ZoneBitcoin EditorialThe way companies launch their crypto projects is constantly evolving. It all started with the famous ICOs which openly reproduced the IPOs of companies established in classic finance. Except that there, no need for a lawyer, no need for a bank loan, nor even a license or to follow regulations, it was enough to just have a bank account (even in a tax haven, it worked very well) to raise funds. funds, a bit like crowdfunding platforms in fact.
In ICOs, anyone could participate in financing a company by purchasing the company's token. Everyone threw themselves into it wholeheartedly, all looking in these untimely investments for the crypto nugget that would perform as well as bitcoin, for example.
So, it was a sort of new gold rush that began and the craze was also on the side of companies (which could in record time and without even having to develop their projects) raise millions of dollars. Like that, almost, by snapping my fingers. A few advertisements, a few crazy promises of returns, and a very specific timetable (and very rarely observed), and there you have it, you had all the ingredients to raise capital.
However, the scams and capital flight did not leave States and legal authorities (especially the US) indifferent and it was from there that we began to regulate a little all these fundraising considered as wild.
We will see here (very quickly) the evolution of fundraising, from the ICO to the launchpad with IDOs.
Context: The different fundraisers so far
ICO: Initial Coin Offering
It all started with ICOs with a huge spike in projects launched in 2017. ICOs started gaining traction as soon as 2016 and literally exploded in 2017 to reach a sum of 2,6 trillion dollars (Funderbeam Report)
We all remember it because it was such a frenzy. We were promised to earn millions of euros with a very small investment of $200. We were told that we were investing in the next bitcoin and the promises quickly gave way to desolation.
Even if many projects have kept their promises and have today become good projects with financially viable companies (Tezos, Filecoin, are perfect examples of success).
No paperwork, no documents to fill out, thanks to ICOs, everyone (with a minimum of capital at that) could become a business angel and buy tokens from emerging projects, potentially the big companies of tomorrow.
However, there were some problems with this uncontrolled excitement.
To fight against this money gone to tax havens and to fight against the inevitable scams which emerged at that time (it was far too easy to see all this money invested gone to tax havens without any way of limiting them made the States cautious and they looked into the problem.
To better regulate these investments, States have decided to impose certain legislation to better regulate fundraising, considered uncontrolled. Wild, because they were open to all investors, whether from China or Guatemala, and to participate you simply had to send BTC or ETH.
New forms of ico have therefore appeared.
If the subject interests you, you can read articles which explain the history of these levies in more detail:
However, to summarize, here is the takeaway:
STO: Security Tokens
In the United States, STO offerings are reserved for qualified investors. However, if you reside outside of the United States, the accredited investor rule does not apply to you and you can participate in most STOs. Unless, of course, they are subject to more specific restrictions. Security Tokens have nothing to do with Tokenized Securities. STOs are intended to provide a regulatory-compliant alternative to regular token sales. They aim to correct perceived inequalities on the investor side, such as granting Security Token holders rights to dividends or other predefined sources of income. However, unlike ICOs, the STO goes even further and distributes tokens which have the status of transferable security like financial securities. They are linked to an underlying investment asset, such as stocks, bonds, real estate investment trusts or other funds.
Very clearly, given the disadvantages (length of the process, restrictions on investors with the need to have capital, non-anonymity of investors), it is a model which may have seemed interesting at first but which was quickly abandoned.
This is how the idea of IEOs took hold.
IEO: Initial Exchange Offering.
The big difference with the ICO is that there, it is the exchange platform which will be responsible for presenting the tokens. It is not an autonomous contract which will therefore create and ensure the sale of tokens. It is a form of ICO which is therefore done centrally.
The big advantage of this system is that the centralized platforms will do the work of upstream sorting and due diligence. To maintain their credibility, projects are carefully selected.
The entire reputation of the exchange is at stake.
Thus, the KYC is already completed and we also know the identity of the investors. Which makes it possible to regulate everything, in the end.
However, this remains too regulated in absolute terms. The selection criteria could take time and non-competition criteria for example, not to mention the very expensive fees to be listed, ultimately led to a non-massive use of IEOs.
