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Cardano NFT-marketplace

The First NFT-marketplace on Cardano

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Designed and developed in collaboration with IOHK, a decentralized application on the Plutus platform. The created DApp is one of the first NFT marketplaces on Cardano.

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How to create a launchpad?

launchpad

The most successful project on the Binance Launchpad multiplied investors' funds by 1,649 times! Rarely can any business boast such a high return on investment index. Market leaders DaoMaker and Polkastarter demonstrate a cumulative level of ROI over their entire existence - 33.79x and 35.21x, respectively. Launchpads are often compared to lottery ticket systems. We'll tell you how this business is actually structured, what such platforms earn on, and whether it makes sense to develop a similar service today.

What is a launchpad?

If you create a metaverse, DeFi protocol, or a new web3 game, the question arises: how to attract more investments? It is logical that specialized platforms are best suited for these purposes. Launchpads are precisely such platforms – crowdfunding services that assist founders of blockchain startups in finding financial support in exchange for tokens, offering the public a profitable opportunity to invest in interesting projects at the very beginning.

The opportunity to acquire tokens of new crypto projects during the ICO/IDO stages attracts investors with the prospect of rapid and substantial asset growth. For project founders, such a service is also advantageous, as it enables them to raise funds for development in exchange for tokens or, for example, access to certain features in the product in the future.

Why is the idea of creating a launchpad relevant today?

The growing trend has attracted not only crypto entrepreneurs but also scammers. During the hype, many one-day crypto projects and outright fraudulent schemes were created. In 2018, according to Status Group estimates, 80% of ICOs turned out to be fraudulent projects.

In the years 2017-2019, most scam projects were exposed, leaving mostly serious players in the market. More than 70% of funds raised went into the development of quality projects. However, business is business: after six months, less than half of ICOs/IDOs stay afloat. Of those that make it to exchange listings, only 16% survive. Those who manage to get listed on exchanges show fantastic returns.

In 2022, DeFi-locked assets decreased by 80%, but 2023 began with the cryptocurrency market capitalization growing to $1.2 trillion in just the first quarter. Analysts predict a return of interest in crypto and the emergence of global regulators ensuring compliance with the rights of owners of innovative assets.

Since the economy develops cyclically, a market reversal can be expected ahead. While the bullish trend hasn't ended yet, having a ready platform for launching initial offerings may prove to be a winning strategy.

As the economy develops cyclically, a market reversal can be expected ahead. There is a high probability that with the market growth, user interest in new projects will also increase. Who would want to miss the chance to invest in a promising product at an early stage? Launchpads are where investors look for prospective projects. In changed circumstances, users are likely to turn to launchpads first. That's why timely preparation of a platform for launching initial offerings can be a trump card for an entrepreneur.

Where to start developing a launchpad?

1. Spoiler: from discovery.

Discovery is considered the first stage of development where the client's idea takes on specific characteristics, making the task clear for the development team, and allowing for a rough estimation of the implementation cost. During this stage, business processes that the launchpad will address are analyzed, various technical implementation options are considered, and optimal solutions are proposed. In simpler terms, the client will gain insight into what users can do on the platform, what services need integration, whether a native token is required, and if so, how and on which network it should be launched. Discovery provides the client with a clear understanding of the future platform, its mechanics, a work plan for the team, and an approximate cost estimate.

The structure of Discovery may vary among different companies. The principles typically involve quick analytics and moderately detailed technical requirement elaboration. After the research, clients are provided with documentation that includes:

The cost of Discovery is usually estimated at 2-10% of the MVP (Minimum Viable Product) cost. The value of this approach lies in the new possibilities opened by the prepared material. The results of Discovery can be presented convincingly to investors, helping with budget and timeline orientation. Additionally, Discovery enables flexible development by allowing the postponement or addition of features in subsequent phases. With concrete data, it becomes easier to compare the project estimate with commercial proposals from other development teams.

2. Target audience selection

A launchpad is a service designed for investors. Investors can be either "retail," meaning individual individuals, or institutional, including various funds, corporations, and other organizations.

This choice influences both the platform's UI/UX and the business model. For larger investors, private sales rounds and thorough KYB (know-your-business) checks are usually conducted.

In launchpads targeting individual investors, it is essential to ensure convenience for people with varying levels of experience in entering the investment market, a stable infrastructure, and protection against bots and scams.

3. Choice of launchpad implementation mechanism

The primary task of launchpads is to ensure the convenience and security of transactions, guaranteeing that an investor who wants to acquire tokens at the initial price will receive them, and the founder of the startup intending to sell them will receive the funds from the token sale in full.

The challenge for the launchpad founder is to find a method to align the interests of the interacting parties. How to protect investors from scam projects? How to ensure blockchain entrepreneurs capture the interest and attention of the public?

As mentioned earlier, the choice of target users largely determines the subsequent implementation mechanism of the launchpad. There are two ways to organize the product:

  • 1) Develop an autonomous system of smart contracts that guarantees the execution of both parties' commitments at the code level. In other words, the launchpad owners propose a technical solution to this problem that automatically executes sales and other processes.
  • 2) Ensure a reliable management team that operates clearly within the framework of the law and the organization's charter, thereby ensuring the execution of necessary and transparent procedures.

