How are crypto-launchpads revolutionizing the DeFi industry?

What is a crypto startup platform?

Crypto-launchpads bring together the ethos of decentralized ecosystems and that community’s ability to make trustless investments.

The cryptocurrency industry and Web3 have been a hotbed of innovation that has put the community at the forefront. It thrives on the proliferation of decentralized ecosystems, breaking away from central hegemony of various incumbent bodies. The rise of crypto-launchpads could be the beginning of a decentralized venture capital model.

The era of Bitcoin (BTC) and Ether (ETH) paved the way for new altcoins. However, by the end of 2022, there were over 16,000 cryptocurrencies. How can an enthusiastic investor choose good projects from so many? True to its ethos around decentralization, one of the most fascinating innovations that brings together investors, projects, innovators and the retail public is a crypto launch pad. What do these ramps do?

Crypto launchpads facilitate investment and empower investors to make informed decisions through rigorous due diligence. They take the pain of curating investment opportunities from retail investors and offer them the opportunity to invest in cryptocurrency projects at preferential valuation terms.

Retail investors who wish to participate in these investment rounds will purchase tokens for the crypto launchpads. Depending on the number of token holdings, investors are usually placed under tiers that determine the access and valuations they get with investment opportunities.

The terms that investors get from these launch sites vary from preferential to exclusive. Preferential investment terms are generally in line with what other investors get. However, launchpad token holders are first given priority to invest in these opportunities. Exclusive terms are those offered only to launchpad token holders. Either way, startup platform participants benefit from the structure.

Why is a crypto launch platform required?

Crypto launchpads offer communities access to high quality deals curated by experienced investors from the community itself.

A primary reason crypto launchpads exist is to provide investors with access to information that will aid in the decision-making process of investing in cryptocurrency projects. This can be a critical differentiator in a bull market, when it is difficult for even the experienced investor to cut through the noise and pick good investment opportunities with good fundamentals.

The second reason crypto launchpads are critical to Web3 is to offer retail investors access to high-quality deals. In the Web2 world, retail investors generally do not get access to high-quality projects until they are listed on a stock exchange. They also do not have experts who check the finances of companies and provide detailed due diligence reports.

Access to high-quality deals and easy decision-making based on well-researched information about potential investments are privileges that only a few enjoy in Web2. With a decentralized model, launchpads – also known as crypto accelerators – have opened retail access to high-quality investment opportunities.

What benefits do crypto-launchpads bring to ecosystem stakeholders?

There is a three-fold dynamic in the Web3 ecosystem that includes the investor, the project and the community. But what does each player get for being on the starting ramp?

The most important advantage of the startup listing on a launch platform is the capital it receives from investors and community members of the launch pad. Retail investors visiting the launch pad will have the opportunity to view Web3 projects listed, understand the team behind the projects along with the type of community the project has nurtured, and can invest their capital in curated opportunities.

Web3 projects gain credibility after being listed on a launch platform, which is critical in the ecosystem. Crypto launchpads also offer a multitude of services to early-stage crypto entrepreneurs, such as tokenomics consulting, marketing inputs, investor introductions, and other related business services. Crypto launchpads are the Web3 equivalent of incubators and accelerators in the Web2 space.

Despite these benefits, launchpads can only be as good as the quality of the community members and the key people in the community who provide the right investment opportunities. Web2 has got it right with organizations like Y Combinator, Startupbootcamp and several others pioneering the accelerator model. Web3 has yet to see such a legacy develop.

Finally, for the Web3 ecosystem, crypto-launchpads have successfully created a framework to cut through the noise and identify projects that deserve investors’ attention. As a result, as the model matures, the number of investor frauds and hatcheries should decrease, which in turn will benefit the Web3 ecosystem from a sentiment and reputation perspective.

How can DeFi projects benefit from launchpads?

There are several crypto launchpads, such as DAO Maker and BSCPad, which successfully operated through the previous crypto cycle. As the next crypto cycle begins, cryptocurrency launchpads could be a key cog in the ecosystem.

For a project to be incubated by a launch pad, it must submit extensive details to be considered. Some of the key operational details required are permission to perform a Know Your Customer check on stakeholders, information on partners, existing investors and advisors, the status of smart contract audits, the quality of the user base, and unit economics.

The level of due diligence that crypto-launchpads perform is crucial, especially in the decentralized finance (DeFi) space. DeFi has been plagued by vulnerabilities in smart contracts, oracle breaches and hacks across the board. A thorough smart contract audit from a reputable audit firm can help put investors’ minds at ease.

Therefore, for the Web3 world to flourish, the effective operation of crypto-launchpads is essential – especially when the right projects with quality products and visions need to be identified. The model is still in its infancy and needs to focus on better quality launchpad communities with a track record spanning several crypto cycles. This practice would make launchpads a fundamental building block of the Web3 ecosystem.