The Pros and Cons of Investing in Token Presales

Investing in token presales is beneficial for investors as it gives access to tokens at a discounted rate compared to the price they might have once they are widely available to the public; that is to say, once they are listed in exchanges, either decentralized or centralized.

However, as with any investment, there is inherent risk. There are pros and cons you need to consider before investing in token presales.

Why Do People Invest In Token Presales?

People invest in token presales because it is advantageous to acquire tokens prior to them being listed in exchanges, as they can have a lower price.

You also get first access to the community and to the project itself before the hype. This can let you understand the value of the project before the buzz, so you can make a better analysis of how the project’s value might develop over time.

What Are The Main Advantages Of Investing In Token Presales?

You can get tokens cheaper compared to when they are listed on official exchanges. You also get a better sense of the community and the value of the project. And last but not least, you get first-hand experience of connecting with the community and the project itself.

Can You Get Tokens At A Lower Price During A Presale?

Most of the time, yes. Tokens tend to have a lower value during presales before the price can be traced in the market.

Do Presales Offer Early Access to Promising Projects?

Yes. Accessing presales is a great way of knowing projects before they are widely available to the public. Being part of a presale means having privileged access.

Now, whether the project is promising or not will depend on your own research and the type of presale you join. You could be joining an ICO, an IEO, or an IDO:

• ICOs: The team lists tokens directly on their own website. These usually carry higher risks.
• IEOs: Tokens launched through a centralized exchange, which requires prior funding.
• IDOs: Tokens launched in a decentralized way, through smart contracts, and usually with the help of a launchpad.

At CoinTerminal, we recommend IDO launchpads. With IDOs, everything is handled on-chain and can be tracked transparently. Launchpads are platforms created especially for launching projects.

CoinTerminal is the first open-access launchpad. You can directly invest in any of our projects, and many have already gone on to centralized exchanges. This is a huge milestone for Web3 startups, as it shows that the value can be sustained over time.

We are not only a launchpad, which is the Web3 equivalent of a startup incubator, but also a funding platform and accelerator. That means we don’t just help projects do a successful launch. Our goal is that projects can sustain value over time, and we support them even after launch.

What Are The Disadvantages Of Investing In Token Presales?

Actually, there are not disadvantages of investing in presales. Rather, there are risks, and these risks are inherent to investing.

When it comes to token presales, there are three main types of risks:

• User risks: Using the wrong wallet, sending funds on the wrong blockchain, or losing tokens because transactions are not handled properly.
• Platform risks: Smart contracts without audits, potential hacks, or in the case of ICOs, even higher risks since they are run directly by teams.
• Market risks: Low liquidity and high volatility, as these tokens belong to early-stage projects. You need to see how value will be sustained over time.

What Should You Research Before Joining A Token Presale?

First, research the platform you’re going to use to invest. Make sure it is trustworthy. (We have a blog on how to choose a legitimate launchpad if that’s what you want to use.)

Second, research the project itself. Look at the tokenomics: the vesting schedules, how tokens are allocated, and how the project plans to sustain value over time. Then ask yourself: does this make sense for me as an investor?

Final Thoughts

Investing in early-stage crypto projects can be very rewarding because they can offer a higher return on investment compared to traditional finance tools like U.S. Treasury bonds.

However, as with any investment, there is inherent risk. That’s why it’s important to do your own research and step into Web3 prepared.

At CoinTerminal, we offer IDOs with refundable sales and no staking requirements. If you want to explore presales, don’t hesitate to browse our active sales. And if you have questions, just send us a message through Telegram, our team is ready to answer and guide you.