When it comes to launching a new crypto project, fundraising always becomes a big question as every startup requires capital for its operations. In 2017, ICO or an initial coin offering (ICO) emerged as the popular fundraising method with its advancement of raising funds, more liquidity, and token value defined, traded within a short period of time. Despite the high return on investment and the advantage, that ICO investors can cash in and out anytime by converting the ICO tokens into other cryptocurrencies, the idea of raising funds through ICO collapsed due to an increase in the volume of fraudsters, rug pulls, and significant risk of failing entirely. Soon after, the alternatives to ICOs came into light – Launchpool, and Launchpad.
They both are fundraising methods and serve the same purpose, but they differ in how they operate.
What is a Launchpad?
Crypto frauds and scams were on the rise, and investors were looking for a convenient way to support projects safely. Thus, Launchpad was born to address this concern. Launchpad is the platform that enables crypto-based projects to raise capital while giving early access to investors for token sales. Investing in the early stages of projects benefits the investors with a low price entry into the project before the public launch. Due to the low cost of launching on a launchpad, creators/developers are getting more interested in showcasing their projects on launchpad for fundraising.
The major advantage of using a launchpad for launching the project is security for both investors and founders. Launchpad requires each project to undergo a rigorous screening process. It also uses the KYC (know your customer) method for users’ verification. LCX Token Sale Manager takes a step ahead to ensure utmost safety for investors by enabling unparalleled security through compliant token sale offerings thus eliminating the risk of rug pulls. The projects launched on LCX adhere to compliance rules, and the platform also conducts Know Your Customer (KYC), Anti-Money Laundering (AML), and Blockchain Analytics (KYT).
What is a Launchpool?
A launchpool is another method of raising funds for crypto ventures by inviting investors to deposit their crypto holdings into a liquidity pool. As a result, investors will receive interest on their deposits. The investment process is called yield farming and it is based on the APY (annual percentage yield). Their launch pools are organized by centralized exchanges that carefully examine projects before listing them. It decreases the likelihood of scams, frauds, and rug pulls. The launchpool serves as a safe and convenient fundraising platform.
LAUNCHPAD VS LAUNCHPOOL
Launchpad and Launchpool are two crowdfunding methods that have the same purpose: to raise funds and support startups. Both methods are designed to make investing and using the platform easier and more convenient. The way they operate, however, differs from one to the other.
The key differences between Launchpad and Launchpool are –
- Trading of tokens – the trading of tokens acquired through launchpad can take place instantly on the exchange whereas the tokens through launchpool have a separate period of time before one can trade them.
- Involvement of risks – Inherent risk is involved in the case of Launchpad, like you invested in a project, and that project fails, then your investment will also be lost. But in Launchpool, no risk is involved.
- Limits – Launchpad has a limit set by its lottery system to prevent investors from having the majority of tokens, whereas Launchpool has no limit besides your own amount.
- Distribution system – a lottery method is used under launchpad to distribute the tokens whereas, in launchpool, tokens will be distributed to users willing to stake their existing tokens.
Conclusion –
Launchpad and Launchpool are both aimed at helping startups raise funds and promote their projects. They both strive for a win-win environment for their investors as well as startups. Based on investors’ and projects’ choice, both methods offer a unique and secure way of investment.