In practice, public launchpads, targeting mass users, typically operate on a hybrid model: critical product logic is implemented in smart contracts, while the rest is handled by a traditional backend. Private launchpads are always centralized services with full control by the product administration.

As an example of a launchpad model fully based on smart contracts, Camelot on Arbitrum can be mentioned: a decentralized platform that effectively achieves fair token distribution.

To illustrate a team's operation under a strict protocol, TrustPad can be cited: individuals decide whether to accept a project on the platform based on a clear set of rules. Due to higher security guarantees, this implementation method is preferable for projects targeting institutional investors. The challenge lies in the need to assemble a reliable and legally knowledgeable team capable of verifying various documents and collecting proofs to ensure that they are dealing with a legitimate project and not scammers.

Monetization schemes for launchpads

How can a launchpad generate income? There are two proven monetization methods in this field.

1. Project Placement Fees: Projects pay for the opportunity to be listed on the platform. The compensation can be:

  • Fixed: Where a project pays a specific amount to the launchpad, regardless of the sales volume.
  • Percentage of Sales: In the form of a percentage based on the sales volume.

2. Sale of Own Tokens to Individual Investors: Typically, launchpads use their own tokens to control allocation sizes, aiming to ensure a more equitable distribution of resources on the platform. For instance, the volume of new tokens from projects available for purchase may depend on the volume of tokens the launchpad has acquired. The more "staked" tokens a user has, the more they can purchase from new offerings. TrustPad operates based on these principles.

3. Combination of Both Models.

Ways to distribute project tokens

Before commencing the development of a project, it's crucial to determine the token distribution mechanism. There are two popular models: Claim and Airdrop.

Claim: Token distribution is automated. One user deposits tokens into a smart contract, and another user will receive the tokens they want to purchase after a certain period. The key is not to forget to come back after a few months to claim the tokens.

  • Pros: More decentralized; token distribution is technically organized. The launchpad team incurs no costs as they are shouldered by users.
  • Cons: Users may not appreciate the need to pay for gas.

Airdrop: Token distribution is manual.

  • Pros: Users have an excellent experience as they don't have to pay for gas or worry about forgetting to claim tokens.
  • Cons: Due to centralization, the trustworthiness of the team is crucial.

In practice, public projects often use the claim model, while closed projects tend to use airdrops.

How to make a launchpad competitive?

User-Friendly UI

Tailor the interface for each type of user. Beginners need guidance and an effortless platform experience, ensuring essential buttons are prominently placed and easily understandable.

Provide experienced investors with advanced tools for managing their crypto assets. For instance, if staking is available, offer users the option to automatically or manually reinvest staking rewards. Enable automatic routing of staking-acquired tokens to yield farming protocols, allowing users to earn from liquidity farming instead of instantly selling on an exchange.

Consider developing a universal launchpad with a toggle switch, allowing users to switch between regular and pro modes based on their preferences. Binance has successfully implemented a similar approach on centralized exchanges.

Innovations in trust and reliability

Ensure fair token distribution using various allocation calculation methods. Camelot's Fair Launch system is an interesting example in this regard.

Guarantee asset transfer through smart contracts without administration interference.

Implement a system that releases investor funds to project owners only upon achieving specific milestones, enhancing accountability. DAO Maker employs the DYCO v2 token sale model, allowing investors to retract their investments if project promises do not align with reality.

Integration into the ecosystem

Form partnerships with decentralized exchanges (DEX) to enhance the launchpad's ecosystem. Consider a mechanism where significant liquidity providers on the DEX receive guaranteed allocations for all Initial DEX Offerings (IDO), increasing the chances of token buyouts by targeting a financially capable and sophisticated audience.

Metapool: Making Crypto Investments More Accessible and Understandable

We've put the principles described above into practice by developing an application for working with launchpads from scratch for one of our clients. The goal of this product is to lower the entry barrier for individual investors into the early stages of token sales, eliminating the need for users to stake large sums to participate in ICOs.

We've created a service that operates on the principle of collective purchasing: users' funds are pooled for joint investments in tokens of new projects. The application addresses the issue of investors' lack of funds, enabling transactions with minimal investments.

An important feature of the project is the ability to perform gasless transactions. Thanks to Metapool, users can now invest in new tokens during the presale stage without obstacles such as staking large amounts or proving participant ratings.

Summary

A launchpad is more than just a platform to buy tokens at a lower price and sell them at a higher price. For projects, it's an indispensable tool for fundraising and developing blockchain ecosystems, increasing Total Value Locked (TVL), and popularizing the crypto industry. Launchpad owners have a crucial and responsible task: ensuring secure transactions between project founders and investors, thereby building trust in the crypto market.

We anticipate that with the new phase of cryptocurrency market development, when the bear market shifts to a bull market, launchpads will become a focal point for investors. Buying assets in the early stages, before their prices skyrocket, is the best remedy for FOMO. It's evident that launchpad owners will be among the first beneficiaries of these processes. The key is to have a well-implemented solution ready by the time the market turns.

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