Some crypto projects offer their tokens to interested investors even while it still under development. This is known as a pre-sale because it happens before the Initial Coin Offering (ICO). It is also why pre-sale tokens are made available at much lower prices. An ICO is like the IPO of crypto tokens. It has been taking a lot of flak lately as people tend to take advantage of the ICO by hoarding a large number of coins and becoming market manipulators.
Pre-sales are beneficial for investors and developers alike, especially if the project does well and sees quick adoption. Crypto pre-sales act as crowdfunding vehicles; they provide developers with the necessary funds to see the project through. For investors, it is an opportunity to enter a cryptocurrency before it hits the market and appreciates.
Pre-sales also help developers spread the word about their projects and garner more attention from a marketing perspective. The event plays a crucial role in luring investors when the ICO goes live.
Pre-sales have been around since 2009, when Bitcoin, the world’s first and oldest cryptocurrency, was launched. It was a golden egg for investors who entered back then and held on to their currency for over a decade. Most of them have made it to the millionaires’ list.
There are two types of pre-sales:
- Investor-only Pre-sales: These are opened only to wealthy investors willing to pump big money into the project. While the invested amount may be substantial, investors can reap the benefits of price appreciation once the tokens hit the open market.
- Open-for-all Pre-sales: Such pre-sales allow retail investors access to a project’s token before its public release. Nonetheless, most tokens remain unsold due to the limited faith in still-developing projects.
Pre-sales are like entering the ground floor of a building that is still under construction. Until it is fully developed, there is no way to know whether it will attract investors in the future. While there are several upsides of procuring crypto tokens during a pre-sale, such as lower entry barrier and the speculated future appreciation, there are some downsides too:
-Unknown Territory: Pre-sales could just be predecessors of rug-pulls and other scams. It is risky to park your money in something that is untested or unproven. Not all currencies turn out to be successful like Bitcoin and Ethereum.
Also Read: How crypto ATMs work
-High Volatility: Although pre-sale prices are much lower than ICO prices, they may plummet after the ICO is over, especially if people do not see the underlying blockchain adding value or solving real-world problems. In this case, you could end up losing your hard-earned money.
-Cyber-Vulnerability: Since most crypto wallets are custodial ones (held by the exchange), there is nothing apart from the exchange’s security protocols safeguarding your assets from hackers. Hackers are siphoning off hundreds of millions of dollars’ worth of crypto from online platforms even today.
How do you enter a crypto pre-sale?
You can enter a crypto pre-sale with 3 easy steps:
-Identify a pre-sale: Navigate through the pages of CoinMarketCap or CryptoTotem and find out which projects are offering a pre-sale. Before you decide to invest, we recommend performing due diligence and being fully aware of the project offerings.
-Choose an exchange: Before creating your account with an exchange platform and adding funds, be sure to do your research and ensure that it is a reliable service provider. Pick globally acclaimed crypto exchanges to ensure a proven third-party is handling your assets.
-Purchase: Once your account and wallet are created, all that is left to do is look for the pre-sale on your exchange’s website and purchase your tokens.
3 pre-sales that went on to become mega projects:
-Tezos (XTZ): This is one of the best-known examples of a successful pre-sale. It opened at a pre-sale price of $0.47 and raked in over $200 million in the ICO. XTZ is currently trading at $3.05 – 549 percent up from its pre-sale price.
-Filecoin (FIL): FIL was released at a pre-sale price of $5 and has touched $18.96 presently. It hit the markets at $11.5 in 2017 and has grown by 279 percent over its pre-sale price.
-Calyx (CLX) – Upcoming: This project has made a name for itself by creating a liquidity sourcing pool that allows it to supply liquidity from multiple sources, thus making it easier to swap cryptocurrencies. It is making waves as CLX holders will be entitled to receive a percentage of the fees paid by transactors, thus allowing them to have a secondary source of income.
You can enter the Calyx pre-sale from here: Sign-in | Calyx (calyxtoken.io)
Also Read: Top reasons why the Bitcoin sell-off is deepening
