Increasingly popular in the cryptocurrency world, the crypto launchpad is a unique tool for supporting innovative new projects. Despite its status as an independent, decentralized platform, its operation on the blockchain is diverse.
Definition of a Crypto Launchpad
To begin with, a crypto launchpad is an online platform that enables a company to launch a token offering. These platforms are becoming increasingly popular in the crypto-currency world, as they offer companies a simple and effective way to market themselves to a wide audience of potential investors.
Indeed, launchpads are designed to be a starting point for businesses looking to raise funds using tokens. They provide a platform on which companies can present their project and security tokens to potential investors, along with the tools needed to complete the offering.
How it works
The operation of a crypto launchpad is, for the most part, based on staking. Investors block a certain quantity of the platform’s tokens.
For example, on the Duckstarter platform, it’s necessary to block DUCK or USDC.
A “first come, first served” system is implemented, as there are more applicants than projects. This system can sometimes be unfair to smaller portfolios.
Other launchpads have introduced a system to bring a degree of fairness: investors are drawn at random, and given a deadline to confirm whether or not they wish to invest. If not, other investors are drawn at random.
To enable as many investors as possible to participate in a pre-sale, an investment limit is set per portfolio address (e.g. 0.37295 BTC). But above all, this avoids feeding future “whales” too early.
The term “whale” refers to a major market player holding large quantities of virtual currency.
What are the different types of crypto launchpad?
There are several types of launchpad, each with a different functionality and their own fund-raising mechanism. The most popular type is the ICO. However, in the wake of certain abuses, other forms of fundraising have become more popular.
ICO
Initial Coin Offering works in a fairly straightforward way: investors log onto the platform with a wallet such as MetaMask or Phantom, pay for their tokens in native coins (e.g. BTC) or stablecoins (e.g. USDC), then wait until the end of the presale to receive their tokens.
IEO
An Initial Exchange Offering is a centralized platform that is often considered less risky for investors, as processes are in place to verify the quality and authenticity of projects. Customers can therefore invest in a project that has already been audited by the teams of a benchmark platform, even if nothing is guaranteed.
IDO
Initial DEX Offering is a decentralized version of ICO. Projects launch their native token on a decentralized exchange, using a method deemed more reliable and transparent than IEO. IDO is currently the preferred method for many Web 3 and decentralized finance projects.
STO
Security Token Offerings are less well-known because they are rare. This is a company that has decided to tokenize its shares and raise funds from the crypto community rather than the traditional markets. Thanks to players like Swarm, the idea caught on. For example, it tokenized Coinbase and Robinhood shares in 2018.
As such, STO platforms are highly regulated, as they must hold real securities before issuing tokenized versions.
Launchpad example
Binance Launchpad
Binance Launchpad is Binance’s “ICO platform”. It was launched in January 2019. The platform is one of the oldest and offers the most mature projects.
Duck DAO
DuckStarter is a launchpad that runs on the Ethereum, Polygon Binance Smart Chain and Polkadot networks. It’s the fact that it uses a multi-chain system that makes this platform so appealing, and attracts so many different crypto projects.
Polkastarter
Polkastarter is the Launchpad of the Polkadot ecosystem. The platform has enabled many investors to invest early on in DeFi protocols, games and even NFT collections on various blockchains.
Of course, investing in a launchpad is not without risk, especially as the ecosystem is currently going through a complicated period following the bankruptcy of FTX. So it’s always a good idea to find out more about the people behind a project.
