Crypto Launchpads : How to Invest in Private Sales

Crypto Launchpads : How to Invest in Private Sales

Launchpads are THE best way to capitalize on a bull market, bar none. In the course of the bear market, they were all left for dead. Even the best launchpads were trading like malnourished meme coins, and it was not until recently that they have begun to heat up again. That said, they have lagged the general markets, and are as yet predominantly phenomenal deals. You can still front run the crowds, but not for long.

Buying into launchpads is like investing in a money printer with a best-before date. Every launch prints you a fresh batch of money, and as the bull market ages the timer counts quietly down to that unknown best-before date. When the timer ends, it all explodes in a flurry of altcoin debris. If played carefully and responsibly, launchpads can yield life-changing gains.

Investing in private sales of cryptocurrencies through launchpads can be a lucrative but risky venture. Launchpads are platforms that facilitate the fundraising process for new crypto projects by allowing users to participate in private sales before the tokens are listed on public exchanges. Here's a general guide on how to invest in private sales through crypto launchpads :

Why Launchpads ?

The term “Launchpad” has morphed over the last few years. It refers effectively to a project that offers exclusive gated access to seed, private and IDO-style sales (Initial DEX Offerings). They are typically membership gated, and require you to own and/or lockup a membership NFT or Tokens, which then allow you access to deal flow.
The value of launchpads derives directly from the exclusive, discounted access to early-stage deal flow they provide. The return on investment has two main sources:

• Primary Benefit: Returns on sales
• Secondary Benefit: Price increase of the membership (tokens or NFTs)

To understand the value of launchpads, we need to take a closer look at how they performed in the previous cycle. The 2021 & 2022 bull cycle was for all intents and purposes the first real Launchpad cycle. In the early stages of the bull run, the industry was brand new and launchpads were crude, disorganized and entirely unregulated. I recall investing in projects where you indicated interest via email, sent funds to a wallet address, and received the tokens to your wallet; no KYC, no smart contracts, no vesting, no geographical restrictions. Now it is more formalized, better UIs, mostly KYC, and more complex deal terms as well.

In the peak of the 2021/2022 bull run, mid tier memberships to solid launchpads were trading in the $200K — $300K range for access alone. The top tier memberships cost in excess of $1M. The sales they gave access to could pay off the cost of the membership in 2–3 sales, and continue to throw off 40–50X returns weekly. Two notable examples are Duck Dao and Trustswap. A Gentlemen’s Club membership at Duck Dao (mid tier) was selling for $250K in 2022. An equivalent membership at Trustswap was trading for roughly $200K, and there were a myriad of other projects with similar (or more expensive memberships).

Research and Due Diligence:

• Before considering any investment, thoroughly research the launchpad and the projects they support.
• Check the track record of the launchpad and its reputation within the crypto community.
• Investigate the team behind the project, the technology, use case, and potential market demand for the token.

Choose a Reputable Launchpad:

• Select a well-known and reputable launchpad. Some popular launchpads include Binance Launchpad, Polkastarter, TrustSwap, and others.
• Look for platforms that have a transparent and fair token distribution process.

Get Whitelisted:

• Many launchpads require users to go through a whitelisting process before participating in private sales.
• Follow the launchpad's official channels (website, social media) for announcements about upcoming projects and whitelisting procedures.

KYC (Know Your Customer):

• Most launchpads require users to complete KYC verification to comply with regulatory standards.
• Prepare the necessary identification documents and go through the KYC process as early as possible to avoid missing out on opportunities.

Secure Your Wallet:

• Ensure that you have a secure and reputable wallet that supports the tokens you are planning to purchase.
• Use hardware wallets or secure software wallets rather than keeping your assets on exchange platforms.

Join Launchpad Communities:

• Participate in the launchpad's official communities, such as Telegram or Discord channels, to stay updated on announcements, discussions, and important dates.

Understand Tokenomics:

• Familiarize yourself with the tokenomics of the project, including the total supply, distribution plan, vesting periods for team and advisors, and any other relevant details.

Participate in the Private Sale:

• Once whitelisted, follow the instructions provided by the launchpad to participate in the private sale.
• Be aware of the contribution limits and follow the guidelines to avoid potential issues.

Risk Management:

• Only invest what you can afford to lose. Private sales, like any investment, come with risks.
• Diversify your investments rather than putting all your funds into a single project.

Stay Informed:

• Keep track of project updates, development progress, and any changes in the market conditions that may affect your investment.

Types of Launchpads :

Generally speaking, there are three main types of launchpads, all with varying degrees of overlap.

IDO Platforms : 

These are launchpads that focus on Initial Dex Offerings that typically occur much closer to the time of public listing. They offer shorter vesting with lower discounts to market price.

VC Style Platforms : 

focus on seed and private sales deals. These typically operate as intermediaries that are able to secure larger tranches of early stage seed & private deals, and offer them out to their member base. Longer vesting, deeper discounts to market.

Pooled/Managed VC : 

These are a variation of #2 in which the VC manages the investments as a pool, and distributes profits pro-rata to deal contributors. I try to avoid these platforms for the most part, as I prefer the control and flexibility of self directed.

Launchpad Strategy

Investing in in launchpads is a bit like running a farm: plant the seeds, let them grow, and harvest them when ready. You invest the capital in sales, wait for them to mature and launch their token, then harvest rewards and rinse and repeat.

Your strategy will depend heavily on your budget and experience. The more restricted your capital, the more careful you will need to be. The less experienced you are, the higher the importance of a smooth uncomplicated user experience. Your budget will also influence which platform you use. Not to worry, I have options for all levels of budget and experience.

The key factors to evaluate when contemplating a launchpad are: the types of deals they access, how long they have been around (did they make it through the bear?), the history of the deals they have offered, allocation sizes, cost of membership, guaranteed or FCFS (first come first served), fees (if any), user interface (if any), staking APY (if any), and token/NFT lockups.