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Can the glory of Binance Launchpad, which has dominated for more than 4 years, continue?

2023-10-05 11:00

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Original Title: "Can Binance Launchpad, which has been dominating for more than 4 years, continue to shine?"

Original Source: ChainCatcher

For a long time, investing in new projects has been a popular investment method with high success rates in the investment market. From the US stock market to the Hong Kong stock market, new stock subscriptions have also been recognized by investors and are referred to as "risk-free returns" by some investors. Binance brought this "IPO" model of subscribing to new stocks to the cryptocurrency field and combined it with the exchange's own situation to create the "Launchpad" IEO model.

Since its launch, Binance Launchpad has become the section with the most potential projects that can generate gains of hundreds or even thousands of times. As of September this year, Launchpad has launched a total of 31 cryptocurrency projects, and "seizing the opportunity of Launchpad" has gradually become the goal of users. After all, following smart money has always been a good strategy for investment, and who can be smarter than the largest cryptocurrency exchange? The IEO model has also become the most popular way for users to participate in new projects due to its low risk and low participation threshold.

Nowadays, with the arrival of the bear market and the increasingly dry market liquidity, the Launchpad model with stable returns is becoming a new focus for exchanges to compete for users. Major exchanges have successively launched their own Launchpad products, all hoping to get a share of the pie. However, Binance's LPD product has always been far ahead with high-quality projects and stable wealth creation effects. So, what are the strategic intentions behind its wealth effect that cannot be ignored? ChainCatcher will explore the intentions and challenges behind the Binance Launchpad wealth effect in this bear market, as well as the optimization and improvement of future systems.

机制特点与战略意图

translates to

Mechanism Characteristics and Strategic Intentions

in English.

As we all know, IEO stands for Initial Exchange Offerings, which refers to the behavior of exchanges issuing tokens directly to their users and helping project parties raise funds. Unlike the ICO model, the IEO skips the step of "public offering" to the public in advance and directly trades asset shares on the secondary market.

And all along, Binance Launchpad, as Binance's exclusive token issuance platform, provides Binance users with priority subscription rights to high-quality projects to support the ecosystem of the cryptocurrency industry. Users need to hold a certain amount of BNB to participate in the new subscription. The final distribution of the new coin depends on the ratio of the amount of BNB invested by the user to the total amount of BNB invested by all participating users, and each user's token distribution has a hard cap to ensure fair distribution of Launchpad project tokens among all participants.

However, the intention behind Binance's launch of Launchpad is not limited to providing a convenient platform and market for high-quality new projects by leveraging its own liquidity advantage, achieving mutual benefit and win-win, or simply valuing user experience and wanting to reward users. More importantly, it is a far-reaching strategy to expand its share of the cryptocurrency industry.

1. Achieving User Growth

The idea that 'the product itself creates value, user growth delivers value, and the ultimate goal is value conversion' is a common approach to product growth, and Binance has injected this idea into its Launchpad product. Launchpad creates value for Binance users with its 'no-lose' wealth effect, which has become an important factor in attracting users. As more and more investors begin to pay attention to Launchpad and are willing to try it out, the stable returns of Launchpad have also allowed these users to taste the sweetness.

With the wealth effect of Launchpad beginning to circulate and expand among investors, the external cryptocurrency users naturally chose to invest in Binance with liquidity. Launchpad also completed value conversion while attracting external liquidity, gradually becoming a tool for increasing platform user increment. In addition, while increasing platform trading volume, Launchpad products also increase Binance's market share and consolidate its position as a leading global digital asset exchange.

2. Maintain the price of BNB

From ICO to IEO, exchanges are trying to seek a new balance by introducing "platform coins". Inspired by the IPO in the US stock market, Binance cleverly combines its platform coin "BNB" with the IEO model to balance the relationship between project parties and investors. Users only need to hold a certain amount of BNB to participate in LPD project subscription, and the amount of funds invested (BNB quantity) is linked to the distribution of subscription tokens. This mechanism greatly mobilizes the market purchasing power of BNB, and when the wealth effect of LPD projects is formed, it also brings in a large amount of external liquidity into the BNB market.

