What is a crypto launchpad?

A crypto launchpad is a platform that helps new projects sell their tokens to the public for the first time. It handles who can take part, how many tokens each person gets and how the tokens are delivered. Launchpads grew out of the problems with the 2017 era of ICOs, where projects ran their own sales with little oversight.

How does an IDO launchpad work?

An IDO, or initial DEX offering, is a token sale run through a decentralized exchange or a launchpad built on one. Smart contracts handle the sale, and you usually take part by connecting a self-custody wallet.

The typical steps look like this:

• The launchpad reviews the project and announces the sale terms, including a maximum allocation per person.
• Because demand often exceeds supply, access may be limited by whitelists, lotteries or tiers. Some launchpads require you to hold or stake their own token to qualify.
• During the subscription window, you commit a stablecoin or the chain's native coin.
• If the sale is oversubscribed, you may get less than you asked for, or nothing.
• Part of the money raised can be paired with the new token in a liquidity pool so trading starts soon after.

Some projects use vesting, which releases purchased tokens gradually instead of all at once.

How is an exchange token launch platform different?

Centralized exchanges run their own launchpads, sometimes called IEOs, or initial exchange offerings. Binance Launchpad is one example. Binance says it carries out due diligence on featured projects and handles the technical side and distribution, and projects must apply and meet its listing criteria.

Exchanges may also run related programs. Binance Launchpool, for instance, lets users lock assets such as BNB to earn new tokens over time, instead of buying them in a sale. Rules, eligible regions and identity checks vary by platform and by country.

What are common launchpad scams?

Anyone can create a token, and a launchpad's screening does not prove a project is legitimate. Risks to watch for include:

• Rug pulls, where the team pulls liquidity or abandons the project after raising money.
• Prices that swing sharply right after launch because only a small share of tokens can trade.
• Large token unlocks later on that add supply.
• Smart contract bugs that can lead to lost funds.
• Fake launchpad sites and social media accounts that copy real ones.

The Georgia Secretary of State's investor alert warns about promised high returns, pressure to act quickly and unsolicited offers, and notes that token offerings lack the regulation of stock IPOs. In one 2018 case, the SEC found that a company called Tomahawk Exploration had made misleading claims while promoting its token offering.

Before joining any token sale, it helps to read the project's documents closely and check who is behind it. Our guide on how to research a crypto project covers what to look at.