If there was 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.
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.
Table of Contents
First, we try to explain crypto launchpads in the simplest way possible.
What are Crypto Launchpads?
These 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 summary, 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.
With that clear understanding, we’ll now go offer some of the best crypto launchpads on the market today. This list includes token sales platforms from both centralized and decentralized exchanges.
Best Cryptocurrency Launchpads
Binance is the world’s largest cryptocurrency exchange in terms of trading volume and number of users. Binance was among the pioneers of the IEO process, launching its launchpad platform to help new crypto projects raise money from token sales.
As with the majority of its products, Binance incorporated its native token, BNB, into the token sales process. Interested participants hold BNB in the days leading up to the token sale, while payment for the newly purchased tokens must also be made in BNB at the end of the subscription period.
Projects that have successfully raised funds on Binance’s Launchpad include Polygon (MATIC), Perlin (Perl), Kava Labs (KAVA), Axie Infinity (AXS), WazirX (WRX), FC Barcelona fan token (BAR), and many more.
- Binance is a fairly trusted crypto exchange, and users believe they have a strict due diligence process for handpicking Launchpad projects.
- The minimum amount to participate is 0.1 BNB (appr. £24), making it considerably cheaper for anyone to get in on new projects.
- Some of the high-profile projects on the market today have their roots in Binance Launchpad, having generated massive gains for investors. The most prominent ones are WRX, MATIC, AXS, etc.
- Investors get instant access to liquidity as coins get listed on Binance post-Launchpad raises.
- Binance.com is not available to investors in the US and some other jurisdictions.
- Binance is strongly affiliated with some of the launchpad projects, meaning that over exposure to them might become the same as having a poorly diversified portfolio.
‘Spotlight’ is Kucoin’s version of the Binance launchpad and gives investors early access to projects that subsequently get listed on the exchange. The process isn’t much different, with users needing to hold Kucoin’s native token, KCS, to participate in the token sales.
Users will have to lock their KCS in the days leading up to the sale, and then sign back into their account during the activity to make the purchase.
At the time of writing, Kucoin has conducted ten token sales on its launchpad with the most notable projects including Chromia (CHR), Trias (TRY), Bitbns (BNS), Coti (COTI). While the returns on Kucoin Spotlight projects are not as explosive as Binance’s, investors have made a decent return from participating.
- Instant access to liquidity upon token listing.
- The process is relatively easy for anyone to understand and participate in.
- Fairly good projects based on Kucoin’s vetting metrics.
- Users only need to hold 10 KCS (appr. £51) to participate in Spotlight token sales.
- The majority of Kucoin’s Spotlight projects have underperformed to date.
- Kucoin is not available in the U.S. and other countries.
MakerDAO is a popular lending and borrowing decentralised application built on the Ethereum blockchain. In 2019, the MakerDAO project launched its Launchpad, allowing upcoming projects to sell ERC-20 tokens to interested investors.
To get an allocation for token sales, users must lock the project's native token, DAO, in a vault on their account.
The token sale process could happen in two ways, including Strong Holder Offering (SHO) and SEED (special seed rounds through which investors can increase their allocations).
SHO targets all holders of the DAO token while SEED seeks to allow more people to participate in the fundraising.
To date, several projects have reportedly raised a combined $40M on the Maker DAO pad. Notable ones include Elrond Network, My Neighbor Alice (ALICE), Orion Protocol (ORION).
- Many projects that raised funds on MakerDAO Launchpad have generated massive returns for participants.
- Users get instant access to token sales as soon as they stake DAO in their vault. There is no stipulated lock-up period.
- Users earn a decent 0.23% APY on their DAO holdings in addition to possible proceeds from participating in token sales.
- Users must lock up to 500 DAO tokens (app. £1100) to participate in token sales.
- Users require advanced knowledge of the Ethereum network and wallets to participate in DAO Maker and its offerings.
Polkastarter allows crypto projects to raise funds by launching pools that investors can buy into. The process is unique since PolkaStarter is a protocol and thus does not control the listing or vetting process, but the communities that launch the pools do.
The price for the token can either be fixed or dynamic and anyone can participate in most offerings.