Of course, we can also consider the LPD project as another form of empowerment for BNB. Whenever LPD launches a new project, it always causes fluctuations in the BNB market, and most holders value the long-term holding income of BNB. According to data previously disclosed by CAPITALISMLAB (from 21 to April of this year), if the token is sold on the first day, the total return rate of BNB is 36%, and the annualized rate is 14%, even higher than the income of ETH Staking during the same period. This also makes BNB the most valuable cryptocurrency for long-term investment in the hearts of investors after BTC and ETH.

Data source: capitalismlab

And this is especially true during bear markets. Even if the cryptocurrency market value drops to historic lows, according to CoinGecko data, BNB currently ranks fourth in market value, second only to USDT. The stabilizing effect of Launchpad on BNB cannot be underestimated.

Data source: CoinGecko

In summary, supported by the "top" influence of Binance, Launchpad has attracted a large number of internal and external investors to participate. Investors not only hold BNB income but also have the right to participate in IEO, greatly increasing the yield of BNB while maintaining the stability of the BNB market. Launchpad is like a moat for the BNB market in the bear market, stabilizing the currency price while continuously mobilizing liquidity.

3. Increase the right to speak on listing

The birth of Launchpad is a crucial step for Binance to revitalize its platform currency, but it also contains its ambition to master the discourse power of listing. From SFP to GMT to HOOK, Binance LPD products have lived up to expectations every time they launch new projects, promoting high-quality projects and establishing a good reputation of "no loss" between users and project parties, while giving people trust and attention to Binance Launchpad.

\"Going to Binance\" has gradually become the belief and "pump warning" of every holder. Driven by the mentality of seeking profits, more and more investors have started to believe in Binance, which has also become the ultimate destination for various projects. The abundant liquidity advantage, large user base, and enthusiastic market response have all increased Binance's say in listing and brand influence. The emergence of Launchpad has become a home for various new projects.

4. Cultivate user loyalty

In fact, with the development in recent years, Binance has achieved complete leadership in terms of market share, user growth, and even the power of listing new coins. Due to regulatory factors, Binance's current development strategy has gradually shifted from competing for market share to cultivating user loyalty.

Since its inception, Launchpad has been one of the main ways for Binance to share and reward platform dividends with users by providing high-quality projects. It has attracted users' attention and recognition while meeting their interests, thereby enhancing their recognition and loyalty to the exchange. Binance combines the stable income of Launchpad with the long-term holding income of BNB, which not only increases the source of income for BNB holders but also effectively improves user stickiness and cultivates long-term user loyalty to the platform.

In addition, the emergence of Launchpad has also built a more complete digital asset ecosystem for Binance: by introducing high-quality projects through Launchpad to attract new users and feed back old users, and Binance's suite of products provides users with more investment opportunities and channels for project participation, thus continuously expanding the ecosystem, retaining and converting attracted users, while also retaining more old users.

Launchpad Wealth Effect: Where to Go?

According to ChainCatcher's data, there have been a total of 18 IEOs conducted from 2021 to date, with an average first-day increase of 1445% and an average highest increase of 50.24%. Among them, GMT ranks first with a highest increase of 41686%, and GMT can also be said to be the most successful project in Launchpad history.

Note: The data is based on the USDT trading pair, and the first-day increase is calculated based on the UTC+0 closing price. The maximum increase does not take into account the highest price generated by the violent fluctuations within the first hour of listing.

From the above table, we can also see that Launchpad has shining projects in each stage, from wallets, to fan tokens, to decentralized domains and education. However, with the bearish market, shrinking trading volume, and liquidity crisis, Launchpad products are also facing challenges. After achieving the "myth of benefiting", the highest increase in history has slightly declined, although the overall return rate is far higher than the projects before GMT, it seems difficult to reach the height of GMT before.

