the liquidity of tokens, as well as funds received from investors. Placed cryptocurrency startups are tested for viability and financial viability. If the transaction is impossible, then the funds are returned to the participant in the process;
  • security and centralization – exchange traders are KYC-verified, so IEO can be considered a safe way to buy coins. Also on stock exchange many participants, which is the key to good trading of a new coin in the future;
  • information disclosure — the crypto exchange does not cooperate with anonymous projects. All information about the creators and their plans is placed in the public domain. ICO in this regard, it is noticeably different – fraudsters received more than $ 1 billion using this procedure;
  • distribution of “entrance” tickets is carried out in the order lotteries. The number of tickets usually depends on the number of native exchange tokens that have passed through the user’s balance in a certain time period.

The projects selected by the exchanges are really worthy of attention. Only high-priced startups that offer users real innovations pass the test. The procedure is also optimal for investors, since it is as similar as possible to a simple purchase of tokens. After the IEO, the exchange lists the token, this condition is the main transaction between the blockchain developers and the crypto exchange.

Despite the transparency, IEO carries certain risks for investors:

  • the fundraising project may not be completed in full, which will adversely affect the rate of the coin after listing;
  • Unreliable can also “slip” projectshowever, such cases are the exception rather than the rule.

Overview of the most popular launchpads

Binance Launchpad

Crypto exchange Binance launched its own fundraising project in early 2020 to launch new tokens. Let’s clarify how does launchpad work from Binance:

  • token sale scheme – IEO;
  • the date and time are published, a large number of traders participate;
  • to participate, you must perform certain actions or block the required amount on the exchange accounts coins (For example, BNB);
  • then there is a 30-day farming period;
  • after some time, the listing takes place, the user can exchange new tokens for the usual USDT coins, fixing the profit from the sale.

Binance is one of the largest launchpads with strong security and informative support. In total, the site gave life to 64 coins, 3,500,000 traders took part in token sales. At the moment, 2.5 billion dollars have been frozen in the project, which indicates a high level of investor confidence. The undoubted advantage of Binance is the high liquidity in trading pairs, since millions of people start trading every day.

Polkastarter

Polkastarter Launchpad

Even a beginner with a small amount of money will be able to check for himself, what is launchpad in cryptocurrency. It is enough to take part in the token sale on the Polkastarter site. The minimum entry amount is 250 POLS (service token platforms). The project operates in the IDO format, has already launched over a hundred tokens and raised $48 million.

Since 2020, the platform has attracted approximately 200 thousand investors. Polkastarter is highly reliable and decentralized. The main direction is decentralized finance and Gaming tokens. In 2022, the company shifted its focus to NFT, which helped increase NTF sales with the help of Polkastarter.

DAO Maker

DAO Maker launchpad

The project uses several technologies at once – IDO and IGO, which allows investors and those who raise funds to gain benefits. DAO Maker uses its own DAO utility token, which needs to be frozen for 30 days. If you pick up coins after 15 days, you may face penalties. The token sale procedure is carried out using a standard lottery with a fixed allocation. The KYC verification procedure is completed by the user once.

Bybit Launchpad

Bybit Launchpad

Considered popular platform, which will make it clear what a launchpad is. The project allows you to buy a coin at a starting price even before it is listed on the Bybit exchange. To participate, you must pass the first level KYC verification and deposit an amount in your account that exceeds 50 BIT. Bybit Launchpad has strict rules, so any attempt at fraud will result in account suspension. Only 12 projects have been launched, which have raised a significant amount. Launchpad has a high yield.

coinlist

Coinlist launchpad

Launchpad implemented a small number of projects, but all of them were of high quality and provided investors serious profit. For example, Coinlist hosted such tokens as: Solana, Flow, Algorand and Filecoin. It is enough to register and go through KYC – but you should not deceive yourself, because the project gathers large “queues” of those who wish. Not every crypto enthusiast manages to take part.

What are the advantages of a launchpad?

The advantages of such launchpad sites are discussed in detail in the article, but we highlight the main points:

  • tokens are placed on a reliable platform, then there is an exchange listing;
  • yield from participation in such events it rarely falls below a few hundred percent;
  • fair distribution according to the frozen amounts of investors;
  • in the long term, purchased coins show multiple growth;
  • the whole process is simple and relatively safe.

Summing up

We have examined in detail launchpad that’s simple phrases. Organizers of cryptocurrency projects, creators and developers rarely spend their own funds on project development. That is why third parties are involved. investors. These sites are suitable for:

  • beginners in the world of cryptocurrencies;
  • traders and advanced investors;
  • large institutional investors (whales);
  • for those who want to discover new ways of earning.

It is worth remembering that cryptocurrencies are associated with risk. Even the most reliable crypto project does not guarantee high returns.

The materials presented in this section do not constitute individual investment advice.

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