IDO Launchpad 101: Formula of a Good Launchpad
Eric Hung Nguyen shared his idea of a holistic way to examine the crypto launchpad’s performance, offering a more thorough and advance-mathematically-required insight. The latter of this piece will present a report on the top 10 launchpad performance.
IDO (Initial Decentralized Offering), the first time that a project’s token is sold to the public, has experienced tremendous hype in the primitive days of the crypto industry. Back then, an investor’s job was to get the most significant bite possible out of the allocation pool, and be almost guaranteed a killer return — at least at the first TGE (Token Generation Event). To serve the high demand of investors, the number of launchpads grows exponentially with an attractive offer for people to become a token staker and earn IDO allocation in return.
Soon enough, the market needs to do its job of correction. In other words, investors could no longer throw money blindly to any IDO and be secured 20–50–100 times profit. They now need to be more strategic and carefully scrutinize the long-term prospect of the crypto launchpad, choosing among hundreds out there to participate.
With this in mind, these are three key metrics that reveal a holistic picture of every launchpad:
1. Launchpad ROI:
“When evaluating a launchpad, the most apparent parameters are the All-Time-High average return (ATH trading price/ IDO price) and current average Return-Of-Investment (Current trading price/ IDO price)” — quote me from the most recent article. (If you haven’t heard about it, you probably can check it out here)
Figure 1. Average ROI of top 10 launchpads calculated by the number of launches
As you can see from the chart, half of the top 10 launchpads experience an average price lower than the IDO price, only 1–2 months after the project launch. Honestly speaking, ATH ROI can hardly help examine the performance of a project/launchpad since a minimal number of investors can capture the peak. Therefore, when examining a project’s performance, I personally focus more on the statistics of current ROI.
General practice usually calculates launchpad average ROI by dividing by the number of launches, like the above chart I presented. However, a more accurate examining method is to use the weighted average allocation.
To illustrate the math, imagine a launchpad introducing 2 IDOs:
- Project A: $100,000 allocation, ATH ROI 20x, current ROI 10x
- Project B: $10,000 allocation, ATH ROI 1x, current ROI 0.2x
If calculate the average ROI by the number of launches :
- ATH ROI = (20 + 1) ÷ 2 = 10.5x
- Current ROI = (10 + 0.2) ÷ 2 = 5.1x
Meanwhile, this is how the average ROI of launchpad look like if you take into account the allocation size of each launch:
Total allocation = 10,000 + 100,000 = 110,000
=> Pool A = 100.000/ 110,000 = 90.9%
=> Pool B = 10,000/ 110,000 = 9.1%
ATH ROI = 90.9% x 20 + 9.1% x 1 = 19.83x
Current ROI = 90.9% x 10 + 9.1% x 0.2 = 9.25x
The number changed drastically using the two different methods. It’s not the launchpad offering a good project that matters, but one offering a good project with a big allocation pool does.
Figure 2. Average ROI of top 10 launchpads calculated by weighted average allocation of launches
To attract stakers, each launchpad comes up with its own tier system to distribute the allocation of the token sales amongst stakers. They can have their tweak, but generally, the more you stake, the more IDO allocation you can participate in. Besides, keep in mind that the more IDO participants, the less allocation you can have. It requires a particular formula and methodology to calculate each launchpad’s allocation staker, which you can find mine in the latter part of this article.
3. Staking cost:
It’s the investment to buy the launchpad’s token in order to be a tiered staker. This cost varies depending on when you buy the token. For example, if you want to be a VIP 5 staker of Spores Network launchpad, it takes $9,700 when I wrote this piece, 20 May 2022. Clear and straightforward, but many investors may forget to include it when calculating the total investment ROI.
In summary, launchpad ROI, allocation, and staking cost are three elements that any IDO investor must be aware of as they greatly contribute to the investment result.
Top 10 Launchpad Relative ROI Performance Research
Taking these three key metrics into account, our team has compiled research to find out the expected ROI per cost of staking of the top 10 launchpads. The thesis is that each staker invests $100,000 (including staking cost and money spent for allocation) in the launchpad’s IDOs, the data has been taken from 8 March 2022 to 20 May 2022. For more details on the research methodology, please view here.
As seen in the chart, Spores Network ranks top 2 with an expected ROI per cost of staking around 92.43%, which means that the net revenue of a $100,000 investor is $192,430. The secret recipe of this performance is we understand and follow the three key elements of bringing the most to our stakers:
- We conduct thorough research and strict due diligence before accepting a project to IDO on Spores launchpad in order to secure decent ROI performance. (if just look at the current ROI, Spores rank at top 3 performance)
- Given the amount of allocation we get for our community, the relative amount of allocation per cost of staking of Spores is highly competitive.
- The Spores tier system is designed to benefit our customers with low barrier entry, but significant allocation can be accessed.
Disclaimer: The content is not investment advice and does not constitute any offer or solicitation to offer or recommendation of any investment product. It is for general purposes only and does not take into account your individual needs, investment objectives and specific financial circumstances. Investment involves risk.
About the author: Eric Hung Nguyen is the co-founder and CEO of Spores Network, established in 2021, and now operates as a multi-function blockchain company in Launchpad, Incubator, GameFi/ Metaverse Publisher, and Venture Capital. The company currently incubates and owns several games and metaverse studios, with a diversified investment portfolio of over 30 web-3 start-ups in GameFi, metaverse, infrastructure, DeFi, and entertainment.
He started his career as a trader and hedge fund manager at Nomura and Elliott Management — one of the world’s largest hedge funds, before exploring the potential of blockchain in 2017. Eric strongly believes that blockchain will greatly transform human society through borderless integration of our digital and physical lives, decentralization of ownership, and the redistribution of wealth.