1. Uncertainty of project quality

In fact, since the launch of Launchpad, Changpeng Zhao has always emphasized that "the core of the IEO model is to find good projects, and the original intention of Launchpad is to help entrepreneurs and promote industry development." However, in the development of Launchpad, we can also see that from the club fan tokens to the "Move to Earn" Web3 application, although they were all new LPD projects at the time, their market performance was still uneven.

Setting aside the factor of the so-called "psychological account" (projects with lower initial prices are more likely to be favored by investors) causing lower initial prices to have generally higher increases, this may be related to the quality of the project itself. From the HOOK incident of "best friends" to the EDU trend in education, there have always been a few voices in the market about Binance's "listing preference", and some users have begun to question the "criteria for new listings" on Launchpad.

However, according to CapitalismLab research, the three tokens launched since HOOK have all performed above average. The median first-day increase of 24.4 times is 1.9 times the historical median, and the maximum historical increase is 1.4 times the historical median. The first-day return rate of BNB is 1.5 times, and the maximum historical return rate of BNB is 1.3 times. This means that these bear market projects are actually more profitable than most bull market projects.

Looking at the entire market, the so-called "girlfriend gate" and other controversies surrounding the listing of coins are largely influenced by the bear market environment, resulting in an overall loss of wealth in the market and a decline in the wealth effect of Launchpad products, which has caused market appearances. The various controversies among investors are also the "inevitable products" of the bear market. As mentioned in a previous public response, Binance does not have phenomena such as "rat warehouses", "relative coins", and so-called "girlfriend coins". Binance still cares about the wealth effect and is currently "performing the best".

"Rumors stop at the wise." As far as the market itself is concerned, how to control the overall quality of listing from the source of the project, adhere to the concept of selecting "good projects" by Binance, and create more positive value for users, is still the direction that Binance Launchpad needs to consider in maintaining the wealth effect during the bear market.

2. Under the bear market background, the "speculative" mentality is magnified

With the continuous launch of Launchpad products, the way in which their prices rise has become more predictable, and careful investors have begun to discover the patterns. This has led to a surge of profit-seekers entering the market. As a result of the fixed thinking generated by the established mode of LPD products, short-term speculative arbitrage has intensified. Similarly, due to the impact of the bear market, investors' patience and trust have begun to decline, and there are fewer and fewer long-term holders.

Users gradually become numb to Launchpad in standard mode. In the eyes of some investors, Launchpad is no longer an incubator for early new projects, but a tool for short-term speculation. Of course, some investors view their returns as "BNB holder financial returns" rather than eagerly anticipating the next "wealth creation myth" of a new coin. When this investor mentality is reflected in the market, it becomes the "unsatisfactory" wealth effect of Launchpad.

However, in fact, in terms of the overall increase and change of the Launchpad project, we can find that projects such as Injective Protocol (INJ) and Polygon (MATIC) have experienced one or several stable periods before they truly exploded in value and created a wealth myth of over 100 times increase, driven by market trends. In other words, there is no "absolute" increase rule in the Binance Launchpad market, and the so-called "speculative mentality" may face greater investment risks. Only the long-term accumulation of wealth through the interaction of investors' DYOR and market environment is a more reliable way of return.

3. Market competition intensifies

There has always been a distinction between "Binance Launchpad" and other IEOs in the IEO field. With the rapid development and intensification of competition in the industry, coupled with the arrival of the bear market and the depletion of liquidity, the Launchpad sector has also become a "must-win" for major exchanges. More and more CEXs are following in Binance's footsteps and adopting this model, and Binance Launchpad is inevitably facing greater challenges. However, in the current market environment, Binance Launchpad is undoubtedly the best investment target when the market is calm, and its market share still ranks first.

Source: https://chainbroker.io/platforms/

From the above, although there is some noise in Binance Launchpad, we can still see that the main reason for its controversy is closely related to the current market environment. As He Yi previously stated, "Listing on Binance is not determined by one person, and we try to take into account the needs of most users in the listing logic." Just like "everything has two sides", Launchpad is also the same. It is not easy to take into account every project party and user in the vast capital market, especially in the bear market. The overly impetuous market environment also increases the market pressure on Launchpad. At present, Launchpad can only try to take into account the needs of most users and project parties.

