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By CNBCTV18.com Jul 6, 2022 6:35:47 AM IST (Published)
A launchpool is like a fundraising platform. It allows startups and other early-stage crypto projects to raise funds by inviting investors to deposit their crypto holdings into a capital pool. In return, the investors can earn interest on the amount of crypto they deposit.
Funding is one of the most important factors for developers trying to launch a new crypto project. In the beginning, initial coin offerings (ICOs) were the go-to option for developers looking to raise capital for a project.
However, ICOs soon became synonymous with rug pulls and other scams. A rug pull is when a fake project solicits funds through an ICO and disappears with the gathered capital, figuratively ‘pulling the rug’ from beneath the investor’s feet.
Even when the ICOs were legitimate, they often employed mechanisms that favoured large investors over smaller individuals. Since then, numerous crowdfunding models have cropped up as alternatives to ICOs, and one of them is the launchpool.