Binance Launchpad: Toxic, but Smart.

967 reads

@ creampuff Max Cardano Ambassador | Let's build a better Cardano! :)

Photo by SpaceX on Unsplash

The recent relaunch of Binance Launchpad was really successful. After BitTorrent and Fetch.AI, it’s now Celer which is going to run its ICO on the popular exchange. But with the hype around these ICO’s, we may ask ourselves questions like: is this healthy for the market? Is this really a viable system?

Before beginning, a brief explanation of what Binance Launchpad is, should be helpful for some of you. The idea behind Launchpad is to be able to participate in ICOs on Binance in order for you to receive your tokens directly into your Binance wallet. That’s the main advantage for users. Another advantage is that you don’t have to go through all these KYC steps that most ICOs require. A last advantage that’s worth mentioning is that, as an investor, it’s a guarantee that the token will be listed on a major exchange(Binance) and hopefully have a decent volume. But there are also advantages for companies who want to run an ICO. The main advantage of running an ICO on Binance is that you have directly access to thousands of potential investors. On top of that, it gives you automatically credibility and an enormous amount of exposure because everyone knows that it’s incredibly hard to be listed on Binance.

So, why is it toxic?

The reason why it’s toxic is because Binance purposely wants these ICOs to have a low hardcap. The result? Thousands of speculators try to invest in these ICO’s and the proof is that Fetch.AI, the last ICO launched on Binance, reached its hardcap in less than 30 seconds… People invest in these projects not because they believe in it, not because they think it’s a great idea, not because they want to support the project, but because they know it’s going to go up once trading is open on Binance. In other words: it’s pure speculation. You may think it’s good that these projects are hyped, but it’s not. Because once these projects will encounter problems, like every company at one stage does, these tokens will be massively dumped because investors don’t believe in these projects and most of these speculators will lose a lot of money because of that. So it’s a win-win, but only on a short-term perspective. Because on the long-term, these projects will have a bad community because the investors will only be focused on profit, not on the advancements of the project.

But it’s smart?

It’s incredibly smart. The reason why is because it creates an exclusive use case for BNB, Binance’s token. Investors can often only participate in these ICOs with BNB. This creates, every time there is an ICO on Binance, a lot of demand for BNB. On top of that, Binance can attract new customers because, in order to participate in an ICO on Launchpad, you have to have an account on Binance.

At the end, who wins?

Binance, without any hesitation. Most investors, actually speculators, will lose a lot of money. Most projects launched on Binance will have a bad community which will be mainly focused on profit and not on the project in itself. But Binance gains in exposure, credibility, customers, and also from the price rise of BNB. Binance is definitely the winner in this system…

I guess that’s the end of this story, thank you for reading it! :)

Blockchain is the future. (A.I. too)

If you want to read more stories like this one, please follow me on Medium here and on Twitter here.

Goodbye!

Tags