In fact, many LPD users we interviewed still have high expectations for the wealth effect of Binance Launchpad. The vast majority of users believe that Binance Launchpad's projects are of high quality and potential, and they still have confidence in its wealth effect. They hope to participate in Binance Launchpad to gain benefits and achieve wealth appreciation.

"The wealth effect of Binance Launchpad can be sustained. Basically, the opening price of LPD is usually more than 10 times the cost price, even up to 20 times. Binance Launchpad projects must pass the assessment of Binance Labs, which is undoubtedly one of the top venture capital institutions in the cryptocurrency industry. Their vision is not too bad."

——Ryan

"Binance's leading position remains stable, with a deeply rooted brand image and a strong sense of vision. This means that it still has strong bargaining power for most projects, providing a steady stream of high-quality projects for Launchpad to solidify user loyalty. Therefore, I believe that the wealth effect of Launchpad can continue, even in bear markets."

——Jacob

How to continue to dominate the Launchpad market?

Since a series of black swan events such as FTX occurred last year, the global cryptocurrency market has been facing a shortage of market liquidity. However, Binance Launchpad, with its "top-tier" brand image and stable returns, has still deeply impressed users. In the face of some user doubts and competition from peers, how should Binance respond and continue to dominate the Launchpad market?

In fact, in the long history of traditional investment markets, there have been similar challenges to Binance Launchpad in the process of investing in US stocks, including issues such as "uncertainty of lottery results", "market fluctuations", "intense competition", and "IPO pricing" that also affect the feedback of new stock subscriptions. To solve these challenges, it requires the joint efforts of brokers and investors in the market conditions. Similarly, for Launchpad, it requires the joint efforts of Binance and investors.

1. Education and Training Investors

Referring to the development history of traditional securities firms mentioned above, it is essential to strengthen investor education. Binance has the obligation to provide investors with comprehensive and detailed project whitepapers and related information, regularly release market reports to analyze market trends, evaluate project risks, and provide risk warnings to help investors have a more comprehensive understanding of the project's basic situation. At the same time, Binance should also provide risk management education to investors, enhance their investment capabilities and decision-making levels, further improve the quality of Launchpad from the user level, and thus increase the platform's competitiveness and influence, widening the gap with other competitors.

Actually, Binance has been making efforts to educate and train investors. Currently, Binance has launched Binance Research, which is committed to cutting-edge research in the blockchain field, and regularly releases "project research reports" on the blockchain industry and Binance's listed trading currencies. Based on improving industry transparency, it focuses on solving the problem of information asymmetry between project parties and investors, reducing investment risks for investors, and protecting their investments.

2. Strengthen project selection and screening

Regarding the uncertainty of project quality, Binance can further strengthen the selection and screening of projects to ensure that each project has innovative, potential, and sustainable development characteristics. In the current bear market and the decrease in fund activity, users prefer short-term hotspots. While Binance strengthens the screening of high-quality projects, it should also be more sensitive to market changes and seize short-term opportunities for project exploration.

Regarding the disputes mentioned above with the project party, Binance Launchpad may need to adopt relatively flexible listing rules for projects with high popularity and potential, in order to make the rules more fair and applicable to truly good projects. Because only through truly high-quality projects can Binance Launchpad win more attention and recognition from users and investors.

3. Introduce more flexible subscription methods

In fact, Binance's original intention of "launching Launchpad to promote the development of high-quality cryptocurrency projects and provide investment opportunities for investors" has not changed. However, with the passage of time and changes in the market, the established model of initial coin offerings may not receive as much market response as before. Therefore, "how to rekindle market enthusiasm through a new model" has become a question that Binance Launchpad needs to consider for sustained wealth effects.

