What Exactly is Pre-Launch Token Trading?

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What if we informed you there was a option to make investments $1 and get $3000 in return?

The clever phrases of Seb’s 1st 12 months uni economics trainer, Ms Lebowski, begin to ring: “sounds too good to be true? It in all probability is.”

BUT, it’s an fascinating idea.

At present we’re digging into pre-launch token buying and selling.

Right here’s the way it works:

When an organization first proclaims that their token goes stay on a decentralized trade (DEX), they usually present a portion of tokens to be made out there for ‘pre-market buying and selling.’

The thought being that tremendous eager beans can snatch up tokens at a low worth, offering liquidity to the market, which might then be used for post-launch token buying and selling.

The issue is, when you’re one of many first to place cash right into a token, there’s actually no benchmark for what a ‘truthful’ market worth is so the worth might be wildly unstable.

In one other shoutout to Ms Lebowski, it might be stated that in pre-launch token buying and selling there may be nearly no probability of reaching ‘equilibrium.’

(Not sufficient provide, or sufficient demand).

Which is strictly what occurred to cryptocurrencies like Wormhole’s (W) token which noticed a 3,000% improve in worth pre-launch, in comparison with round 100% one week after the coin was launched.

So, whereas it’s technically doable to show $1 into $3000 with this technique, it’s additionally doable that if the crypto undertaking is a flop, your $1 may turn out to be $0.

(And lets face it, we’re all human, possibilities of investing simply $1 in one thing like this are slim).

Watch out on the market and any time you hear of those alternatives let Ms Lebowski’s phrases ring in your ears:

“Sounds too good to be true? It in all probability is.”