Dissecting a Binance Launchpad Crowdsale (BETA finance)
Public crowdsales are often the first point of entry for most retail investors. By this time, a project will generally have secured some sort of funding from angels or seed investors and the crowdsale is usually happens pretty close to the open listing of the project token.
There are many on and off chain platforms that deal in crowdsales, and these are often swamped by dodgy projects and people looking to make a quick buck... and for the unwary, it can be difficult to determine if you are the dupe or the eventually winner. Don't get overconfident, it is likely that you will be the dupe!
So, with that in mind, I tend to keep my crowdsale participation limited to a few trusted platforms. CoinList for long term holds and investing due to longer lock up times, and Kucoin and Binance for the quick short term action and also some long term interest in holding.
More recently, I have started to avoid the Kucoin sales as they often list a limited pair selection (usually against USDT) which isn't the currency that was used to participate in the crowdsale (KCS) and more importantly, it has been a struggle to make a decent recovery of investment and profit plus the quality of the projects seems a little bit less good than the CoinList and Binance. For that reason, I'm likely to stop with the Kucoin sales and try my hand at the FTX ones instead.
So, over the past years, I've had decent luck with the Binance launchpads. No complaints at all... and often you recover the initial investment, and are left with a healthy stack of the new tokens to take profit and hold for longer term. Plus, the fact that a project is launching on the world's biggest crypto exchange doesn't hurt, as Binance will want their launch projects to do well in the longer term as well!
As soon as Binance announces a Launchpad event, it will often publish a "research" article article about the project. I call this "research" because it reads more like a non-neutral marketing article rather than a factual piece of research.... but sadly, that is what most people believe is research anyway! However, given that most of these projects haven't really fully launched or been at all battle-tested, there isn't likely to be much else anyway. So, read the "research", but keep a healthy dose of skepticism on hand at all times, especially when evaluating their claims of impact.
If the complaints in Telegram and Twitter are anything to go by, it appears that there are at least a few people that don't understand the subscription model that Binance has adopted for the crowdsales. Now, every model is going to have its strengths and weaknesses, but I do think that the subscription model is one that is more inclusive of every potential participant as opposed to a lottery system. But it does mean that smaller participants will be only able to invest smaller amounts; however, in a lottery system that is based on stake, it is more likely that they will be able to invest zero.
So, on Launchpad announcement, your BNB holdings on Binance will start to be snap-shotted over a week and the system will come up with a time-weighted average of your holding for the week. Only BNB that is held in the Spot wallet or Flexible savings products are counted, NOT fixed staking. For this reason (and to collect the Binance Card cashback tiers), I always hold some BNB in the lower interest flexible Vault instead of staking on-chain or in the higher interest locked staking. This time weighted average is the MAXIMUM that you can lock to subscribe to the Launchpad.
However, due to the fact that these sales are often oversubscribed, you are more likely to see that about 1/1000 (0.1%) of the locked BNB will be actually used to purchase the tokens (the rest of the BNB is reimbursed back to your spot account, be patient). I have seen people lock only the amount that they want to spend... and then be surprised when they actually end up spending MUCH MUCH less! If you are going to participate in a crowdsale of ANY sort, or invest in ANYTHING... read read read, learn, learn, learn and UNDERSTAND how things work. If things don't go as expected, hold off on firing up twitter/telegram/discord... go back and read, and learn how things actually worked instead of how you wished they worked.
So, Binance tends to list on a number of different pairings at Launchpad token market openings. BETA listed against BNB, BUSD, BTC, and USDT. Initially, the most important of these is the BNB pairing. BNB was the token used to purchase into the crowdsale, so this is what you need to recover before you are playing with house money. Keep an eye on the listing time which will be several hours AFTER the token subscription and roughly an hour or two after the distribution. This will be the time of greatest volatility, and you can quite easily recoup your initial investment, make a little profit and also have a moonshot stack of the new tokens afterwards if you aren't greedy.