However, just like most launchpads reviewed so far, Polkastarter also has a native token. There is a 3000 POLS requirement to buy into certain projects marked as exclusive to POLS-holders.
At the time of writing, Polkastarter is already live on the Ethereum and Binance Smart Chain networks. As per the project’s roadmap, more features are planned for release as soon as the protocol is launched on Polkadot, the main network for which it was designed.
Popular projects that have raised funds via Polkastarter include Ethernity, Convergence, and Blockchain Cuties.
- The entire process runs on the blockchain and thus there are no KYC requirements.
- Projects with strong communities can fundraise without relying on the rigorous voting process to exchange launchpads
- Despite being fairly new, Polkastarter has attracted over 200,000 investors, with many projects achieving remarkable success.
- Investors must have sufficient knowledge of decentralised finance (DeFi) to participate.
- The 3,000 POLs (appr. £3000) to participate in certain pools makes it unfavourable for small investors.
Pancakeswap is a decentralized exchange platform built on the Binance Smart Chain (BSC). The project primarily allows trading of tokens and liquidity mining. However, it also has a launchpad platform to help BSC-based startups raise funds for their products.
To participate in a token sale or initial farm offering (IFO), users have to provide liquidity to the CAKE-BNB pool. This is done by purchasing CAKE tokens and BNB tokens, and then adding them to a liquidity pool on Pancakeswap.
Users receive liquidity pool tokens (LPs) as per their contribution to the entire pool, and then use these tokens to participate when a token sale is live. Upon completion of the token sale, the amount allocated to the user is deducted and the remaining LP tokens refunded as soon as they claim the new tokens allocated to them.
Projects that have completed a token sale on Pancakeswap’s IFO include Horizon Protocol (HZN), Helmet Insure (HELMET).
- No KYC process required
- Users typically only need £71 ($100) worth of CAKE-BNB LP tokens to participate in Basic sales and are guaranteed an allocation.
- Projects often yield significant returns within the first few hours after listing.
- Being a DEX, users get instant access to liquidity as tokens are promptly added to the platform for trading.
- Large buyers are taxed 0.5% for participating in the unlimited sale.
- Users require advanced knowledge of DeFi to participate.
- There is also the risk of losing money as the price of CAKE and BNB fluctuates based on market demand.
- There is a one-time fee of 1.5 CAKE (appr. £40) to make a profile on the exchange so you can participate.
How to use crypto launchpads
- Understand the Basics: To use a crypto launchpad, you first need to acquaint yourself with the rules governing the platform. This might include the minimum required amount to participate, the token lockup period, and the distribution schedule. Such information is usually available on the Launchpad page and will also let you know if the exchange supports your jurisdiction.
- Get Ready: Once you’re familiar with the process for the platform you want to use, then you can purchase the tokens required to be eligible for participation. Ensure that you purchase the tokens well ahead of schedule to avoid buying at a high price or missing out.
If you’re going to participate on a DEX-based launchpad, then you’ll probably need to set up a Metamask wallet and connect it to the appropriate network (either Ethereum or Binance Smart Chain.)
After setting up the wallet, you’ll need to send some ETH or BNB to the address to pay for network fees.
- Participating: On the set date and time for the token sale, connect your wallet or log-in to your wallet to stake your tokens if applicable. Otherwise, claim the tokens allocated to you and withdraw the excess funds as is usually the case.
What is the difference between Launchpad and Launchpool?
For Launchpads, users are exchanging their tokens for a new one released during the token sale. For Launchpools, though, users have to lock their tokens in a pool for a specified period to earn the new tokens being distributed. The number of tokens to be allocated to each user isn’t predetermined but is often based on the stipulated APY provided by the host platform.
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
This article reviewed the best crypto launchpads, highlighting their pros and cons, as well as discussing how to use these platforms. It also addressed common questions about token sales via launchpad.
Undoubtedly, crypto launchpads are an innovation to the traditional fundraising method which often features a lengthy and rigid process. These days, new projects can raise millions of pounds within a few minutes and go on to yield excellent results for early investors.
However, the relatively easy nature of these fundraising mechanisms doesn’t come without risks, and investors must do due diligence and weigh their risk appetite before putting money on the table.