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    Launchpad vs Launchpool: Key differences explained

    Launchpad vs Launchpool: Key differences explained

    Launchpad vs Launchpool: Key differences explained
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    By CNBCTV18.com  IST (Published)

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    While Launchpad and Launchpool both serve the same purpose (raising funds for projects), there are a few stark differences between the two concepts. The differences become clear once we get to know how these two platforms operate. Find out more here -

    Binance is currently the largest cryptocurrency exchange in operation. Among many other services, it also offers two unique fundraising platforms, known as Launchpad and Launchpool. Both these solutions allow Web3 and crypto projects (curated by Binance) to offer their tokens to members of the exchange.
    This happens before the project is listed on Binance and other crypto exchanges. As such, it helps these upcoming projects raise funds and meet development needs before public release. Also, investors get a chance to bag these coins before they are listed and potentially appreciate in value.
    While Launchpad and Launchpool both serve the same purpose (raising funds for projects), there are a few stark differences between the two concepts. The differences become clear once we get to know how these two platforms operate.
    How does Launchpad Work?
    Launchpad is a safer alternative to initial coin offerings (ICOs). In the past few years, instances of ICO frauds and scams have led to a diminishing faith in this method of fundraising.
    The result? The deserving projects sometimes fall short of funds and never make it big, despite their vast potential. Binance understood this problem and created Launchpad as a platform where projects can offer their tokens to the users of the exchange.
    Since Binance vets the projects, coin credibility and investor faith are high.
    And because Binance already has millions of members across the globe, the project has a better chance of receiving the funding it requires. There are still chances of a project not working out or not getting enough funding, but the reason would never be because it was a scam.
    It starts with the Binance team studying community-nominated projects. Only the best projects are chosen from this pool and taken up for further inspection and audit. Once Binance is assured, they get the ball rolling on the IEO.
    It starts with marketing and awareness campaigns. These are followed by the coin offering, where a lottery method is adopted to decide which users receive the coins. Every interested Binance member can add themselves to this lottery.
    This method also ensures equal disbursal of tokens among the community. It prevents whales from buying out most of the tokens, which could spell trouble for the project as well as the minority/retail token holders.
    Till date, Launchpad has raised over 57 million dollars for 23 projects to date with participation from close to 1.5 million unique members. Some of the notable projects that have come out of Binance Launchpad are MATIC, EGLD and WRX.
    How Does Launchpool Work?
    Launchpool is the other fundraising platform on Binance. It is a more recent innovation compared to Launchpad and was launched in early 2020. It follows the principles of De-Fi where, instead of the lottery system, members must stake BUSD, BNB or any other valid token to earn coins of the upcoming project.
    Like Launchpad, there is an equally rigorous process of audit and due diligence that the projects go through before they’re offered on Launchpool.
    Launchpool works like this — users stake their BUSD or BNB and are rewarded with the upcoming projects’ native cryptocurrency. These rewards (referred to as harvest) are updated on an hourly-basis and can be withdrawn at any time.
    To date, the Binance Launchpool has distributed over $85 million in tokens from 17 completed projects, some of which have been multi-baggers in just two years despite the reigning crypto winter. This is quite considerable as investors receive these coins virtually for free.
    Some of the notable projects that have come out of Launchpool are ALICE, ALPHA, REEF & LIT.
    The differences between launchpad & launchpool
    a) Launchpad uses a method of lottery to distribute the tokens of any chosen project. However, Launchpool distributes coins to all users willing to stake their existing tokens.
    b) Launchpad comes with some inherent risk because you’re investing in the project. If the project goes on to fail, your investment will also be lost. Launchpool, on the other hand, comes with no risk as you can un-stake your tokens at any time, and you harvest new coins at zero cost.
    c) With Launchpad, you have a limit that is prescribed by the lottery system to ensure that there are no investors with a majority of tokens. On the Launchpool platform, you are only limited by the amount you wish to stake.
    d) A small difference is also that the tokens received via Launchpad can be traded immediately on the exchange. In contrast, the Launchpool tokens have a differing period before which you can trade them.
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