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Launchpads are increasingly gaining popularity in the world of cryptocurrencies. They solve a unique problem for both crypto-investors and developers alike and have seen much traction due to the advantages they offer. Although the launchpad phenomenon is now commonplace for individuals who are knowledgeable in cryptocurrencies, most people do not know what they are and how they work.
The unprecedented growth in blockchain use, especially in the digital currency sector, brought with it a plethora of problems. Investors fretted over the insanely high number of scams they had to deal with, and many lost money through initial coin offerings (ICOs). For projects, the real challenge involved raising enough funding for building and development. The ICO craze in 2017 lured many investors into buying into projects, yet most of them turned out to be scams. Initial DEX offerings on decentralized exchanges also proved unhelpful as investors with large pockets quickly bought up the entire allocation of tokens, defeating the aim of crowdfunding.
All of these teething problems and many more led to the development of platforms that would offer authenticity and security to investors and also provide projects with all the funding they need. The cryptocurrency space recognizes these platforms as launchpads, which were named after the famous Launchpad that provided developers with a platform to build and maintain open-source software. Essentially, launchpads are platforms that help cryptocurrency projects accrue crowdfunding and give investors access to coins and tokens before they are launched to the public.
How Do Launchpads Work?
Crypto launchpad platforms aim to achieve two things: raise funding for projects and bring genuine projects to their community before they get out to the public. To achieve the above goals, launchpads seeks to build a budding community and then attract potential genuine projects to their platform for investors to crowdfund.
The launchpad first sets about building its community. Most launchpad platforms have their tokens, which community members must own, and a stake that could be optional to participate in crowdfunding. Some launchpads also require users to verify their identities before participating in any IDOs or IEOs to ensure they are vetted. That way, no one can cheat the system by buying through multiple identities. Indeed, launchpads ensure that their users access genuine and promising projects by vetting them. Through the vetting process, scams and frauds are easily identified, and the launchpad can quickly decline the request to entertain such projects. Thus, these platforms save time for investors by doing the due diligence for them. This time-saving advantage is one reason launchpads are gaining momentum in the crypto space.
Types of Launchpads
Launchpads on Centralized Exchanges
Popular centralized exchanges (CEXs) like Binance and KuCoin Spotlight have a launchpad feature that offers new projects to members of their large communities. After the crowdfunding exercise, these projects may be listed for trading on the exchange. Most centralized exchanges require users to pass KYC verification before accessing the launchpad feature and hold a specific quantity of their native tokens in their wallets for a fixed duration.
IDO Launchpads
These platforms are decentralized, so they are different from those found on CEXs. IDO launchpads are built on blockchain networks that support smart contracts like Algorand. Decentralized launchpads may not necessarily require KYC verification, and some use a whitelisting process to select those who can participate in IDOs. Most IDO launchpads also have native tokens, which are sometimes the qualifications for users to participate in crowdfunding. Yieldly, which was built on Algorand and is the world's first carbon-negative blockchain, is an IDO launchpad that aims to bring exciting projects to the Algorand ecosystem.
IGO Launchpads
Even though they are unpopular, this kind of launchpad platform is dedicated to introducing gaming projects to their communities as initial game offerings (IGOs).
How to Interact with a Launchpad
There are different types of Launchpad platforms and each one has unique requirements. Those who intend to use launchpad platforms will require a cryptocurrency wallet like Metamask to connect to it. However, centralized exchange launchpads do not need to be connected to external wallets. Users are advised to buy and hold the tokens of the launchpad platforms or stake them according to the requirements to gain a slot in crowdfunding projects. Generally, launchpads are a unique innovation in the cryptocurrency space that give investors early access to potential projects.
