What are Crypto Presales?

Put simply; Crypto Presales create an opportunity for an outfit or new establishment to secure funds by selling coins before their Initial Coin Offering (ICO). When potential investors eventually purchase coins or tokens during a presale, these investors get to receive discounts on the cost of the coins purchased.

The general impression of Crypto Presales is that they present new establishments or startups with the needed funds to get their enterprise up and running while simultaneously providing investors the opportunity to invest in a lucrative outfit from inception.

Why Crypto Presales Matter for Investors

Presale’s matter because that is where a huge amount of upside exists for traders when the coins start trading on public markets. 10x, 100x gains are not unusual in this early stage space of the crypto landscape.

Many presales often have several stages, with the price increasing with each stage. As the price appreciates, it means early investors are more likely to see a return on their investment once the coin becomes tradable on exchanges.

However, it’s also important to note that investing in crypto presales isn’t a guarantee of success. Like all investments, presales come with substantial risk, so it’s wise to weigh the pros and cons before getting involved.

What Returns Can I Make from Presale Crypto?

A key feature of crypto presales is that they offer tokens at a low price to entice investors to get involved. One of the main benefits of this approach is that presale investors can often generate remarkable returns if the related token ends up being listed on a major exchange.

But what level of returns can be expected from a crypto presale? This depends on many factors, such as social media hype, token accessibility, and the current economic conditions. Moreover, returns also depend on the underlying project’s use case(s) – as these help foster token demand, which leads to price increases.

It’s not uncommon for presale investors to generate triple-digit (or even quadruple-digit) returns in the period immediately after a token is first listed on a major exchange. A recent example of this is the crypto-gaming platform Lucky Block, which saw the price of its native token rise by over 4,000% in under three weeks following its first CEX listing.

Many presales often have several stages, with the price increasing with each stage. As the price appreciates, it means early investors are more likely to see a return on their investment once the coin becomes tradable on exchanges.

However, it’s also important to note that investing in crypto presales isn’t a guarantee of success. Like all investments, presales come with substantial risk, so it’s wise to weigh the pros and cons before getting involved.

Crypto Presales vs ICOs

The main differences between a Pre-ICO / Pre-sale and an ICO (in nearly all cases) are as follows:

• Pre-sale are in many cases conducted when the actual technology behind the Tokens is not yet deployed. ICOs are conducted normally at a much later stage when the project is ready for trial.
• Usually the price of a token is lower in a pre-sale than an ICO (i.e. 1 ETH = 3,000 in Pre-sale, 1 ETH = 1,000 in ICO). This is to encourage early adopters and to reward them for their faith.
• The main purpose of a Pre-sale is to create awareness and raise some capital to allow the project to grow. If they hit their target amount, they can use that capital raised for more marketing, more staff and to put into what they are creating.

How Do I Buy Crypto in a Presale?

Investing in crypto presales differs slightly from buying crypto through a broker or exchange. Since presale tokens aren’t listed on exchanges, investors must purchase them directly through the project’s website. Often, the tokens won’t actually have been created yet – since many development teams opt to generate them once the presale concludes.

With that in mind, detailed below are the five steps that investors must take to buy crypto through a presale:

Step 1 – Set Up a Crypto Wallet
Investors must first set up a crypto wallet compatible with the blockchain that the presale crypto is hosted on. For example, if the crypto uses the Ethereum blockchain, then the chosen crypto wallet must be able to hold ERC-20 tokens.

Step 2 – Acquire Digital Currency for Exchange
Each crypto presale will have its own supported digital currencies that investors can use to exchange into the target token. Common examples include ETH, USDT, USDC, and DAI, which are easily obtainable from most brokers and exchanges.

Step 3 – Link Wallet to Presale Platform
The next step is to connect a crypto wallet to the presale platform. As an example, current crypto presale projects like Dash 2 Trade and IMPT enable investors to link their wallets directly through the official website. This makes it relatively easy for beginners to get involved.

Step 4 – Buy Presale Crypto
Once a wallet has been connected, all that’s left to do is purchase some presale crypto tokens. There may be a minimum investment amount, but this will depend on the specific project.

Step 5 – Claim Presale Crypto
As noted earlier, many projects opt to create their tokens after the presale has concluded. Once this occurs, investors can usually claim their purchased tokens through the project’s website.

Presale Crypto vs Buying Crypto on an Exchange

Investing through a presale and buying crypto using an exchange are two very different ways of entering the cryptocurrency market. Let’s take a closer look at each of these approaches and how they differ:

Presale Crypto – Since a presale occurs before a token is publicly listed, investors must buy tokens directly from the project’s website. Although they come with risks, such as the chance that tokens may end up being worthless, presales also offer an exclusive opportunity for investors to acquire tokens at a discount – which can prove lucrative if the token’s value increases in the future.

Buying Crypto on Exchange – On the other hand, buying crypto on an exchange occurs when a token is already publicly listed. Due to this, supply and demand forces will affect the token’s price, meaning there can be substantial price swings.

Both approaches have their merits, although investing through a presale will likely be more appealing to risk-seeking investors. Presales offer a limited-time opportunity to get in at the ground level on a new project, whilst exchanges usually list tokens that have already generated enough momentum to be visible to market participants.

Biggest Crypto Presales to Date

The tremendous crypto market growth over the past few years has created a platform for an abundance of crypto presales to succeed. Here are a few of the most successful crypto presales to date:

Lucky Block – As mentioned earlier, Lucky Block’s presale in early 2022 resulted in presale investors generating quadruple-digit returns. Moreover, the Lucky Block team raised a total of $5.7m in funding through the presale, which helped grow the platform in the months that followed.

NEO – NEO is an innovative blockchain project that had a successful presale phase in late 2015. All told, the project raised over $5m in funding, with investors receiving over 100x returns on their investment in the first few months post-presale.

Ethereum – Although not technically a presale, Ethereum was initially launched through an ICO, which is very similar to a presale. ETH tokens were available to early investors at a price of just $0.31, which led to more than $17m being raised for the project. At the time of writing, ETH tokens are valued at $1,355 – an increase of 436,997% from the original token price.

The Legality of Crypto Presales

Crypto Presales are provided for under securities law. Under securities law, because of the “Simple Agreement For Future Tokens” certification (SAFT), which enlarged the feasibility of engaging in Crypto token sales to outfits even at their startup phase, presales of Initial Coin Offerings are regarded as legal sales.

When engaging in coin sales, companies need to ensure they have their architecture in place concerning their businesses to enable them to issue coins or tokens in alignment with the rights that conform to those outfits.

Then, using the SAFT, those outfits can market securities to willing investors because tokens or coins will be accessible to those who invest as the business is serviceable and the token company rights are acknowledged

Furthermore, it is to be noted that for the sale of SAFT to be regarded as legal, it must be done with strict and diligent compliance with the securities law.

Often this would imply depending on the exemption clause provided by Rule 506 of the securities law regulation for marketing to recognized investors. The company could rely on regulation crowdfunding when an outfit is looking to market tokens to non-accredited investors.

Also note that companies that intend to engage in public offerings may find doing so a bit challenging, especially regarding cost. This is because if a company or corporation is marketing SAFTs, it invariably has minimal business engagements established, making a full disclosure of those engagements impractical.