How Crypto Presale Works - Guide For New Crypto Startups
A crypto presale is a fundraising event that occurs before the official launch of a new cryptocurrency. It allows early investors to buy tokens at a lower price in the early stage.
Presales are commonly used to raise funds for the development of the project and build initial interest.
Let's understand its more and more deeper for a Crypto Startup.
How Does a Crypto Presale Work?
Here is the complete breakdown of the whole steps of how Crypto startups offers presales:
1. Project Announcement and Whitepaper Release
Steps | Procedures |
|---|---|
Project Introduction | The team behind the cryptocurrency announces the upcoming project, detailing its goals, features, and potential use cases. |
Whitepaper | A whitepaper is released, explaining the technical details, tokenomics (token distribution model), and the problem the project aims to solve. The whitepaper is a critical document for investors, providing transparency about the project's vision and development plan. |
2. Presale Preparation
Steps | Procedure |
|---|---|
Smart Contract Setup | The team creates a smart contract for the token sale. This smart contract automates the distribution of tokens and ensures the sale process is transparent and secure. |
Token Allocation | The project allocates a portion of the total token supply for the presale. Typically, the team reserves tokens for the development team, advisors, and marketing. |
Whitelist Registration | Investors are often required to register for a whitelist to participate in the presale. This is a list of approved investors who meet certain criteria (e.g., completing Know Your Customer (KYC) verification). |
3. Presale Launch
Steps | Procedure |
|---|---|
Token Price | During the presale, tokens are offered at a lower price than they will be during the public sale. This discount serves as an incentive for early investors to participate. |
Presale Tiers | Sometimes, presales are structured in tiers, with each tier offering a limited number of tokens at progressively higher prices as demand increases. |
Fundraising Goals | The project sets a soft cap (the minimum amount needed for the project to move forward) and a hard cap (the maximum amount the project aims to raise). |
4. Investor Participation
Steps | Procedure |
|---|---|
Cryptocurrency Payments | Investors typically buy presale tokens using popular cryptocurrencies such as Bitcoin (BTC), Ethereum (ETH), or stablecoins (e.g., USDT). The project's smart contract handles the transaction and sends the tokens to the investor's wallet. |
Token Vesting | Some presales include vesting periods, meaning investors may not receive all their tokens immediately. Instead, tokens are released gradually over a set timeframe to prevent massive sell-offs after the launch. |
5. Post-Presale Activities
Steps | Procedure |
|---|---|
Public Sale or ICO | After the presale, the remaining tokens are sold during the public sale, also known as the Initial Coin Offering (ICO) or Initial DEX Offering (IDO) if it’s on a decentralized exchange. |
Exchange Listing | Once the token sale is complete, the team lists the token on cryptocurrency exchanges, allowing public trading. |
Token Utility | Presale tokens can be used in the project's ecosystem, such as governance, staking, or accessing the platform's services. |
Types of Crypto Presales
Private Presale: Offered to select investors, such as venture capitalists or institutions. It usually occurs before any public announcement and offers the lowest prices.
Public Presale: Open to a broader audience, usually with fewer restrictions. Investors can buy tokens at a discount before the ICO.
Why Participate in a Crypto Presale?
Discounted Tokens
: The main attraction is the opportunity to buy tokens at a discounted price, which could increase in value once the token is publicly listed.
High Potential Returns
: Early investments in successful projects can yield significant returns, as seen with tokens like Ethereum (ETH) or Solana (SOL).
Support Innovative Projects
: Investors get to be part of new blockchain projects early on, potentially contributing to the development of groundbreaking technologies.
Conclusion
Crypto presales can be an excellent opportunity for early investors to gain exposure to new projects at discounted prices. However, they also come with risks, and investors should carefully research and evaluate each project before participating.
Disclaimer: CoinSoMuch does not provide financial advice or guidance. Also note that the cryptocurrencies mentioned/listed on the website could potentially be scams, i.e. designed to induce you to invest financial resources that may be lost forever and not be recoverable once investments are made. You are responsible for conducting your own research (DYOR) before making any investments. Read More...
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