Investment through Private and Public Sales - Crypto Academy / S4W6 - Homework Post for @fredquantum.
Hope you are all doing well. Today i am writing homework task for professor @fredquantum which is about Investment through Private and Public Sales.
What can you say about Crypto Investment and how to properly utilize the investment tools available to make the right decisions?
Crypto investment refers to putting capital in crypto with the hope of getting greater payoff in the future from the appreciation of value of that crypto (s). Ever since genesis of crypto world, all the cryptos with sound backing have met with great success in terms of appreciation of process due to multiple factors. For example started from less than a penny to thousands of dollars and so did ETH. So many people find cryptos a viable option to invest in with the hope of generating a good future income.
However, there is no denial of the fact that investments do involve risk of depreciation. So thorough research before investment is mandatory. Moreover, one general principle of investment that holds true for all sort of investment like stocks, equities, commodities, forex etc is that of diversification of portfolio. Diversification involves investment into multiple assets so as to minimise risk in case of depreciation of one or few assets. One more investment strategy that i can recall is "Systematic investment plan (SIP)" which involves investment into an asset at regular intervals to average out the buying price.
Crypto investment tools.
Crypto are highly profitable and innovative investment of 21st century. We know, where there is more risk , there is more profit too. As of now, thousands of cryptocoins exist in the crypto space. It is neither possible nor sane for anyone to invest in all of them as a part of diversification of portfolio but one has to select few of them after thorough research fundamentally and technically. So there are certain tools to ease out journey of investors in this regard.
We have web based tools that hold very vital stastical data about cryptocoins like ranking, marketcap, circulating supply, total supply, all time high, all time low, and much more. Some of the above mentioned tools are Coimmarketcap , Coingecko , Coinbase These tools provide comprehensive data of crypto coins. Moreover, it's not like that every coin gets listed on these websites but cryptocoins have to fulfill some prerequisites to get registered. So in a way , these data bases ease out the job for investors and reduces chances to a great extent in falling prey of scams.
We are familiar with charting platform like tradingview, Metatrader, investing.com etc that provides live market stastics graphically in the form of charts and also allow use of indicators that aid in taking right decisions in the market. Some more technical tools like block explolers and on chain matrics platforms provide more technical details to the investors.
Talk extensively about the following. Also, highlight the benefits and risks associated with each.
I. Private Sale in Cryptocurrency
ii. Presale in Cryptocurrency
iii. Public Sale in Cryptocurrency.
People are so much obsessed with the success of cryptos that new coins are entering the crypto space day in and day out. These coins have to undergo a series of phases before being live publicly and accessible to all for investment or trade. These stages will be discussed below.
Private Sale
Private sale is the first step or foundation step of any crypto project. It is the first stage of ICOs which is carried out by founders or developers of the project after completion of paper work and the most famous being white paper. Fund raising team or developers of the project look for the investors who are interested in investment in ICOs and convince them for participating in this initial phase meant to deliver limited tokens to the investors. As it is a fundraising proces, developers approach institutional investors or venture capital investors or group of individuals combined together for investment purpose and explain the details of the project to them so as to persuade them for investment. This phase also gives investors the chance to interact with the founders and clarify their doubts before actually investing their capital.
Benefits of private sale
Tokens offered to investors are cheaper than cost of tokens during other phases. It is driving force for investors with the purpose of gaining from the forthcoming price hike and mandatory for the founders to persuade investors. so both parties are benefited.
This phase paves way for other phases. As significant investments are made by institutional investors during this phase and that acts as a motivating factor for other investors during subsequent phases to make investments.
Founders and investors are benefitted from mutual experience and networking of each other.
Risks of private sale
Private sale is high risk investment stage as profitability depends upon unpredictable success of project thereafter.
At times some projects turn out to be scams and ruin the whole investments.
Even some successful projects take time to flourish amd give expected results. Investors capital may stuck for long time which inturns could have been utilized for gaining profits else where.
Unequal distribution of tokens as institutions hold large amount of tokens and renders tokens susceptible to prrice manipulation.
Major strata of investors are excluded from participation.
Pre sale
Pre sale is the second phase of ICO in which investors try to reach out to individual investors wirh larger capital, founders of investment groups etc. However, there is no limitation for institutional investors. At times institutional investors who missed the private sale do enter into this phase. Advertisement details about this phase are usually available on the company's website and social media sites of the company or is done via private communication with investors. Tokens are offered on discounted price but that is still slightly higher than that offered in private sale. However, it is slightly less riskier than private sale.
