How to buy tokens before listing: strategies and tips for investors
Imagine how your life could have changed if you had invested in Bitcoin in 2010? Obviously, being ahead of others at the right time and place in the context of investing in cryptocurrency investments is hugely significant and can bring very good profits.
In the cryptocurrency world, 'listing' literally means the process of adding a new coin or token to an exchange. This is one of the key stages for a project as the cryptocurrency becomes open for buying and selling, with its price being influenced by demand and supply mechanisms, and the level of success of the listing affects the project’s further development.
How listing happens
Typically, the initiators of a listing are the creators of the project, but sometimes trading platforms themselves offer to add an asset if they see demand for the token among traders.
Listing can take place on both centralized exchanges (CEX) and decentralized exchanges (DEX). For a listing on a centralized exchange, token creators need to apply, pass a selection process, and pay a fee, after which the exchange adds the token to its list of trading pairs. Each exchange has its own rules and requirements for adding an asset, and this helps to ensure the reliability of projects on CEX.
On decentralized exchanges, the listing process is different: no one's permission is needed. Any user can create a liquidity pool for a new trading pair, thereby placing the token on the exchange for trading. DEXs do not charge a fee for listing, except for the cost of creating a smart contract. However, due to the lack of stringent requirements, fraudulent tokens are often found on DEXs.
Being listed does not guarantee that a cryptocurrency will remain on the exchange. If a token for some reason stops meeting the standards and requirements of the exchange, it is removed, a process called 'delisting.' Reasons can vary: insufficient liquidity, changes in regulatory policy, violation of usage terms, fraud. Delisting can negatively affect the price of the cryptocurrency and its trading volume.
How to buy tokens before listing
Before we continue, it should be noted that investing in new crypto projects carries risks. Always conduct your own research before making any investment decisions and do not invest more than you are prepared to lose.
Investing in crypto presales
Crypto presales give investors the opportunity to buy tokens before they appear on public exchanges. During the presale process, a digital wallet is connected to the project's website and existing cryptocurrencies are exchanged for new tokens. This helps the project gather funds for marketing and further development, and gives investors the chance to enter the project at an early stage. During the presale, tokens are usually offered at a lower price to stimulate early investments. However, participating in a presale still carries risks, as the project's success and token value are not yet proven.
- Participation in ICOs
An Initial Coin Offering (ICO) is a fundraising process in which new projects sell their base crypto tokens in exchange for other cryptocurrencies. To participate in an ICO, you need to identify potential projects, apply to participate in their ICO, and purchase tokens. It is important to be cautious and attentive, conducting research when considering initial coin offerings, as there is a risk of falling victim to scammers.
- Participation in IEO, IDO, and STO
IEO (Initial Exchange Offerings), IDO (Initial DEX Offerings), and STO (Security Token Offerings) represent different methods of launching tokens:
IEOs are regulated by crypto exchanges. The project benefits from the exchange's existing user base and reputation, while investors gain an added level of trust, knowing that the exchange has vetted the project.
IDOs, similar to IEOs, take place on decentralized exchanges (DEX). This method allows for immediate liquidity and trading, bypassing the need for listing on centralized exchanges.
STOs involve tokens backed by real assets, such as stocks, bonds, or real estate investment trusts (REITs). STOs are designed in compliance with regulatory governance, making them safer and more reliable than ICOs.
- Parachain auctions
Parachain auctions are a unique method of fundraising and slot distribution in blockchain ecosystems, where various projects compete for slots to launch their blockchain linked to the main 'relay chain.' This provides security and interoperability for the winning projects. Funding for these bids often comes from the project's community through a process called 'crowdloan,' where participants can receive rewards in project tokens.
- Airdrop hunting
A great tactic for acquiring a crypto project before its listing is airdrop hunting. To be eligible for free tokens, i.e., airdrops, you need to perform certain tasks or actions, such as providing liquidity, staking, etc.
- Participating in launchpads
Launchpads are platforms where new crypto projects are presented, and funds are gathered before they become available to the wider public. To gain access to these early crypto token sales, you must either stake existing cryptocurrency or purchase the token at a low price. These platforms provide all the important information about the projects they represent to investors, conduct checks to ensure that projects meet certain standards, reducing risk for investors and increasing the project's chances of success.
- Joining whitelists and waitlists
New projects sometimes offer community members the opportunity to join whitelists or waitlists, guaranteeing them early allocation of tokens. Whitelists ensure that those who meet their specific criteria, such as having an invitation, meeting minimum capital requirements, and assisting in promoting the project, have the right to participate in the event. To join a whitelist, you first need to register and undergo verification, and after approval, you can send cryptocurrency from your whitelisted address to the smart contract address. Once the sale ends, you will receive the tokens you purchased."
How to choose which new cryptocurrencies to buy
Here are the key factors to consider before investing your funds:
- Team and Leadership
The foundation of any crypto project is its team. Study their past achievements and reputation. A competent and experienced team can significantly enhance the prospects of the project's success.
- Innovation and Technology
Analyze the innovations and technological foundation of the cryptocurrency initiative. Prefer projects that offer new and valuable contributions.
- Market Viability and Competitive Advantage
Explore whether there is a real need for the product or service it offers? Study its competitive environment to determine if it has any unique advantages.
- Community Engagement and Strategic Partnerships
A high level of community engagement can significantly impact the success of the project and its implementation.
- Economic Model and Token Utility
Analyze the economic structure and utility of the project's token. Understand how the token integrates with the project's ecosystem and its potential for value increase. Evaluate aspects such as token distribution, supply constraints, and its functional role in the project. A well-thought-out economic model is crucial for the long-term success of the project.
- Liquidity
High liquidity indicates an active market, which makes it easier for investors to enter and exit positions. Projects listed on reliable exchanges with significant trading volumes usually offer better liquidity, reducing investment risk.
- Tokenomics
Good tokenomics consists of a balanced mechanism of distribution, supply constraints, and incentives for holders. Look for projects with a clear token distribution strategy that rewards early participants while ensuring long-term viability.
What are the benefits of buying new crypto before listing?
Low initial price and its potential increase. This can bring significant income, as tokens often increase in price after being publicly listed on an exchange, driven by increased demand and project development.
High annual percentage yields. In the early stages of a crypto project, annual percentage yields for staking can be very high. This is done to attract investors and ensure a loyal user base, rewarding them with high returns for their early support.
Access to new features. Early investing can provide exclusive access to new features or services before they are available to the general public. This access not only allows investors to test and benefit from the latest innovations but also strengthens their connection and commitment to the project's success.
Purchase bonuses. Early investment in new crypto tokens is often accompanied by a range of bonuses, from airdrops to purchase discounts or special access rights in the project's ecosystem.
What are the risks of buying new coins at an early stage?
- Lack of liquidity
Yes, you get exclusive access to new cryptocurrencies at a low price, but limited availability means lack of liquidity. Additionally, listings may take significant time before you can withdraw your tokens and realize a profit.
- High volatility
There is no guarantee that the price will indeed increase after listing.
- Fraud
The crypto market has tens of thousands of coins, and tons of new ones are launched every day. Many of these projects may be fraudulent.
Buying tokens before they are listed on exchanges offers not only a unique set of advantages, from the opportunity to discover a promising project to financial benefits, but also many risks, so the decision to buy should only be made after thorough analysis.
