Cryptocurrency presales attract the entirety of the investor spectrum. Whether you are a novice beginner with a recently developed interest in crypto or a seasoned player, participating in crypto token presales can be for you! Presale can be like a premiere, a chance for a select group of people to invest in an asset at its lowest offered price!
As several new tokens are coming up, it can be interesting to learn about presales before you partake in them. This blog will take you through the intricate details of a presale, the mechanism behind its working, and the benefits and risks of participating in a token presale.
Types of Crypto Presales
Cryptocurrency presales can be of various types depending on the type of people participating, the underlying objective as well as the intent behind conducting the event. Check out some of the most common varieties of the crypto presales:
Private Presale
A private presale is an exclusive and highly sophisticated event in which founders aim to raise funding for the token by involving high-net-worth individuals such as venture capitalists, angel investors, industrialists, and entrepreneurs.
Through private presales, founders try to secure heavy endorsements for the cryptocurrency and find investors who might be interested in potential collaborations in the future.
Public Presale
A public presale is usually an all-inclusive event that makes a new token available to a wide spectrum of audiences who are willing to invest in the asset. Public presale opens up a way for retail investors to have access to a token and test it out before an official initial coin offering (ICO) launch.
The main aim of public presale is to generate awareness about the token and cause a stir within the market, thus creating substantial hype before the actual release.
Strategic Partner Presale
Strategic partner presale comes in with a specific motive of a possible partnership or collaboration that transcends financial exchange. Strategic partners can partake in contributing to technological innovation, marketing, development, and more.
Many industry leaders, financial experts, and internet personalities participate in strategic partner presales and contribute to the last-minute polishing of an asset before an ICO release.
Community Presale
Community presales are usually conducted to bring in a massive hype for the token. Most community members, supporters, developmental teams, and enthusiasts participate in the community presale to get exclusive access and generate awareness about the token within the market.
Community presales also help in broadening the user base and driving higher adoption rates through the support of community members.
Whitelist Presale
A whitelist presale is highly exclusive, with a pre-approved guest list consisting of investors who have met a list of criteria set by the development team to participate in the event.
The criteria may require an updated Know Your Customer (KYC) application status, pre-registered investors, or individuals with a unique proposition that may benefit the cryptocurrency.
Difference Between Presale and ICO
The objective of both a presale and an ICO is to make a particular token available to a wider set of audience. However, the difference lies in the time of release, the participants involved in the event, and the other characteristics associated with the asset.
Presale takes place before the project is fully developed and the token is made available to a select group of people, including high-net-worth individuals, angel investors, industry leaders, and community members.
Presales serve as an early-stage fundraising event and also help create extensive awareness about the token’s public release (e.g., ICO). Presale also helps the developers connect with strategic partners to bring forth advanced technological innovations and improve the token before its release.
On the other hand, initial coin offerings (ICOs) are public launch events where a fully developed and tested project and its associated tokens are released to a wider audience. ICOs occur after presale events and have a higher price offering than presales.
ICOs are less risky to invest in. However, ICOs do not offer special price discounts and additional bonuses that are available in a presale. ICO aims to accumulate a larger sum of money to secure the token’s future and encourage future developmental endeavors.
How does Crypto Presale Work?
Token presales are the stepping stone for any token that is set to begin its journey in the cryptocurrency world. If you’re looking to participate in top crypto presales, it’s important to understand how it works. Take a look:
- Planning and preparation: Before a presale event is launched, the development committee and the founding members spend weeks planning it. Specific details, such as the type of presale event, invited guest list, launch dates, special bonuses, etc, are decided upon before the launch.
- Setting up the presale tokenomics: Once the event is planned, the specific tokenomics are decided for the token. Information such as the token’s circulating supply, total supply, governance model, staking features, etc., is finalized before the presale goes live. The token’s whitepaper, detailing all its features for investors, is also created.