That said, there are still IEOs available like on the site probit for example.
It is to combat these flaws that we have recently come to create IDOs.
IDO : Initial Dex Exchange
There, let's say that it is a form of IEO except that instead of being carried out on a centralized exchange platform, it is done on a decentralized platform, hence the presence of the word DEX in the acronym). It is the placing on the market of a token on a DEX, such as Uniswap or Pancakeswap, for example.
IDOs are now very often accessible through what are called launchpads. It was mainly Binance which was at the origin and since then it has taken off and more and more platforms are offering this type of launch.
Thus, anyone can invest and buy tokens before they are put on the market. This is therefore an opportunity to buy tokens from promising projects at a lower price.
1/ What is a Launchpad and what are the advantages?
A launchpad offers the possibility for brand new projects to very quickly and easily access capital to get started. So they sell a certain quantity of tokens at a heavily discounted price. This discount price is justified by the fact that the company is still young and that the bet on success is therefore riskier. Investors can therefore invest at a lower cost and if the company follows its promises, they then end up with tokens that are (much) valuable.
The good thing about launchpads is that they do a kind of upstream work that the investor doesn't always have the skills or even the time to do properly.
Thus, he will be able to invest in safer projects than for ICOs.
We can see a clear improvement from previous versions. Now, there are projects that we put on Launchpads and others are put in incubators.
The advantages are double for both the investor and the entrepreneur who launches his project. In his case, he can again access start-up capital relatively easily.
From an investor's point of view, he can quickly access new tokens, and invest with lower capital.
It's popular at the moment and see in this article which platforms offer this type of fundraising.
Helpful Disclaimer: However, return rates vary and it is imperative to conduct research and due diligence before investing in a new project.
2/ How to participate in an IDO via a launchpad?
You should know that there are more and more launchpads and each structure modifies certain parameters. Although it differs from platform to platform, fundamentally the steps are the same to participate in an IDO.
1st step (Buy and stack launchpad tokens): You generally need to have the platform token. For example, for Polkastater you need POLS tokens and for DuckStart you need DUCK, etc.
The more you own these tokens, the greater your allocation will be. In fact, you need these tokens to be able to participate.
In general, you must stake (lock) the launchpad token for a certain time (without being able to withdraw your token) to have the right to participate in the IDO. You must be careful before stacking your tokens, because, in the meantime, the price of the token may fall, there may be hacking, etc.
2th stage: Enter a project: The launchpad warns owners that a new IDO will be released. Of course, there is an effect of urgency and FOMO, this is where we must be vigilant and not seize just any opportunity. Some projects require KYC which can be as simple as joining a Telegram group or entering your crypto address. At this time, it is good to take the opportunity to look at the project in depth (analyze its tokenomics) and its fundamentals.
3rd step: You invest: Each launchpad will do this in its own way, for example via a lottery or an allocation depending on the amount of tokens you have. Often, we see that it depends on the places there are. This is called FCPS:: First-Come, First-Served, or first come, first served. This is also why IDOs often end within a few hours.
Send you yours and we send you the IDO tokens in exchange. Some IDOs send you the tokens immediately and others will do so at a certain time and released little by little during a vesting period called vesting. This is put in place to limit the pump & dump effects of massive sales.
Crypto Launchpads to watch out for
As you have to buy the launchpad token, in addition to the funds that you have to send to the project for the IDO, you have to choose your launchpad carefully and carefully analyze the projects they select;
Binance Launchpad (Binance Launchpool)
Obviously, we start with Binance Lauchpoold because it was the first platform to offer this type of service. Even if the most emblematic remains Injective Protocol which has enjoyed great popularity to this day.
Beyond the fact that it is the oldest, it is also the one which offers the most mature and most developed projects.
Most new crypto projects that see the light of day on Binance go through LaunPad. Moreover, Pancakeswap was itself offered via this service.
In fact, through Launchpad, the companies have been incubated beforehand. They receive expert advice, from marketing to code auditing to ensure that they are ready for launch. The application process is rather selective and only the most relevant projects are selected.
