Cryptocurrency is a digital decentralization currency based on a blockchain system. To create a new cryptocurrency, a team must raise funding to fund the crypto project so the new crypto coin can be listed in the market as a legal token for people to buy, sell, and trade.
Currently, there are some methods to raise funding in the crypto space, but in this article, let us focus on two of them, which are raising funding through Launchpad and ICO.
Raising Funds in Crypto Currency
Raising funds is a way to realize a cryptocurrency project. The raised funding is an important thing for the cryptocurrency project since the financial resource is needed to develop, launch, and promote new cryptocurrency The raised funding is usually done during the token sale event to gather financial support from the investors.
Differences Between Launchpad And ICO
Currently, we discuss Launchpad and ICO as they function to raise funding for the cryptocurrency project. Even though both of them have the same goal which is to gather financial support for the cryptocurrency project, Launchpad and ICO are different things.
Launchpad
Launchpad is a platform that provides help for a new cryptocurrency project. The Launchpad platform usually helps the new crypto project to raise funds or gain exposure within the crypto community. An example of a good launchpad for cryptocurrency is Kommunitas launchpad, which is web 3.0 crowdfunding that offers many benefits..
ICO
ICO (Initial Coin Offer) is a fundraising method that is used in the cryptocurrency space. Fundraising through ICO involves the announcement to the public about the new crypto project and the sales of the new crypto token with other established cryptocurrencies such as Bitcoin and Ethereum.
Do you spot the differences between Launchpad and ICO? Launchpad is a platform that helps new crypto projects fund the development of the project. Meanwhile, the ICO is a method of fundraising the project by introducing the new crypto project to the investor and selling their token currency with another cryptocurrency.
Read also : Launchpad vs IDO: What’s The Differences Between the Two?
Which One Is Better Between Launchpad And ICO?
Answering a question about which one is better between the crypto launchpad and ICO is subjective because the answer depends on various factors.
The decision to use a crypto launchpad platform and conduct an Initial Coin Offering (ICO) depends on the nature of the project, the goal of the project, the target audience, and the current regulation in fundraising for crypto projects.
To help you decide which one is better for your project, here are the advantages and disadvantages of using a crypto launchpad platform and conducting ICO for fundraising:
Crypto Launchpad Platform
Advantages
1. Credibility
Launchpad platform usually conducts a venting process to select only promising projects. If a project can pass the venting process it means that the project is credible enough to be developed. Projects that pass the platform’s selection process are viewed as more promising and favorable for the investor.
2. Big Exposure
Launchpad platform can grant your project big exposure to a large audience from the platform users’ base. With the big exposure and wide range audience, it can increase the potential to get more investors within the platform user.
3. Community Building
Most launchpad platforms already have their community that already solid. the project selected by the Launchpad platform can tap into the community to gain community support to connect with potential supporters and investor.
4. Technical Support
Launchpad platform might offer you technical assistance, especially to the team who are new to the process of token sales.
5. Liquidity
Launchpad platform helps list the new token on the crypto exchanger shortly after the token sale, it can provide liquidity to the investor.
Disadvantages
1. Platform fees
The Launchpad platform typically charges fees for the service, and the fees of service can make an impact on the funds raised.
2. Competition
There is big competition in applying the new crypto project to the Launchpad platform since the Launchpad often features multiple projects at the same time
3. Regulatory Considered
Depending on the jurisdiction, conducting a token sale through a launchpad might require compliance with relevant regulations.
Initial Coin Offering (ICO)
Advantages
1. Flexibility
Initial Coin Offering (ICO) offers more control over the fundraising process to the crypto developer team. The developer team can have their term, pricing, and conditions during the fundraising process.
2. Direct Connection
Conducting the Initial Coin Offering (ICO) allows the developer team to have direct communication and relationship with the investor. The direct communication and the direct relationship can lead to more engagement and community building,
3. Early Adoption
An initial Coin Offering (ICO) can attract early token adopters who are genuinely interested in your project, and the potential cryptocurrency in your project.
4. Potential for Higher Return
The initial Coin Offering (ICO) can offer a probability for the investors to get a higher return if the token shows significant value. The potential for higher returns depends on how successful the crypto project is during the (ICO).
Disadvantages
1. Regulatory Challenges
Initial Coin Offerings (ICO) need to face regulation for security in various jurisdictions. Facing too many regulations and jurisdictions can lead to legal and compliance challenges.
2. Credibility Concern
Initial Coin Offering (ICO) can be used for fraudulent projects easily. This problem leads to concern about the credibility of the crypto project and makes investors being extra careful.
3. Marketing and Exposure
Using an Initial Coin Offering (ICO) makes the developer team put more effort, especially in the issuance of their project to the investor. The crypto developer team needs extra effort to do marketing and community building to attract investors.
4. Liquidity Issues
Unlike the launchpad platform which often helps list the new token to the crypto exchange quickly, a Coin that is born from the Initial Coin Offering might delayed in getting listed on exchanges. This delay can impact the liquidity.
In summary, the choice between using the Launchpad platform or conducting Initial Coin Offering (ICO) depends on the goal of the project, the capability of the team, and the regulation landscape. It is important to carefully consider the pros and cons of each fundraising option and seek legal advice to ensure compliance with the relevant regulation.