- Launching the presale: Once the tokenomics are whitepaper are in place, the presale goes live. Investors participate in the crypto presale and invest in the token’s future.
- Fundraising and token allocation: The presale helps in fundraising and secures the token’s developmental future. It also helps to find strategic partners to improve the token’s roadmap. Following the presale, specific tokens are allocated to the investors based on their investments. These tokens are usually rolled out to the investors after the official token launch.
- Post-presale activities: Following the presale, a substantial amount of hype has been created within the crypto market about the upcoming token. Presales are followed by the main launch event wherein a wider set of audience invests the token to further increase its market capital.
Benefits of Crypto Presale
Investing in crypto presales can be a great opportunity for both novice beginners and expert investors alike. If you’re looking to invest in a token presale, here are a few benefits that may interest you:
- Discounted prices: Crypto token presales offer tokens at a much lower price as compared to the ICO or first launch. Many investors want to grab the opportunity before the token is made live to a wider audience. Also, many presales offer incentivization and additional bonuses that can be lucrative to the investors.
- Low entry barrier: Presales usually allow the purchase of smaller amounts of tokens at a lower price point. Additionally, there is less competition in the market during a presale, indicating lesser volatility. These factors create a lower entry barrier that can benefit investors.
- Exclusive access: Certain presales, such as private or whitelist presales, allow access to a limited set of people, making these events highly exclusive. Participating in these presales allows networking opportunities with influential people. Also, these presales can offer added perks that will not be available during an ICO release.
- Potential for higher returns: Participating in a presale allows investors to buy tokens at a discounted price. When the tokens are released in the market, and their price continues to soar, investors may be able to receive higher returns upon their initial investment. This can be one of the most promising benefits of participating in a crypto token presale.
- Potential to influence governance: If investors participate in presales, they get the opportunity to be a part of the network from the token’s initial days. This opens up the possibility for them to actively participate in the governance of the token and shape its future trajectory.
Risks Associated With Crypto Presale
Just like any other new venture, the cryptocurrency presale is also ridden with probable challenges and risks. While most tokens undergoing presale end up having a promising future, a few risk factors may lurk around cryptocurrency presales that investors must be aware of.
Take a look at these potential risks to stay informed and make the right buying decision:
- Risk of project failure: Token presales are conducted when the product is not completely developed or tested. This increases the risk of project failure in case of any technical challenge, market-wide uncertainty, or lack of confidence among the investor pool.
- Regularity uncertainty: The cryptocurrency ecosystem is relatively new, and the regulatory landscape keeps changing from time to time. In the face of such uncertainty, new laws may come up that can affect the future trajectory of the token. This may impact the price of the token even more, leading to massive losses for investors.
- Risk of scams: One of the most prominent risks of investing in a presale is the risk of falling prey to a scam. Owing to its anonymity and decentralization, scammers utilize blockchain technology and cryptocurrency to conduct sophisticated scams. They may fabricate false information in their whitepapers and create misleading tokenomics that can lure investors to fall for their trap.
- Security threat: Security threat is another significant problem that investors may face during a presale. Many tokens do not follow the necessary security protocol or have added layers of cryptographic security. This may lead scammers to hack into the network and steal millions worth of tokens, draining the investors out of their money. Investing in tokens with advanced security features, such as quantum resistance, can be the best option for investors.
- Intense volatility risk: The cryptocurrency market is highly volatile. Most tokens experience significant price fluctuations, which can significantly impact an investor’s portfolio. Investors looking to play safe should steer away from presales as the token’s future is still in jeopardy.
Conclusion
Token presales are the best way for crypto enthusiasts to invest in a brand-new token and experience its best features at a discounted price. Presales have their fair share of ups and downs, gains and losses. It’s important that investors understand tokenomics and analyze the relevance of the token before investing in it.
With newer cryptos coming up every day, the sky is the limit! With time, we can truly witness the evolution of cryptocurrency and the plethora of benefits and use cases that may come in the future.
