There are many ways to raise funds for a crypto startup. Launchpads are one of them. Usually, the presale of tokens takes place immediately before the listing. Launchpads also promote the project through airdrops. Anti Danilevsky, CEO and Founder of Kick Ecosystem, spoke about the essence of launchpads and their safety for crypto investors.
- What are launchpads? What practical benefits do they have for crypto projects? Roughly speaking, why are they needed at all?
- The purpose of launchpads can be called good—to “pre-find” promising startups and help them raise money. If we are talking about crypto-launchpads, that is selling the tokens of these startups. The scheme is quite simple: companies receive money and develop their product. In an ideal picture of the world, their tokens are in demand and offer a lot of benefits to holders. And buyers use this token within the product that the company makes. Let's say it’s a game. Under the current circumstances, tokens are often bought not for use within a product, but for resale to those who intend to use this product.
I think this trend will hold in the near future—product users will not buy tokens, the latter will be bought for speculation. Unfortunately, this contradicts the idea that launchpads are designed to help startups raise money without venture capital funds and investors or unnecessary complications. After all, the idea, with the right filtering of startups and screening out the scam, is really worthwhile.
- One of the functions of launchpads is to promote the token through airdrops. How does this process take place?
To put it in an outline, everything is quite simple. As a rule, users need to perform a series of actions–subscribe to a Telegram channel, join a group, write a post, retweet, like, add to the watchlist on Coinmarketcap and then leave their wallet address. When all this is done, the user is added to the list, and the startup sends tokens to his address.
Airdrops were a very interesting thing. They brought in users and buyers. Now, in my opinion, airdrops attract people who are unnecessary and irrelevant to projects and who solely hunt for airdrops and make money on them. They often create numerous accounts, get tokens on them and then sell them on exchanges. Airdrops, therefore, can hardly be called a worthwhile idea for their organizers.
- One of the most important purposes that launchpads serve is to check projects. For investors, this is a kind of guarantee and exclusion of fraud risks. What checks do projects undergo? Are there any criteria that they must meet?
- Indeed, checking projects for feasibility is extremely important. Unfortunately, now launchpads, especially decentralized ones, do not check them at all or do it purely formally. For example, there is a lot of scam on Pancakeswap and Uniswap. In most cases, people simply lose money. Therefore, you need to be very careful when choosing a platform that conducts token sales. For example, when we were actively working on KickICO at KickEX (now this project is on hold), we checked startups carefelly, including all their documents, and carried out KYC. And we worked only with legal entities. To my mind, this is how the launchpad should work, not like it is now, exposing the investor to great risk.
Let's also consider how this all will work in Russia. There will be an operator for the release of digital assets and an operator for their exchange. The requirements for them will be very strict. For example, the charter capital of a digital asset exchange operator must be at least 50 million rubles, and its staff must have a Compliance Officer and other inspectors. After all, the platform itself will be responsible for those companies that will be launched on it. The pad will be interested in not having scam on it.
By no means do I want to say that all launched projects are scam. But even if we look at the “ordinary” venture industry business, only 10% of projects work out and the rest fail, not because they are scam, but because the business failed. In the crypto realm, this percentage is even lower.
- How safe is a launchpad for an investor? If, for example, the project is never implemented, is it possible to count on a refund of the invested money?
In my opinion, at the moment it is very dangerous to take part in token sales and launchpads in general. In any case, you should study the company, its founders and its product carefully before giving money.
Talking about personal experience, I hope soon KickEX will work in the Russian Federation as a digital asset exchange operator—a cryptocurrency exchange—and we will be able to attract additional money to the mentioned fifty million charter capital, for we still do not have enough of our own resources. And we will analyze the projects carefully in order to be a guarantor of their feasibility and good faith. Moreover, we cooperate with the State, and the country has a preliminary list of projects that have already passed the scoring and are literally waiting for the start of the legal work of such a website.
But the question is if they can implement their plans successfully after raising the money. If it were that simple, then venture capital funds would not have failed projects. The success or failure of an initiative is indeed very difficult to predict.
- Is it difficult to participate in a launchpad? For instance, can a person who does not have much experience in working with cryptocurrencies figure out what's what? What is this process on the part of the investor?
Today it is difficult to participate in launchpads without having experience with cryptocurrencies. But if you have an idea of how it works, on KickEX, for example, then this is an understandable procedure. It is enough to make a payment by card, or any bank transfer, or even use cash (I really look forward to when banks will be able to accept cash and open crypto accounts). This process will be easier due to the fact that, as I said, we will work with startups scored by us and government agencies.
Is it profitable for the creators of projects to attract someone's help? What are the advantages of launchpads? What opportunities do they open for users and for the creators of the crypto project?
Of course, this is beneficial for the creators. After all, when tokens are sold on launchpads, no one enters the share capital, and the project remains completely in the possession of those people who initially worked on it. With entering equity and even investment, everything is completely different. Then there is “hand-wringing”, share dilution, and even the “smokeout” of the creators, if suddenly their documents turn out to be made incorrectly.
Therefore, for startups, launchpads are much faster, more attractive and convenient than venture. Although venture investment is not developed in Russia altogether, secured lending is much more common in Russia. And what is served under the guise of ventures is often the old usury. Therefore, launchpads are much more interesting for startups, especially for Russia. If our company, for example, launches its own launchpad, participants from all over the world can come to it using cryptocurrency. But they also have some minor downsides. For example, companies need serious investments in marketing tools.
To sum it up, launchpads are truly the future. The main thing is for the creator to organize it correctly and for the investor to choose the right project.
- What about the cons? In particular, I would like to discuss the high threshold for entry (since guaranteed allocations on most good launchpads cost from $3000-4000), as well as the difficulty of choosing an excellent website among a dozen offers.
In fact, for the cryptocurrency market, $3000 is a low entry threshold, it is about 10% of the cost of BTH, or 2 ETH. As for an average entering, it is worth $20,000–30,000.
- In conclusion, I would like to ask about how one could choose a good launchpad. What are the parameters to be guided by? Which of the existing proven websites could you single out?
In order to choose a website correctly, you need to look at what projects they list, what they are. If there is scam, this is, of course, a bad indicator.
As to choosing a website, I expect that our company will become the first choice website in Russia, which will enable domestic startups to attract resources for development.