Plan before listing... how much of the new token do you want to hold and how much do you want to sell? I normally reserve around 25% for recouping and profiteering in the initial half hour with either market sells or lowish limit orders... and another 25% to listing stupidly long shot limit orders and the rest is for holding.
Immediately after listing, I often will take a quick look at the BNB price (0.00777) vs the purchase price (0.00013), keep in mind that in the first 5 minutes or so, the price is ALL over the place... 0.007-0.008 was roughly where it was during that time. I normally market sell a little bit, which is often more than enough to cover at least a good chunk of the initial investment. Then I start stacking up sell limit orders to try and capture some of the crazy volatility. During this early hour, the price managed to get up to 0.01! I had orders all the way up to 0.04 just in case...
So, with the BNB denominated orders done... I moved to setting some USDT orders in order to just take profit to park into stablecoins. Hedge hedge hedge... the BNB orders are primarily to just bolster my BNB holdings, the USDT or BTC ones are to take for profit so that I have house money to play with other tokens of interest... the USDT equivalent price at purchase was 6 cents, and the BETA token did manage to trigger orders all the way to 4 dollars!
So, back to the marketing (sorry, research...) report. One important thing to check is the unlocking schedule of the previous round of investors. These investors will have bought in at a much lower price than the crowdsale as they have taken onboard more risk... however, if they are unlocked, they will take the opportunity to dump on you at market opening! Binance and Coinlist have generally been pretty good about this with early investor tokens lockups, I'm not convinced that KuCoin have always handled this well enough...
Always double check the fiat listing price... this will be changed to a BNB equivalent (the actual purchasing token) in the day before the actual subscription opening.
So, from the previous slides, we have a 160 million circulating supply at market opening, of which 50 million will be from the Launchpad sale. Its okay... I doubt that many of the early investors will take the opportunity to dump at the 6 cents level (which is only 4X for them)... however, they will join the dump when the price stabilises a bit... especially if it is much higher than 6 cents! Thus, the importance of making sure that you take a bit of profit and the initial investment... play ONLY with house money!
Actually, the marketing paper did have this handy infographic where you could easily see the unlocked circulating supply against time! Very very handy! Of course, I'm only really interested in the snapshot at the opening of the market!
So, nearer to the end of the day... this is where things were sitting for the BETA markets. Today, they have cooled off quite a bit, and so you can see that there is quite a bit of money to be made in those opening crazy hours. Plan ahead, be prepared and stick to the plan. Have a set order of things to do... and don't get distracted by the stupid volatility. Stick to the plan, and be happy with the profit that you make, don't go chasing more or things might come apart!
Of course, once all the pieces are set up, you can start tinkering with them... but I really advise against it in those opening minutes. The primary objective is to recover your initial investment whilst keeping as much of a moonshot stack as possible.... after that, it is house money and you can do whatever you want to!
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Handy Crypto Tools
Ledger Nano S/X: Keep your crypto safe and offline with the leading hardware wallet provider. Not your keys, not your crypto!
Binance: My first choice of centralised exchange, featuring a wide variety of crypto and savings products.
Kucoin: My second choice in exchanges, many tokens listed here that you can't get on Binance!
FTX: Regulated US-based exchange with some pretty interesting and useful discounts on trading and withdrawal fees for FTT holders. Decent fiat on-ramp as well!
MXC: Listings of lots of interesting tokens that are usually only available on DEXs. Avoid high gas prices!
Coinbase: If you need a regulated and safe environment to trade, this is the first exchange for most newcomers!
Crypto.com: Mixed feelings, but they have the BEST looking VISA debit card in existence! Seriously, it is beautiful!
CoinList: Access to early investor and crowdsale of vetted and reserached projects.
Cointracking: Automated or manual tracking of crypto for accounting and taxation reports.
Stoic: A USD maximisation bot trading on Binance using long-term long strategies, powered by the AI/human system of Cindicator.
StakeDAO: Decentralised pooled staking of PoS assets.
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