Starting or investing in a new crypto project can be a tricky business. Regardless of whether you are an investor or a developer, there are so many platforms and options to choose from these days that it is difficult to pick a winner.
Binance, one of the largest global crypto exchanges, offers project teams two popular options for launching their tokens: Launchpad and Launchpool. Both aim to help new blockchain projects raise capital and gain exposure among investors, but they do so in different ways.
What is Binance Launchpad?
Binance Launchpad is a platform that helps launch new cryptocurrency projects in a fair and open manner.
In the crypto space, launchpads (also called incubators) allow young projects and tokens to grow. A typical launchpad allows new projects to present themselves to investors and sell early access tokens to raise funding. The appeal for investors is the chance of big profits when, hopefully, the value of the token starts to increase as the project becomes more popular.
This is what Binance Launchpad offers users and it works in a fairly simple way.
First, when you want to invest, there is a calculation period where Binance looks at your average BNB balance over a set number of days to determine your participation limit. This determines the maximum number of project tokens you can receive. During this time you don’t have to do anything with your BNB; Just keep it in your account.
Once the calculation period ends, there is a subscription period during which you can commit to purchasing the new token up to your participation limit from BNB. This will lock your BNB in a separate Launchpad wallet until the allocation phase.
After the subscription period expires, Binance will determine the final token allocation for everyone based on the committed BNB amount. When demand is high, they decrease allocations to stay under the overall coin cap. Once the allocations are set, the BNB you have pledged will be automatically exchanged for the new tokens.
Any remaining BNB will then be sent to your Spot wallet along with your new tokens.
Some important things to note about Binance Launchpad:
- You do not need to “plug in” or lock your BNB during the calculation period.
- You can keep your BNB in products like Launchpool and BNB Vault, which will still count towards your limit.
- Once you commit your BNB during the subscription period, it will be locked until the allocation is complete.
- To be fair, there is usually a hard cap or maximum number of tokens each user can receive.
- The minimum amount of BNB you can deposit is 0.1 BNB.
Binance Launchpad used to be a lottery system, but now it’s based on your average holdings, which isn’t too complicated. Simply set your BNB when the time comes and be ready to receive the allocated tokens.
Some of Binance Launchpad’s biggest success stories include Axie Infinity, Elrond, and Celer Network. People who got in early made a lot of money on these projects. Of course, there is no guarantee that any particular project will be successful via Binance Launchpad, but the platform does offer developers a solid opportunity for big profits.
What is Binance Launchpool?
Unlike Launchpad, Binance Launchpool allows users to farm (earn) rewards by staking BNB, BUSD, and other supported tokens. Basically, it’s a way to get your hands on some newly introduced coins without having to buy them.
This is how it works:
If a new crypto project wants to distribute its tokens, it can partner with Binance Launchpool. Binance will then allow its users to pledge BNB, BUSD and other eligible tokens in a separate pool for this project.
For example, let’s say NewCryptoCoin starts and runs a launchpool with BNB. You can stake your BNB in the NewCryptoCoin BNB pool. As your BNB is wagered, you will receive NewCryptoCoin tokens as a reward.
The more and longer you wager, the greater your share of the rewards. So if you can lock your BNB for the entire wagering period (usually around 30 days), you can maximize your earnings.
Some important things to note about Binance Launchpool:
- You need a verified Binance account.
- Minimum bet is 0.1 of an eligible coin.
- Rewards accrue every hour and are automatically compounded.
- You can stake, stake out or extend your position at any time.
- Reward tokens are tradable on Binance after the first farming period.
Successful tokens distributed on Launchpool include REEF, LIT, UNFI, and ATM.
Factors to consider when choosing between Binance’s Launchpad or Launchpool
Launchpad and Launchpool on Binance allow you to get involved in exciting new crypto projects. And since Binance backs them, you know they have real credibility.
However, there is a lot to consider when deciding between these two services. Let’s discuss some of these important factors.
1. Accessibility
Launchpool is much more accessible than Launchpad as you only need a few tokens to wager and you’re good to go. On the other hand, Launchpad requires you to commit a certain amount of your BNB for a certain period of time in order to be eligible for new token allocation.
So, Launchpool is better if you’re looking for something that’s easy to jump into.
2. Potential rewards
Launchpad token sales tend to be more driven by hype, as most new tokens experience a rapid upswing after launch. So you can potentially build up some fat stacks in a short amount of time.
With Launchpool, the rewards are spread out over time through farming, so it’s more of a slow burn.
3. Blocked Funds
With Launchpad, your BNB will be locked for a while before you buy and tokens will be allocated to you. Launchpool allows you to de-stake your pooled assets at any time.
So if you want flexibility, Launchpool is less of a commitment.
4. Technical know-how
Launchpool is easier if you just want to wager and earn. Launchpad requires more technical knowledge as it includes managing cryptocurrency wallets, committing BNB, tracking allotment limits, etc.
This is another win for Launchpool as it makes it a bit easier for crypto newbies.
6. Risk
Due to the hype and limited supply, the tokens sold on Binance Launchpad often see dramatic increases in price when they start trading. However, the spikes were followed by declines as early investors took profits or tokens lost value after they started trading on exchanges. When you invest through Binance Launchpad, you are taking a risk.
For a safer and more passive approach, Launchpool allows you to earn new tokens over time just by holding BNB or other coins. So there’s less risk, but also less explosive growth potential.
Binance offers two different routes to new token rewards
Binance offers crypto projects two solid options to get started: Launchpad and Launchpool.
Launchpad is ideal for experienced crypto investors looking to actively participate in promising new token sales. Users commit to BNB during a set subscription period to secure an allocation of the new token. The more BNB engaged, the higher the token reward. Launchpad requires trust in multiple steps like managing BNB transfers and tracking allocation limits. The rewards can be high, but they also come with greater risk.
In contrast, Launchpool allows for more passive earning of new tokens by deploying BNB or other coins into liquidity pools over time. Users don’t need to monitor timing or limits. Just use and earn! For beginners, the barrier to entry is lower. While the rewards are more consistent, they might not be as big as Launchpad for the hottest projects.
Ultimately, it is important to assess your risk tolerance and how active you want to be in it. Also, do some homework with each new project. Choose the ones that fit your crypto investment strategy.
Make sure you know the differences between these Binance services
Binance Launchpad and Launchpool both offer some great tools for crypto traders and investors. If you are interested in DeFi and new tokens, this is especially true.
Just make sure you understand exactly what each service offers before you get started, and note the important differences between them.
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