Hey folks, so if you’ve been following crypto twitter over the last couple of days, you’ve probably notice a lot of talk around $SAVM, which did a quick 300x, one of the most successful ICO launches so far in 2024. This means that if you were able to get in on it for just $100 dollars, you might have been able to cash out at around $30,000.
There’s been quite a bit of speculation that this might be the start of a new launchpad narrative — one that we’ve seen during the last two bull cycles, the last being around 2020–2021 when $BTC was hitting its peak.
In today’s article, I want to give some takes that I hope everyone considers — whether you’re going to participate in an IDO yourself, or if you’re considering aping into a newly launched token after it hits the market.
Let’s dive in shall we?
This is perhaps the most obvious point I’ll make, but not only do many projects not generate a 300x, but sometimes you’ll be lucky just to break even. Take a look at some of Avalaunch’s previous ICOs (which is the premier ICO platform for the Avalanche network):
Some of these projects like $SLIME or $SNCT never even were able to break even at their all-time high’s, only producing 16% or 34% of your investment. In other words, for every $100 dollars you put in, you may lose 84 dollars, and that’s assuming that you were able to sell all of your tokens at their all time high.
The majority of ICOs that usually hit platforms are for web3 games, and although I’m a fan of web3 gaming as much as the next person (right now I can’t stop playing Pancake Protector), from what I’ve observed, web3 gaming is in such an experimental phase that it makes it much more risky than an ICO that comes out for something else, such as a DeFi app. I may sound overly critical, but in my opinion, many of the web3 games I’ve seen lately are nothing compared to the likes of games like Diablo or World of Warcraft.
Even though it too isn’t a AAA-game, the biggest exception to this argument might be Axie Infinity which gave ICO participants the opportunity to literally make multiples of 1000x’s on their initial investments. Honestly though, I think much of this was due to Axie being one of the first kids on the block — a novel game that had new and exciting economically-drive mechanics which generated a great deal of mass adoption and hype very quickly. Additionally, although in full transparency I haven’t played the game myself, I’m skeptical as to whether or not people actually played the game because it was fun — the majority were just trying to make money.
Therefore with web3 games you’re actually making two risky bets:
This second bet is perhaps even a more important consideration, especially when the token has an elongated vesting schedule. Speaking of…
Vesting and unlock schedules I believe are factors that all investors (whether you’re an ICO participant or not) should be wary of, but many launchpads may enforce different token unlock schedules, some that span for months if not years. Take a look at this monthly unlock schedule on Seedify (a launchpad primarily based on BSC) for the the token $HeC, the native token for the game Heroes Chained:
As you can see in the graphic above, the vesting schedule for $HeC began in January 2022 and didn’t finish until July 2022. If you look at the token’s price during this same time frame, you’ll see that by the time the last unlock was released, the price was decimated to less than $0.07 cents, which is an a 80% drop from the IDO price of $0.35, let alone a 98% drop from its ATH of $3.30:
Arguably even though Heroes Unchained inevitably turned out to be a big flop, assuming that you dumped your tokens immediately at each unlock, you still would have made a few multiples on your investment.
With the launch of $SAVM, ZachXBT made a brilliant point that all token investors should consider when there’s a lot of hype surrounding any token launch:
Ape Terminal, the launchpad behind $SAVM, has a ticket-based system where allocations can be increased dependent on your social media presence and engagement:
As we’ve covered earlier, more hype = more price appreciation, so I’m not blaming Ape Terminal for doing this as it makes the launch potentially more successful, but investors should be wary that the hype generated may be artificially driven.
Conclusion
Despite everything I’ve said, it’s undeniable that launchpads can be extremely lucrative and that they can give the opportunity for average retailers to invest into projects just like venture capital firms. But similar to any good VC, retailers should try their best to do just as much due diligence investing into projects that are actually worth the risk — not in ones that don’t even have a chance to get off the ground.
Are you invested in any launchpads? Hit me up in the comments below because I’d be interested in checking them out.
And as always, thanks for taking the time to read this and be sure to follow me on twitter (https://twitter.com/CryptosWith) to get all my latest updates. Also, looking for a gift for your Crypto-loving/hating friend? Give them a REKT journal to cheer them up!
Disclaimer: And as a final reminder, this is not financial advice and this is for educational and entertainment purposes only. Please as always, do your own research and find what investments are best for you. Cheers everyone!
