Understanding The Intricacies of Crypto Token Sales

By November 23, 2022The Sandbox
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Understanding The Intricacies of Crypto Token Sales

The cryptocurrency industry has enabled various forms of fundraising for projects and companies. Token sales are an excellent method, enabling a community buildup before a product launch. Even so, not every token sale is a success, and they might not all be accessible to you either.

Why Token Sales Matter

Crypto token sales allow companies to raise funds in exchange for the future use of their product or service. As a result, they are often used by companies that cannot obtain funding through traditional methods.

A crypto token sale can provide liquidity to investors who want to sell their tokens without selling their entire holdings. It is imperative for investors who want to buy many tokens and then sell them over time as the price increases.

For crypto token sales to be successful, there must be an established market for the tokens being sold. That often requires marketing efforts and developing relationships with potential customers before launching the sale. That way, there is at least some interest in using the product or service beforehand.

Token Sale Accessibility Is Crucial

Partaking in a token sale is not always a matter of investing funds directly. Many projects require users to apply for a “whitelist”, which often has a limited number of spots. As such, not everyone can invest in a token sale’s early stages. Some investors may gain an advantage over others, always causing some dismay. There are also questions about whether these whitelist spots are assigned randomly or correctly rather than going to friends of the developers, etc.

In addition, token sales can be rather expensive. A normal approach is to let investors buy tokens through low minimum thresholds. Unfortunately, that is only sometimes the case, either due to greed, projects trying to raise capital too quickly, or other factors. Therefore, one’s budget should not determine whether participating in a token sale is possible.

Fairness, accessibility, and transparency are the crucial pillars of establishing trust in the decentralized world. Token sales like the VERSE token by Bitcoin.com shows the importance of checking the right boxes. The multistage sale removes concerns over insider information or fair access to the tokens. Moreover, the sale relies on dynamic pricing. The Verse token has utility through the Bitcoin.com ecosystem, which has been around for years.

Not All Token Sales Are Successful

There is no shortage of token sales in the cryptocurrency world. Whether as a public sale, ICO, IEO, IDO, presale, or otherwise, new projects try to raise capital virtually every day. Unfortunately, that leads to a flooded market and unsuccessful sales. It is tricky for projects – especially those without a product, service, or ecosystem – to ensure their token maintains value.

Per data by CryptoRank, tokens for DeCredit, DBX, Bankera, Aeron, Hedget, and many others newer succeeded in providing a healthy ROI. However, even at their all-time high, the tokens would trade far below the token sale price. Even in 2022, projects like Arthswap raised $100,00 to see tokens provide an ROI of 0.06x at best.

Simultaneously, the token sales that note tremendous success generate mainstream headlines. Investors in Axie Infinity achieved an ROI of 1643x, whereas Solana investors pocketed a 1180x return. Other successful projects include Polygon, The Sandbox, MultiversX (formerly Elrond), Altura, and many more.

Interestingly, the most successful projects occur through the Binance Launchpad, established by the leading cryptocurrency exchange. That provides broader access to every token sale and ensures listed experts have vetted projects. Those remain crucial elements to any successful token sale.

Disclaimer: The content is for informational purposes only, may include the author's personal opinion, and does not necessarily reflect the opinion of TheCryptoBasic. All Financial investments, including crypto, carry significant risk, so always do your complete research before investing. Never invest money you cannot afford to lose; the author or the publication does not hold any responsibility for your financial loss or gains.

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