MOONER+0.76%
$0.00462
BTC+0.46%
$17 007
ETH-0.58%
$1259.7
BNB+0.24%
$290.20
Blog|Defi|DeFi Presale: What Is It and How Does It Work?
Published April 24, 2022|6 min read

DeFi Presale: What Is It and How Does It Work?

The term “DeFi presale” means a sale of digital tokens to a limited number of buyers. Usually, tokens are sold at discounted prices during the pre-ICO period. This is a great chance for investors to get a maximum return with minimal investment. It is profitable for projects because the funds collected in this way can be used to complete the work on a startup and to perform marketing activities that will ensure future interest in the token launched.

What Is DeFi Presale?

Let us dwell on the definition to better understand its meaning. DeFi is decentralized finance not regulated by a third party. Its transactions are based on the execution of smart contracts using blockchain technology. This allows achieving the anonymity of DeFi holders and the absence of external influence. Unlike CeFi (centralized system), DeFi relies entirely on encryption algorithms and source codes. So, a DeFi presale is a procedure of performing preliminary deals to purchase digital tokens or new cryptocurrencies that are just entering the market.

How Does It Work?

The DeFi presale process follows a standard algorithm:

First, the team that develops a new token announces the start of pre-sales. This usually happens with the help of specialized sites.

Investors get acquainted with the existing offers, choose the most reliable ones, and buy a certain number of tokens before the main sales stage (ICO) starts.

The token developers receive funds to complete the project and improve their product or token.

Also, the pre-sale provides the team with valuable trading experience. The developers get a chance to work on bugs, fix weaknesses in a marketing campaign, or correct any technical flaws. As a result, the token rises in price by the start of the primary wave of sales, and interest in it continues to grow rapidly, providing the early investors with high returns.

How to Find Upcoming DeFi Presales?

There are several ways to determine when a DeFi presale is about to begin. Let's explore how it works in detail.

Where to Look For?

The creators of a project report on an upcoming sale of coins by themselves. They do this on their social networks and specialized message boards, such as those hosted on CoinMarketCap, Coinscope, and other online resources.

A user can find a list of coins offered for presale, their prices, and other information important for making a purchase decision on such platforms.

Blogs of expert investors can also serve as information about the opportunity to buy coins before they are officially released to the market.

Is It Profitable to Invest at the Presale Stage?

The developers themselves and those who buy coins or tokens before starting the main sales earn the most on cryptocurrency. The benefit is explained by the fact that tokens are sold at reduced prices at the pre-sale stage because the product is not yet actually completed. It's like buying an apartment in a new building at the stage of excavation. The very first owners have to wait until the building base appears and the walls grow, but they will get the apartments at the best price per square meter. Exactly the same principle is used to trading tokens. As soon as a project is completed and ready to appear on the market officially, its cost will increase several times.

However, as in any project with a high return on investment, DeFi presales come with some risks, and we are going to explore both sides of the coin.

Benefits

The pros for investors are the opportunity to earn 10 or more times the amount invested. But, at the same time, the minimum amount accepted for the investment is much lower than in the ICO process.

There are even more bonuses for those who enter the pre-sale of coins:

  • The developers can generate additional funds to work on their startup.
  • Investors can predict the future popularity of the token based on the pre-sale success.
  • The creators of the project receive funds to further promote their product.
  • The liquidity of coins and their real value in the market are formed.
  • Risks

    Investments in new tokens through DeFi presales are as risky as they are profitable:

  • There are no guarantees that a startup will become successful, and a token will gain a foothold and remain on the market for a long time. The reliability of a startup depends on the developing team and the reputation of its leaders.
  • There is no regulatory body and no third-party responsible for the interaction of investors with the funded project.
  • Tokens do not yet have guaranteed liquidity at the pre-sale stage.
  • Some token holders who managed to acquire the assets during the pre-sale start selling coins at the ICO stage. Therefore, if the smart contract conditions do not specify a ban on the token sale for a certain period, the token price may decrease due to the sharp dumping of the assets by many holders.
  • Notable and Successful DeFi Presales

    The best DeFi coins to look out for are as follows:

  • Lucky Block
  • Colony Lab
  • Uniswap
  • Fantom
  • Terra
  • Aave
  • Yearn.finance
  • These and some other DeFi projects are poised to shake the traditional approach to investment and funding, thanks to the fact that their reliability is proven, the community manages the protocols, and the liquidity pools are formed. And yet, when deciding to invest in a particular project, you should be careful while understanding all the risks involved.

    Presale vs. ICO: What Is the Difference?

    A cryptocurrency ICO is an official process of selling tokens that already have some support in the form of liquidity. With a DeFi presale, no one guarantees that a project will turn out to be successful. The success depends on a proper advertising campaign and social media mentions or the quality of the startup funded by such investments.

    At the pre-sale stage, investors get the opportunity to redeem coins at a cheap price. After the official entry into the market, the price becomes higher, and the return on investment decreases.

    So, ICOs incur lower risks thanks to the higher liquidity of tokens, yet they promise lower profit as well. Pre-sales, in turn, provide a chance to earn a lot if the project is successful, while the requirements for investors are minimal.

    Conclusion

    A DeFi presale is a great opportunity to make money. However, the success of this deal depends on your analytical skills multiplied by pure luck. Before investing in a project, find out who stays behind it. You must be as sure as possible that people who are well-versed in this field and have already proven themselves in other successful projects are working on the product. Also, try to invest exactly as much as it would be acceptable to lose. Unfortunately, there are certain risks, and even the most promising projects are not immune to possible failures.

    Frequently Asked Questions

    What Is DeFi Presale?

    A DeFi presale is a sale of tokens before their main release to decentralized markets.

    How to Find Future DeFi Presales?

    Projects available for investment are advertised on specialized sites. Information about them is also shared on official social media pages and websites by influencers, experts, and the authors of the projects. Any information should be double-checked before making financial transactions.

    What Is the Difference Between DeFi Presale and ICO?

    A pre-sale means buying a token before it is completely ready or before a startup can release the final product for which the money is raised. An ICO allows you to buy those tokens that already have a certain pool of liquidity.