So, when a crypto is offered on Launchpad, we are almost certain to have a stable project which has a real service to offer. Binance only offers projects that actually have a rather mature stage of development. Unlike ICOs, for example, where the project was barely thought of until it raised funds. No, with Binance for example, the incubated project checks all the elements that will enable this project and the management team to manage the company properly and make it a business that will support its growth.
Thus, depending on the types of projects, Binance offers either IEOs or IDOs.
There are 3 main options to participate via binance LaunchPool. Note also that there is a difference between binance launchpad and binance launchpool.
- Binance Launchpad: You simply need to have BNB that you don't need to stack but that you need to have a certain amount of time before obtaining a right to participate. There, it's first come, first served. Often, this is done in a few minutes, so you really have to go very quickly.
- Binance LaunchPOOL: When the sale on launchpad is over, you can find the IDO tokens and there, you can stack your BNB (or other tokens) to farm the project tokens. It is therefore a simple method even if there is less output than if we participate in the launchpad.
- BNB Vault: There we can automatically farm all the tokens that are currently in the launchpad and also receive a rumination in BNB. It really is a simple and profitable way to continuously earn BNB and tokens from newly launched projects.
>> Discover Binance Launchpool
polkastarter : The refined launchpad
You may have heard of Polkastarter and that may just be the beginning. In any case, it is the most publicized. This attracted a lot of attention and the rise in Polkadot clearly showed this new craze for Polkadot. And even more, it is also for the quality of the projects that have been proposed that Polkadot has gained a certain new credibility in some ways. The proposed projects show good results. Yes, the more a platform offers good, profitable and serious projects, the more we will tend to follow it and invest more easily.
There are two methods to invest on Polkastarter:
- Via a lottery system for members: There, you must have 3000 POLS in your wallet and have them for 7 days before the IDO to be able to participate in the liquidity program. There, depending on the projects, it will be necessary to complete certain tasks (such as sharing on social networks) to be selected among the members.
- Public pools : luck will be your friend. You do not need to have POLS to participate. It's first come, first served and it goes very, very quickly. And some will simply pay very high transaction fees and see their request fail... Very risky therefore. Some sales were made in less than 10 seconds, which shows you how quickly it can go! You have to be ready and not miss the opportunity.
We have seen projects like FireProtocol or Maha Dao launch with Polkastarter.
Discover Polkastarter
DuckDAO with its DuckSTARTER launchpad
Here, we are going to talk about DuckDAO which is also very successful. Community engagement is very strong. It's basically a decentralized crypto incubator project again. The associated token is DuckDAODime (DDIM) and you must have it to invest in the proposed projects. In fact, by owning DDIM, investors then have access to the token sale before anyone else.
Among the projects launched, we can cite fyooz, Bondly and Base Protocol for example.
DuckDao uses a multi-tier system and you must own DDIM tokens to access token sales. Those who own DDIM can then have allocations for projects launched on the platform. Thus, users will then be able to deposit USDC (the amount varies depending on the project) to participate.
DuckStarter is a very recent platform, launched in 2021 and it has already brought together an ever-increasing number of users and investors.
TrustSwap : the very promising launchpad
It's one of our favorites on zonebitcoin, let's be honest with you. In fact, beyond the lanchpad, the TrustSwap project turns out to be very interesting.
We have an article on the subject of Trustswap and are preparing a video soon, it's worth discovering it.
Previously launched tokens on TrustSwap include Glitch Finance (GLCH) and Yield App (YLD), one of the strongest protocols in existence (although still new).
Final word on crypto launchpads
Obviously, even if all this is very tempting, you have to do your research, there are also a lot of scams.
There are high-profile projects that are not worth it and much more promising small crypto projects that do not get the spotlight they deserve.
Don't succumb to Fomo and the fear of missing the train. If you follow the fundamentals well, no matter how violent the market is, you will always win in the end.
Invest in projects that make sense and above all, don't be influenced.
Good investment.
See the video version here:
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