Binance Launchpad

Binance Launchpad is a token sale platform run by the Binance cryptocurrency exchange. Through it, new crypto projects sell a portion of their tokens directly to Binance users, who pay with BNB or other assets, before the tokens are listed for trading on the exchange. This model is known as an initial exchange offering, because the exchange acts as the sales venue and screens the projects that use it.

Launchpad helped make IEOs a popular fundraising method in 2019, after the initial coin offering boom of 2017 had faded amid fraud and regulatory warnings. Binance has since added related programmes, such as Launchpool, in which users stake tokens to farm new tokens, and other airdrop-style formats for holders of BNB. Launchpad sales are not available in every country, and participation usually requires a verified Binance account.

Imagine a popular department store that lets a handful of new brands sell their products to its loyal customers before they appear on the shelves. The store vets the brands, sets up the sale and lets each customer buy only a limited amount. Once the sale ends, the products go on the shelves for everyone, and their price may rise or fall from there.

Binance Launchpad is that early sale for new crypto tokens. Binance picks the projects, sets the rules and decides how much each user can buy, often based on how much BNB they hold. After the sale, the tokens start trading on the exchange. Buying early can bring gains, but prices after listing can also drop well below the sale price.

Binance ran some early token sales in 2017, but Launchpad became prominent when it was relaunched in January 2019 with a sale of BitTorrent (BTT) tokens that raised about $7.2 million in minutes. Further sales quickly followed, including tokens from Fetch.ai, Celer Network and Matic Network, now Polygon. Demand was so high that Binance replaced first-come, first-served sales with a lottery system in 2019 and later moved to a subscription model in which users commit BNB and receive an allocation based on their average holdings. In September 2020 Binance introduced Launchpool, and in later years added further formats for distributing new tokens to BNB holders, so that Launchpad became one of several launch channels rather than the only one.

A typical subscription-style sale runs in stages:

1. Announcement. Binance publishes the project, token price, total amount for sale and rules.
2. Holding period. Users' average BNB balances over several days determine how much they can commit.
3. Subscription. Eligible users commit BNB during a set window.
4. Allocation. If demand exceeds supply, as it usually does, each user receives a share in proportion to their commitment, and unused BNB is returned.
5. Distribution and listing. Tokens are credited to users' accounts and trading opens on the exchange.

Projects normally sell only a small share of their total token supply through Launchpad, with the rest held by the team, investors, ecosystem funds and future rewards. Many of these projects were earlier backed by Binance Labs.

Because allocations depend on BNB holdings, Launchpad and similar programmes give users a reason to hold BNB, and periods of busy launches have coincided with higher demand for the coin. Projects benefit from access to Binance's large user base and from a ready-made listing, which provides immediate liquidity. Launchpad sales have also been criticised for concentrating new tokens among large BNB holders, since those who hold more BNB receive bigger allocations.

Several risks stand out:

• Price after listing. Some tokens have risen far above their sale price after listing, while many others have fallen sharply over time, sometimes after large token unlocks by early investors.
• Low float, high valuation. Selling only a small share of supply can produce a high fully diluted valuation that later weighs on prices.
• Exchange conflicts. The exchange screens, promotes and lists the token, and may also have invested in the project, which raises questions about independence.
• Regulation. Token sales may be treated as securities offerings in some jurisdictions, and Binance restricts access by residents of certain countries.
• Fake sales. Scammers create fake Launchpad pages and social media posts to trick users into sending funds; genuine sales take place only inside the Binance platform.

Participation in any token sale is speculative, and allocations should be treated as high-risk. More on the format appears in token pre-sales and crowdsales.

• Binance