Benefits of presale.
Tokens are offered on discounted rates. So investors have higher chances of benefit in subsequent stages.
Special quota of tokens is provided to investors as tokens are offered to limited investors.
Less riskier than private sale as experienced investors have already taken part earlier.
Risks of presale
Success of project is yet to be achieved. So loss may occur despite getting tokens on discount.
Limited number of tokens at lesser discounted price are offered to investors as compared to private sale.
Investors funds may be stuck because at times projects take time to be adopted massively and to flourish thereby.
Public Sale
Public sale or crowd sale as the name implies involves offering of tokens to the general public, small and large groups of investors. Investors are free to choose as much amount as they want as there is no minimum set token limit. Advertisements are carried out at massive scale involving all modalities available to the project owners.
Benefits of Public Sale.
Tokens are easily accessible for genral public . There is no limit on capital turnover for investors.
Small investors have free will to choose number of tokes as no minimum limit is imposed.
Project owners get a larger user base for their project to interact and persuade for investment.
It also involves significant fundraising as project documents are in public domain and free to be explored by all.
Risk of public sale
it is the least discounted phase , so token prices are higher .
Instituional investors have potential to manipulate price significantly and some less experienced public may fall preyr of FOMO and suffer heavy losses in the dumping phase.
What are the mediums used for Public/Pre/Public Sales in Cryptocurrency?
Mediums refer to means of offering coins to investors. Suppose if anyone of us is willing to purchase BTC, we will visit any of trusted exchanges and get it from there. But during above mentioned stages, cryptos are not listed on exchanges. So what about crypto distribution during these phases. I'll talk of few of the commonly used mediums below .
Official websites : I think official websites of developers are most common means of sale during above stages. Example, 20 million SOLD tokens were presaled during june 2021 on [email protected].
Social media platforms : As socialisation has taken new form in 21st century. Social media caters to large strata of the population. However, chances of scams is also high through this medium.
Public or private meetings : it involves direct interaction between founders and investors. It is more reliable than social media as personal contact is established here. However, it caters to small number of investors.
- Exchange launchpad : It is the most advanced and reliable means of sale of tokens. It is used for public sale . It is more reliable as projects are thoroughly verified by exchanges before listing for sale. It is easily accessible for general public.
Research about any recent (2021) successful ICO or IEO and give detailed information about the project. (Note: BETA token is excluded).
SOLANAX .
Solanax (SOLD) is Solana based AMM (automated market maker) aimed at providing low cost and high speed transactions by using DEX centralised order books. Solanax was live in Aug 2021 and its ICO sale ended in june 2021. ICO sale was carried out on official website of solanax and 20M tokens were sold. Immediately after ICO conclusion, it was listed on coinmarketcap. The tokens were distributed in price range of 0.1 to 0.15 $ . As for current price of SOLANAX is concerned, its price is $0. 22 . It has made all time high of 0.75 $ immediately after ICO and therefore gave 6x to 7x benefit for ICO investors. Solanax had optimistic entry as it was able to gather about $315 M investment from a popular venture capital investors by name of Andreessen Horowitz.
Solanax is based on solana block chain and so follows proof of history algorithm. PoH is known for its scalability , low cost transactions and energy efficiency and so these feathers are inherited by solanax too. Being a Defi platforms it gives token holders opportunity to contribute to the liquidity pool at almost zero fee and earn rewards. Solanax aims to develop a DeFi ecosystem with cross blockchain bridge implementation via Wormhole / Binance Bridge / Solanax aToken Converter Launch.
Solanax (SOLD) has current rank of #3098, and a Market Cap of $2,450,261.78 and a total supply of 80 000 000 tokens . SOLD is listed on Exmarkets exchange with pairs with USDT, SOl, ETH, and BTC.
Create an imaginary token. Write about the project including its use case. Develop an ICO which includes Private sales (3 stages) and Public sales (1). Note that: You are expected to explain what the funds are intended to be used for, your Private sale should have 3 stages, and specify the initial supply available, and the price you are issuing the token in each stage. Also, specify the price you are issuing the token at the Public sale phase (including the supply).
WHC on DzFR3.
The imaginary token that we are talking about in this section is **Wealthy Healthy Coin (WHC) *. WHC is a native coin of the Health Wealth Protocol developed on DzFR3 Blockchain.
This project is aimed to provide hastle free global health care services for all. Project is intended to develop a blockchain based global defi protocol which will be accepted as a means of payment for health care expenses anywhere on globe. Token holders now need not wonder for native currency of any country in world. Moreover, payments made through HWC will be subjected to flat 20% discount on final expenses irrespective of the value of native currency. No standardization of discount rate is proposed as of now.
