What Exactly is Pre-Launch Token Trading?

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

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

BUT, it’s an fascinating idea.

In the present day we’re digging into pre-launch token buying and selling.

Right here’s the way it works:

When an organization first declares that their token goes reside on a decentralized trade (DEX), they typically present a portion of tokens to be made accessible for ‘pre-market buying and selling.’

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

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

In one other shoutout to Ms Lebowski, it may very well be stated that in pre-launch token buying and selling there may be nearly no likelihood of attaining ‘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 potential to show $1 into $3000 with this technique, it’s additionally potential 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 most likely is.”