What Are Crypto Launchpads?
A crypto launchpad is essentially a bridge between project founders and investors. It’s a decentralized exchange-based platform where projects can lay out their objectives and purposes and obtain funding for further development. At the same time, launchpads offer a range of investment opportunities to investors who want to pour money into projects before they even get listed publicly.
Investors who utilize launchpads are always in for a bargain, as they can buy tokens relatively cheaply before they get introduced to the market. As some tokens skyrocket soon after their launch, many investors choose to scout for new opportunities through launchpads to maximize their returns.
How Do Crypto Launchpads Work?
Introducing or getting involved with a project through launchpads is a process involving several steps. For starters, not just any crypto newbie can get a spot and promote itself on the platform. Instead, for a project to become listed on the launchpad, it first has to go under rigorous evaluation.
Each launchpad carefully evaluates projects to decide which ones can be featured on the platform. This gatekeeping is one of the main advantages of launchpads – if your project doesn’t meet the criteria set by the people running the launchpad, it won’t get listed. These people will scout for trustworthy projects that could have a promising future, making their platform a stable ground that offers the best of the best and, therefore, attracts more investors.
If the project meets the (usually) strict standards, they get the chance to collect funding by offering their coin at a reduced price. This approach also boosts demand, and everyone involved in the process can benefit from it.
A launchpad then lists the project on its platform, providing a direct path to its roadmap, utilities, business model, whitepaper, and other crucial information. Investors can also access information related to price or the token’s sale start date.
Photo illustration: Freepik
Now, launchpads typically feature native tokens that users must first purchase in order to participate in token sales. Not only that, but users are usually asked to go through a KYC process, as this allows launchpad systems to weed out scammers or bad actors that could jeopardize their platform or the project’s integrity. Once the users have verified their identity, they can engage in any IDOs, IEOs, or other crowdfunding models.
Are All Launchpads Trustworthy?
The short answer is – no.
The crypto world is, unfortunately, full of scams. Just like you can find a bunch of fake tokens or trading jobs, you might stumble on a fake launchpad. Prominent, reputable launchpads are known for their transparency and robust security measures, which is why it’s essential to go there and find how you can utilize platforms that already have a decent client base.
Photo illustration: Freepik
Still, if you want to explore other options, evaluate these characteristics before meddling with launchpads:
- Transparency: Transparency is a good sign that the launchpad you wish to use is a safe choice. If the project itself effectively communicates its role and provides clear and comprehensible information about the projects hosted on its platform., it demonstrates its focus and commitment to fostering trust and delivering what’s best for its community.
- Security: A reliable crypto launchpad is doing its best to protect user information and funds. It vets both project creators and investors, eliminating all potential bad actors from their thriving environment, and utilizes the best technology to meet the desirable security standards.
- Evaluation process: Vetting all launchpad users is essential. How they do it, though, is more important. If the vetting process isn’t thorough, the launchpad in question might be trying to list as many projects on the platform to maximize its profits.
- Community: Launchpads with a track record of developing a robust community and supporting projects by getting involved with marketing or helping them gain CEX listing are usually reliable and trustworthy. A reliable launchpad system will always prioritize users and continually put effort into ensuring a better user experience.
Launchpad Pros and Cons
By connecting trustworthy project creators with investors, launchpads can help people reach their target audience and avoid crypto scams. Still, they offer additional benefits, including:
- Portfolio diversification: If you consider yourself a passive investor who doesn’t have time to look up exciting investment opportunities, launchpads are a great tool for portfolio diversification. Not only do they filter out bad seeds, but they also focus on growth and usually choose to feature projects that could have a bright future.
- Strong online community: Many crypto projects fail to attract investors simply because they lack an adequate budget for marketing. As crypto launchpads act as middlemen between valuable business ideas and investors who can support their growth, they could help startups during their early stages of business development.
- Support: Launchpads usually offer tools to help project creators issue and distribute tokens or promote their products.
When it comes to launchpad disadvantages, keep in mind that:
- Launchpads minimize risk: Although rigorous vetting minimizes risks, the market will inevitably crush some projects. As a result, it’s vital to be cautious when investing in new opportunities.
- The vetting process varies: Each launchpad evaluates new projects based on its own standards. While some launchpads are thorough, others might not be, which is why it’s always a good idea to learn about the platform before trusting it with your money.
- Launchpads are not regulated: At the moment, no regulatory body can protect investors from fraud and ensure all launchpads are working in investors’ best interests.
Despite these flaws, launchpads offer many advantages to both project founders and investors. As long as you take your time to learn about how each launchpad you want to use operates, you’ll mitigate the risk of potential financial losses.