Regarding users' feedback that the current Launchpad market is "boring", it is necessary to introduce more flexible subscription methods, such as tiered subscriptions and public auctions, to meet the needs of different investors, increase user participation in projects, and improve the fairness and transparency of the subscription process. In addition, for high-net-worth BNB holders, corresponding priority subscription and exclusive subscription services can also be provided to increase the return rate for long-term holders.

4. Strengthen the project review of Launchpad

Previously, He Yi stated regarding the "rat trading" incident that "Binance monitors the project party's wallet and market-making accounts on Launchpad. Launchpad project tokens currently require multi-party custody of the project party's tokens as part of mutual supervision." In fact, Binance has always maintained a strict attitude towards listing review and regulation, and has been exploring more comprehensive regulatory methods.

Regarding the review of listing, Binance can introduce various audit methods, such as technical review, financial review, compliance review, etc., to comprehensively evaluate the feasibility and risks of the project, and improve the quality and reliability of the project. At the same time, Binance can also learn from the governance model of DeFi, promote the community governance mechanism of the Launchpad platform, and increase the participation and trust of platform users by allowing investors holding platform coins to participate in project decision-making and management.

For Binance, controlling the "quality of project parties" and the "investment threshold" is equivalent to controlling the risks at both ends of "entry and exit". How to "stay true to the original aspiration" and place oneself in an equal position with project parties and investors, while providing high-quality projects and paying close attention to the interests of users, is also something that Binance needs to consider.

Of course, from the above controversies, we can also see that in the face of some noise about Launchpad, Binance may appropriately delegate rights to users, project parties, and the market, listen to all parties' voices, and it is also the key to let Launchpad regain its popularity. Currently, Binance has opened public social channels such as Twitter and Binance Square to better "pool wisdom" in the market and grasp the development pulse of the current encryption field.

Summary

From the financial storm to the subprime crisis, the subscription model of US stocks has survived to this day, which also proves the correctness of its system and wealth effect. Inspired by this, Binance Launchpad will also continue and develop on this basis in the future.

During the bear market, there were cries everywhere, but Binance's market share remained stable in the first place, and the role of Launchpad was undoubtedly significant.

Just like Zhao Changpeng previously stated in an AMA that "the bear market environment has brought more projects seeking help", how to carefully select good projects, while increasing exchange users and trading volume to activate the market, enhance the power of listing and brand influence, expand the ecosystem, and create value for users by providing more investment opportunities, is the direction that Binance Launchpad needs to think about in the long term, and it is also the "only way" to achieve its strategic intentions.

Amidst the liquidity crisis that easily triggers runs and stampedes, Launchpad's strategic focus is gradually shifting from market share to cultivating user loyalty and reputation development. This is a necessary path for enterprise growth to become "century-old" and a top priority for stabilizing the platform market in a bear market. How to better meet user profit expectations has become Launchpad's current development direction.

Currently, Binance has launched Launchpool on the basis of Launchpad, which further increases the annualized return rate of holding BNB for the long term through methods such as "BNB mining, withdrawal, and selling". According to CAPITALISMLAB data (from 2021 to April of this year), the total return rate of BNB is 52%, with an annualized rate of 21%, which is more than twice the yield of ETH Staking during the same period.

In addition, in response to market preferences, user preferences, and platform preferences, Binance Launchpad has also made adjustments to its coin listing. According to statistics from Chainbroker, we can see that recent IEO projects (HOOK, ID, and EDU) rank in the top ten compared to previous projects, with higher quality and average returns.

Source: https://chainbroker.io/platforms/

According to data from the official website of Binance, the Binance Launchpad has raised over $100 million for projects.

As for the current liquidity crisis in the global cryptocurrency market, "the greater the ability, the greater the responsibility". Binance, with its top-notch influence and strong market liquidity, has become a cornerstone in the bear market. Launchpad is also a powerful competitive tool for Binance to expand its market share and increase wealth effect. As the market gradually recovers, the wealth effect of Launchpad may continue and expand, as Binance Launchpad is now more capable than ever of raising funds for excellent projects in the bear market and creating more eye-catching wealth effects.