What are Crypto Launchpads?
Crypto launchpads are platforms in which investors buy new cryptocurrency projects before being publicly released. They are known as Initial DEX Offering (IDO) or Initial Coin Offering (ICO) Platforms.
Crypto launchpads allow investors and traders to buy a new coin or token for the first time. Generally, crypto exchanges or specific projects run on this purpose operate Launchpads.
When a developer team generates a new project in the crypto space they need money to this project alive. Then they create a token for raising the liquidity of the project. For the first time, they sell tokens at a lower price to early investors in the planned launchpad platform and raise the money. Afterward, the token is released in the public crypto exchanges. If the project grows, as more investors make an investment in the project, the token’s price increases. As earlier investors buy this token at a lower price, they make more profit.
A Brief History
Firstly, in 2017 and before, new projects sold their tokens on their own websites. They distributed tokens to the investors known as Initial Coin Offering (ICO). Then investors held their tokens until it was listed on a crypto exchange.
But most of the ICOs turned out to be scams, investors lost their confidence in investing in such projects. Because investors buy the token from the project website, there is not much guarantee for investors. The other important problem was the lacking knowledge about investing. That is to say, most of the new investors had no expertise to analyze the new projects, so they put the money in the looking flamboyant ones. As a result, they are mostly scammed.
Then crypto ecosystem found a solution to this problem. Crypto exchanges take on the mission of finding new reliable good projects. They went into a partnership with the project to conduct a token sale on their exchange platform. It reduced the risk of investing in a new project. Both exchanges found good projects also reduced the risk of scams.
Recently Centralized Exchanges have taken over the mission. CEXs are conducting token sales on their platforms. It is called Initial Exchange Offering (IEO). They work as a Launchpad.
(In the second part of this article we will take a look at well-known Crypto Launchpads. Most of them are parts of major Centralized Exchanges. We advise you to check on this.)
Lately, as more and more projects emerged. CEXs can’t handle it. So, decentralized exchanges grant opportunities for investors to buy into new projects. It is called Initial DEX Offering (IDO). Now, DEXs are offering the Launchpad platform for initial public offering. (In the third part of this article we will touch on this issue.)