Crypto Launchpads Simply Explained | OpenPad Web3 Investment
Decentralized Initial Offering Models & Launchpads: Towards Open Web3 Investment Culture
Launchpads are a place for crypto-based projects to pre-sell their tokens to the early-stage investors before they are listed on a centralized or decentralized exchange.
Launchpads are initial token offering platforms similar to investment banking in traditional economic systems.
In this piece of the Web3 Investment newsletter, we’ll dive into what a crypto launchpad is, why it exists, what problems it has, how coins/tokens are pre-sold, and examples from some launchpads.
Blockchain and crypto-based startups are increasing day by day, and every crypto project is looking for its investors. What about investors? They are also looking for promising projects to invest in. So where should these two meet? The answer is a crypto launchpad, a launchpad for short.
The Meeting Point of Early-Stage Crypto Projects and Investors: Launchpads
The place where crypto projects pre-sell their tokens before they are listed on a centralized or decentralized exchange is Launchpad or IDO platform. In this way, investors have the opportunity to purchase promising project tokens before they are listed on a digital asset exchange. This allows them to purchase project tokens at the best-discounted prices possible.
Remember, those who join successful projects early always reap the most benefits because they share the risk as they share the reward.
The Lifecycle of Launchpads
Let’s take a look at the lifecycle of the launchpads—a nascent crypto project to pre-sell its tokens enters the Launchpad. At the same time, investors in the launchpad community decide whether to invest or not after passing these projects through their investment filters. Launchpad platforms set some prerequisites for investors to invest in new and exciting projects. The most basic of these conditions is to acquire a certain amount of the platform's native token and lock it (staking) on the platform.
At the end of the day, as the success of the projects increases, this success is reflected in the price of the project tokens, and the investors realize a profit.
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But let's face the facts, most launchpads have centralized governance and economy and have difficulty reassuring investors. Among the reasons for this is their inability to solve social and financial problems such as rug pull (taking profit from the project and leaving the project). In addition, unsuccessful approaches to capital and risk management and high expectations of inflows from investors (for example, $1000 and above) appear as central weaknesses of launchpad ecosystems. Even though there are way more problems than mentioned, we kept its excitement to future articles where we’ll analyze this topic in depth.
There are many kinds of launchpads in the crypto ecosystem today; some of them embrace the game industry, some of them to fields such as the metaverse, some of them finance & economics and some of them all kinds of projects without distinction sectors. Let's continue with the examples.
OpenPad DAO is an innovative Launchpad platform and Web3 investment community founded by Turkey's young crypto engineers and entrepreneurs. With its new dual-token decentralized governance and economic model, it aims to solve the problems in the launchpad world.
Aiming to be managed as a DAO, OpenPad offers artificial intelligence and big data-based solutions to prevent capital inefficiency. At the same time, OpenPad operates in its own economy with two tokens; OpenPad Citizens (OP Citizens) NFT or $OPN tokens aim for people to invest even with low prices such as 1 dollar. Moreover, OpenPad is known as the first model globally with its investment and fundraising approach and the first in Turkey as a launchpad model.
DAO Maker is a platform that allows crypto investors to invest in startups and projects at an early stage. In other words, DAO Maker is a crypto launchpad, an incubator that acts as an intermediary between investors and projects in the fundraising processes.
DAO Maker is one of the first launchpad models on the Ethereum network. As of today (June 2, 2022), it has raised funds for more than 100 projects with a fund of more than 35 million dollars, and its total market valuation is over 23 million dollars.
Finally, DAO Maker provides many services to projects such as marketing, community building, pre-sale, and token architecture design like many launchpads.
BSCPad platform is an IDO platform designed for fair, decentralized token pre-sales, a brokerage house to distribute tokens to cryptocurrency projects and increase liquidity. It is also the first Launchpad on the Binance Smart Chain (BSC) network.
BSCPad cares about token holders of all wealth levels and lowers barriers to entry, allowing its users to participate in fundraising processes conveniently.
It also works with the rank system, referred to as the BSCPad tier system; it assigns you to a class based on the amount of crypto staked. Your class decides whether you can participate in IDOs. Low ranks allow you to invest based on lottery luck, and high ranks allow you to invest in a guaranteed manner.
Finally, at the time of writing, BSCPad has raised more than $15.60 million in funding for more than 60 projects, with a total market valuation of around $30 million.
Launchpads in the Web3 Community
After the launch of Ethereum, there were thousands of ICO attempts, especially between 2016 and the end of 2018, but most of these initiatives left only a dust cloud behind. As a result of this process, ICO structures turned into IDO platforms, namely Launchpads. Launchpads will evolve into new business models in the future with the spread of various IPO ideas. We expect decentralized investment banking and new coin/token offering models among the future business models. But the fact that almost every newborn crypto project needs to pre-sell its tokens indicates that the future of launchpads will be bright like never before.
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