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What is Crypto Launchpad?

If there is a way to earn multiple times the amount you invested in a certain crypto within a few hours or days, would you seize the opportunity? Crypto launchpads offer almost a guarantee of such returns, albeit with risks that potential investors must understand before putting their money on the line.

What is Crypto Launchpad?

If you’ve ever bought into a launchpad project and either lost or made money, then you’ll understand why people search for the best crypto launchpads. If you only buy penny cryptocurrencies and haven’t participated in the launchpad, then you’ll gain valuable insight from reading this article.

For instance, you can go to Binance or Kucoin to buy crypto projects.

There are platforms that allow investors to buy into new cryptocurrency projects before the tokens are publicly released. Launchpads are usually operated by a crypto exchange or a different project dedicated to that purpose.

To fully understand how launchpads work, you need to understand how new crypto projects raise money for their product or service.

  • A new project comes up with a product or service they want to develop.

  • They create a token that will form an integral part of their planned platform

  • They sell these tokens first to early investors to raise money.

  • The token is then released in the public market

  • As the project grows and the token’s price increases, investors make money, but earlier investors who got in at a cheaper price make even more.

In 2017 and earlier, most new projects conducted their token sales directly on their website, distributing tokens to investors that buy their token at a specified price. The process was known as an initial coin offering (ICO), and investors would have to hold the token until it gets listed on an exchange.

However, after 99% of ICOs turned out to be scams and the crypto market crashed, investors were no longer confident investing in such projects. The underlying problem was that most new investors lacked the knowledge and expertise to analyse new crypto projects and thus were putting money into literally anything that looked flashy.

Meanwhile, crypto exchanges saw the revenue opportunity and grabbed it with both hands. They would take on the job of researching many new projects, and based on their findings, they partner with the project to conduct a token sale on their exchange platform.

The method worked out since the exchange already had users and potential investors looking to buy into new projects. Investors also relied on the vetting process used by the exchange, thus reducing the risks of them investing in apparent scams.

The new process of conducting token sales on centralized exchanges (CEXes) like Binance was then called initial exchange offering (IEO), and the platform used by the exchange to handle such sales was called launchpad.

In recent times, decentralized exchanges (DEXes) have emerged and also offer opportunities for investors to buy into new crypto projects. This token sales process is called initial DEX offering, and the platform or service that DEXes uses to provide this is also called a launchpad.

In short, any platform that raises funds for new crypto projects by allowing you to buy tokens before they’re publicly released is known as a crypto launchpad.

Is a Launchpad Token Sale Different from a Pre-Sale?

Yes. In a pre-sale, a project normally sells tokens to very early investors (can include venture capital firms) to cover the basic costs of setting up their business. The pre-sale price is usually lower than the launchpad price, which in turn is expected to be lower than the price when the token begins to trade in the open market.

Is it advisable to Invest in Launchpad Projects?

Like investing in any other crypto, participating in token sales is also risky. For one thing, the price of the newly released coin is usually very volatile, meaning that money can be made or lost within a few minutes, hours or days, Users must weigh their risk appetite and decide what part of their crypto portfolio to allocate to participating in launchpad token sales.

How Much Can I Make from Crypto Launchpads?

Once again, the amount to be made isn’t fixed and can be up to multiple times the amount invested. One can also lose funds from investing in crypto projects, although this is unlikely if one commits to selling their allocation just after the sale is complete

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