<p>Before new cryptocurrency projects can go public, one of the  crucial steps is raising funds to kick-start their operations.  Initially, the primary method for this was through Initial Coin  Offerings (ICOs), which began in 2013. ICOs provided an efficient way  for startups to raise funds, were easily accessible to investors, and  offered high potential returns within a short timeframe.</p><p>However, ICOs had significant drawbacks. Token prices were highly  volatile, and investors were often impatient, able to withdraw their  funds at any time. This environment made participants vulnerable to  malicious actions like rug pulls and the frequent collapse of ICO  projects.</p><p>To address these issues, alternative fundraising platforms like  Launchpads and Launchpools were developed. While both serve the purpose  of raising funds, they operate differently. In this guide, we’ll explore  what a launchpool is and highlight the main differences between  launchpads and launchpools.</p><h2 id="header-0">What Is a Crypto Launchpool?</h2><p>A crypto launchpool is a fundraising method for early-stage  cryptocurrency projects, allowing investors to deposit their funds into a  liquidity pool. In return, participants earn interest on their  deposits, a process known as Yield Farming, which is based on a  predetermined Annual Percentage Yield (APY) system.</p><p>To put it simply, launchpools function similarly to bank savings  accounts that generate interest over time. However, launchpools  typically offer higher interest rates than traditional banks. The amount  of tokens users earn depends on the percentage of their investment in  the total pool.</p><p>Launchpools are managed by centralized exchanges that list only  thoroughly vetted and promising crypto projects. This approach helps  reduce the risk of scams, rug pulls, and other fraudulent activities  that often affect new projects, providing a reliable and efficient  fundraising mechanism.</p><h2 id="header-1">What Is a Crypto Launchpad?</h2><p>Amid rising crypto frauds and scams, investors sought a safer way  to support new projects. This led to the creation of Launchpads. A  Launchpad is a platform that allows cryptocurrency projects to raise  capital while giving investors early access to token sales. By investing  at the early stages, investors can enter at a lower price before the  public launch. This cost-effectiveness has made Launchpads increasingly  attractive to project creators and developers for fundraising.</p><p>The primary advantage of using a Launchpad is the security it  offers both investors and project founders. Each project must undergo a  thorough screening process, and user verification is conducted through  the KYC (Know Your Customer) method. Projects launched on a reputable  Launchpad adhere to strict compliance rules and are subject to Know Your  Customer (KYC), Anti-Money Laundering (AML), and Blockchain Analytics  (KYT) checks. This rigorous process ensures a high level of safety for  investors, reducing the risk of scams and rug pulls.</p><h2 id="header-2">Launchpad vs. Launchpool</h2><p>Launchpad and Launchpool are both crowdfunding methods designed to  raise funds and support startups, making investing easier and more  convenient. However, their operations differ significantly.</p><p><strong>Trading of Tokens:</strong> Tokens  acquired through Launchpad can be traded immediately on the exchange.  In contrast, tokens obtained through Launchpool have a designated period  before they can be traded.</p><p><strong>Risk Involvement: </strong>Launchpad  involves inherent risks. If the project you invest in fails, your  investment is lost. Launchpool, however, carries no such risk.</p><p><strong>Limits:</strong> Launchpad  employs a lottery system to limit the number of tokens any single  investor can hold, preventing dominance. Launchpool has no such limits,  only restricted by the amount you choose to stake.</p><p><strong>Distribution System:</strong> Launchpad  uses a lottery method to distribute tokens. In contrast, Launchpool  distributes tokens to users who are willing to stake their existing  tokens.</p><h3 id="who-can-join-a-crypto-launchpool">Who Can Join a Crypto Launchpool?</h3><p>To join a crypto launchpool, you need an account with the hosting  exchange and must complete their KYC (Know Your Customer) process.  Additionally, you must hold a minimum amount of tokens in your wallet to  meet the staking requirements for the specific launchpool.</p><h3 id="staking-period">Staking Period</h3><p>The typical staking period for a launchpool ranges from 7 to 30  days. During this time, you earn rewards based on the duration of your  stake.</p><h3 id="can-users-unstake-their-assets-anytime">Can Users Unstake Their Assets Anytime?</h3><p>Yes, users can unstake their crypto assets from the liquidity pool  at any time. However, it is more profitable to keep your tokens staked  for the entire staking period to maximize your earnings.</p><h3 id="earnings-calculation">Earnings Calculation</h3><p>Earnings from a launchpool are calculated in a straightforward and  transparent manner. New token earnings are calculated hourly from the  moment you stake your tokens. The daily earnings are proportional to  your share of the total staked tokens in the pool. Essentially, your  earnings depend on the number of tokens you have staked compared to the  total tokens in the pool.</p><p>Once the token is available for trading, typically within 7 days,  users can trade the tokens they have earned. Additionally, they can  claim their pending rewards from the farming pool at any time.</p><h2 id="header-3">Launchpool Pros and Cons</h2><p>Here are some general advantages and disadvantages of launchpools as crypto crowdfunding platforms:</p><p><strong>Pros:</strong></p><p>- Flexible Unstaking: One of the main benefits of launchpools is  the ability to un-stake your tokens at any time, giving investors the  flexibility to manage their assets as they see fit.</p><p>- Low-Risk Investment: Launchpools are relatively low-risk.  Investors simply stake the required tokens without needing advanced  trading knowledge. With the security measures of centralized exchanges  (CEXs), the risk of fraud is minimal.</p><p>- Profitable Returns: The APY model often yields attractive  returns, which can be withdrawn at your convenience, making it a  potentially profitable investment.</p><p><strong>Cons:</strong></p><p>- Price Volatility: If the price of the token you are staking drops while it’s in the pool, you could incur a loss.</p><p>- Short Staking Period: Launchpools typically have a staking  period of 30 to 60 days, which may not be ideal for those interested in  long-term yield farming and earning passive income.</p><p>- Limited Projects: The number of available launchpool projects is  limited. Due to their popularity, it can be challenging to find a  variety of projects and acquire a large volume of tokens.</p><p><img src="https://media.licdn.com/dms/image/D4E12AQE14B5mdvIHEQ/article-inline_image-shrink_1500_2232/0/1715708635477?e&#61;1721260800&amp;v&#61;beta&amp;t&#61;EqUHIL03ANZ7aFnUfwCC7naxRxO8lCn7MCeNcBq1vmU" /></p><p>For deeper insights into blockchain technology, check out our Listing.Help <a href="https://listing.help/blog/" rel="noopener noreferrer nofollow">Blog</a>.</p>

What is Launchpool? Differences with the Launchpad

Table of Contents

Sergei Khitrov

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