I'll admit, I'm a relatively new investor in cryptocurrencies. The first time I heard about Bitcoin was in 2017 and how it crashed and burned. I didn't pay too much attention or did any research into what it was besides that it's an online currency. Fast forward to February 2021, I made my first Bitcoin purchase.
The entire cryptosphere is very big and very confusing to a new comer. There are acronyms and technical language thrown around everywhere. And in my search for an exchange to buy cryptocurrency, I came across Binance, which is one of the largest exchanges in the world with low trading fees. Since then I've DCA (dollar cost average) to buy more Bitcoin.
So I did that for about a month or so until I stumbled across the Launchpad / Launchpool function within Binance. They are similar but not exactly the same, so I will cover that in more detail in another post. Essentially, Launchpad allows users to subscribe to new coin offerings (almost like a new listing of a coin) and Launchpool allows BNB holders to stake their BNB in exchange of some new coin that is not yet listed on Binance. When the listing ended you can see the following:
It was a very confusing process for someone new to crypto so I will write from my experience how this process worked. I won't go into too much detail into how I analysed TKO and decided that I should invest. In my case, the amount that I invested was so small and had an asymmetrical return profile but most importantly I was just curious how this whole thing worked.
Step 1: BNB Holding Calculation Period
The genius of Binance is that they create many use cases for the BNB token. The very first one I discovered was to reduce trading fees by 25% if you paid in BNB and the second is Launchpad. Essentially, in order to buy the Tokocrypto (TKO) coin when it first lists on Binance, Binance has a calculation methodology which calculates your average BNB holding over a 7 day period. I didn't have much BNB at all so I went ahead and got about 3.3 BNB. Because I was a bit late to the party, my average BNB holding was 1.3028 BNB which is then the maximum amount of BNB I can use to buy TKO.
Step 2: Subscription Period
At the end of the calculation period and in between a 4 hour window, you can then put in your subscription amount which is capped at the average BNB holding calculated. If you subscribe your BNB, it doesn't mean you'll end up using the entire amount to purchase TKO, but it helps Binance calculate how many people want to buy and how the TKO sale should be distributed. However, whatever you commit is potentially the maximum that will be deducted to exchange for TKO, so only commit up to what you're comfortable with. In my case, I committed my max, because I did some research in previous Launchpad listings and they all seem to be oversubscribed and hence most likely you won't get the full amount anyway.
Step 3: Calculation Period
Binance then takes some time to calculate how much TKO they can give to everyone that subscribed and how much BNB should be deducted in exchange for TKO. So from my 1.3028 BNB committed, I was allocated a grand total of 0.00233059 BNB to be converted to 9.46 TKO. So about a grand total of.... $1.0
Step 4: Final Token Distribution
The TKO coin then appeared in my spot wallet.
Final Step: Sell TKO
It took a few hours after official listing of TKO to appear on my Binance app. I saw the price jump up to all time highs but couldn't trade! I'll have to note that for next time.
In the end I traded my small bag of 9 TKO (couldn't trade in decimals for some reason...not sure if that's normal update: decimals is dust and can be traded for BNB) for 0.000414 BTC.
So the end result?
Bought 3.3 BNB which allowed me to buy only 0.00233059 BNB worth of TKO
Converted 0.00233059 BNB to 9.46 TKO (about $1.0 worth in fiat)
Converted 9 TKO to 0.000414 BTC (about $30.0 worth in fiat)
Overall Return on Investment: 30x in 1 day
It's not a bad result as I did it due to my curiosity and wanted to learn more about the Launchpad platform. It also shows you the genius of Binance in linking their BNB to coin launch which incentivises users to hold more BNB. Now that I have some BNB, I will also explore other staking / savings / vault options on the Binance platform. I think it's an interesting investment strategy I will explore further, using BNB to earn my first profits which turn is accumulated in BTC for the long hold.
Let me know in the comments below your experience with Binanca Launchpad and previous launches and how those went. Did you keep the tokens or sold out?
Until then, keep stacking.