The best time to discover true gems is often during the presale phase, before the public sale, ICO (Initial Coin Offering), or exchange listing. At this stage, tokens are usually offered at a relatively lower price, giving early investors the chance to accumulate as many as possible in anticipation of a strong run once the project launches.
What is crypto presale?
This is an early investment round in a project cycle, where a project sells its token before they are actually launched on exchanges. They do this to generate money for project development and management.
Interested Investors can buy the tokens with USDT, BNB, USDC, ETH. According to what is stated on the white paper, the presale tokens can either be distributed immediately after the purchase or after project launch. One thing is common, tokens bought during presale are released by vesting. It means that investors can't sell immediately but have to wait till a predetermined time. May span through months or years, depending. A more detailed explanation is below;
Project launch: Developers list their tokens for presale, it can be private or public.
Private presale: this type is only open to a select group of people.
Public presale: it is open to the public
2. Investors buy into the project they find befitting, they pay in line with the conditions of the project team, usually USDT, USDC, BTC and ETH.
3. Token distribution is done immediately after the presale or after project launch. You need to know about these before you invest in any presale. So your expectations are not disappointed
4. When the project launches, presale participants expect the project to launch at a reasonable price. But there lies the risk.
If you catch a good presale project, it's a jackpot.
Entry at low price: presale price is quite lower than launch price.
There is potential for high profit. If the project beats expectations, early investors smile away with high profit
But it's not always that way.
Risks in presale
There's a very high chance the project is a scam. A very high chance. Anybody can create and market a token, the market is untrustworthy.
There are no specific agencies in charge of auditing or checkmating presale, there are no rules.
The vesting period means you cannot withdraw your tokens till its vesting expirations.
There are various cases of project developers running away from their project with investors ‘ funds, after a presale round. In such cases, the project doesn't even make it to daylight, funds gone.
A project may fail to meet their target launch price due to lack of liquidity. When this happens, little to no profit is made.
There are chapters and chapters of risk a presale investor must beware of before investing early into a project, but with due diligence, carefulness and good analysis, these risks are mitigated.
How to analyse a presale token before investing
Whitepaper: if you've been following our articles, the need to study the whitepaper has been emphasized over and over. This is not something to joke with, a whitepaper exposes the seriousness of the project team.
Team: are they even real people?, what are their qualifications? Their former projects and how it's faring/fared? It's tiring but worth it.
Community: a good community is vital for a crypto project to thrive. Check for community strength. When there is little or Jo community activity, even if the coin starts pumping, just know it is orchestrated by few individuals that plan to dump on you.
Roadmap: consider the project roadmap and see if it is in alignment to your investment goals. Check also if they are workng in line with what is written on it.
Audit: many people don't know this but presales are audited—not all. It is better to go for a project audited by a reliable auditing company like CertiK.
Utility: invest in a project that has utility, not just because of hype and green upwards movement, hype will die down and the green will surely reverse, but utility gives it value.
Tokenomics: projects that give their team high percentage of the tokens aren't transparent and are prone to manipulation. A good project divides their shares to favour the community and retail users. Tokens with massive supply and tiny value per coin is a red flag.
Common presale platforms include:
CoinList
DAO Maker
PinkSale, and
Project websites.
In conclusion;
Always DYOR before investing a penny. Don't rely solely on your social media feeds for alphas, research and study on your own, for your own safety. Presale is a good time to invest in a token, but it comes with equal risk. Tokens are sold at a smaller price compared to the main launch price but you can buy a load of tokens at presale and it will become ‘dust’ or empty code letters and numbers in your wallet.
Only click official links to any website, do not click a link sent to the DM if you cannot vouch for the sender.
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