Our DgX wallet will support Health Wealth blockchain and will allow users to manage their crypto assets by sending, storing and receiving HWC token. Native exchange of HWC coin is OlzWel Exchange. OlzWel is open source , GPL licensed and decentralized exchange and smart contract based automated market maker exchange for HWC. For more details, go to official website (https://healthiswealthdzfr3.com/) and download and read the whitepaper of the project. Since the paper work of the project is complete, ICO will be carried out in 3 phases as detailed below:
HWc will have total supply of 99.90 million tokens and out of that 39.90% will be offered to investors through different phases of ICO sale.
For private sale coins will have discounted price of $ 0.75 and for presale and crowdsale the coins will be offered at $0.85 and $0.95. Offering rate is finalised for private sale only. Prices may vary for other two phases which shall be made public for the participating investors before calling for action. Details of phases are given below
Private sale
Date - 10 NOV 2021
Sale medium- Official website
HWC token price = $0.75
Token Supply = 19% of total
Presale
Date - 14 NOv 2021
Sale medium - Official website
HWC token price = $0.85
Token supply = 10% of total
Public sale
Date - 01 DEC 2021
Medium - Official website
HWC token price $0.95
Token supply = 10% of total
All the details of funds raised and its use and coinsbdistributed as per date and time is available on official website of the project.
The team at work is so much committed to the promotion of health that every aspect of the project is linked to the health. Below is logic behind some of the terminologies and dates choosen.
HWC = Health is wealth coin .
Health wealth protocol.
DzFR3 = Short form of disease free.
DgX = Short form of diagnosis.
OlzWel = All is Well.
10 Nov = World immunisation day.
15 Nov= world diabetes day.
01 Dec= World AIDS Day.
What are the criteria required for listing a token on CoinMarketCap? Is there a criteria for listing an asset on a Centralized Exchange? If Yes, use an exchange for your explanation in response to the question.
I have done some research on this from HERE . Let me try to put it in my own words.Before a coin gets listed, it must meet following criterias :
It must have a well established and integrated blockchain to back up like consensus algorithm, hashing algorithms, P2P network, block exploler etc.
For any coin to flourish in market, we would like to find details about that coin from official website or decentralised application. Isn't it. So these criterias are also sought by coinmarketcap.
As a matter of common understanding, for a token be traded an exchange is must. So coonmarketcap demands a coin to have a good trading volume and that too on one of the exchanges ( atleast) listed on coinmarketcap.
Must have a representative to establish communication with coinmarketcap so that any data needed may be asked for. Also the team at work must be professionally sound.
Must have good user base and significant number of trading pairs. Good user base fosters listing because that signifies the community attention and trust the project has been able to develop. Significant trading pairs facilitate faster adoption of cryptos.
Must be innovative project which is likely to have wider adoption based on its diverse utility and simplicity.
Once a coin meets all these criterias, then the project representatives have to fill an online form that doesn't require any fee for submission with all the necessary details requesting listing of coin on the coinmarketcap. The form must be complete in every aspect to be considered for review. In case of any inadequate information, coins may be added to untracked listings (inactive, untracked, unverified). Application form has to be submitted only once and wait for review and verification by web service provider. Coinmarketcap does not like to be spammed or intimidated by any means. Behave Behave professionally and comply with the terms of service so as to get token added to tracked listing.
Criteria for listing on centralised exchangeexchange -BINANCE
Undoubtedly there is a definite procedure for listing of coins on centralised exchange too. Let's talk about Binance.
An application form complete in all aspects must be filled and submitted on official website of the exchange.
Review of form may take time. Exchanges authorities must not be intimidated in this regard.
Project must have a representative to establish communication with exchange so that any data needed may be asked for.
BNB and BUSD must be used for fund raising.
Token must be available for exchange with BNB or BUSD.
Peoject must be up to date. After acceptance of application, fee has to be submitted. However, listing fee is solely used by Binance for charity.
Project team must be professionally sound. No misconduct at any junction is acceptable.
- in case of rejection of application, project managers cam re-apply after full filling of deficiencies that led to rejection.
Conclusion
Investment in cryptocurrency is an innovative and profitable use case of capital intended to generate income in future. With success of BTC and ETH, the field is becoming obsessive and new coins are launched day in and day out in series of phases . So to choose coins for investment, thorough research into the project must be carried out.