Investment through Private and Public Sales - Crypto Academy / S4W6 - Homework Post for @fredquantum

Hello Professor @fredquantum. It is amazing how the Crypto world is full of opportunity, it is literally the new world full of riches and opportunities for those adventurers who are willing to step out of the conventional patterns of economics. But as in every new world, there are also certain risks.

Let's get started on it!

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1.What can you say about Crypto Investment and how to properly utilize the investment tools available to make the right decisions?

Crypto Investment refers to any practice that aims to take advantage of the cryptocurrency market, which today is very broad. In a general sense, we can define it as all those measures where we inject capital into a crypto project in the hope of receiving a return.

Cryptocurrencies and the projects behind them are like virtual companies where you invest money to receive shares or participation. In this case, the participation or shares come in the form of tokens that gain or lose value depending on the market.

The best way to know how to invest in cryptocurrencies is to know all the tools and all the opportunities that the market presents. For example, the first form of investment is through Holding, in which you get a token and wait for a while (can be years) for the coin to revalue and then sell to make a profit. This is a tool that is very good for investors with large capital and high-risk aversion.

However, Hodl is not the only way to invest in cryptos. There are also the decentralized finance platforms DeFi which offer services such as liquidity pools and yield farms, whereby owning certain tokens and block them on the platform the user is offered a return depending on the risk of the investment.

Here is one of the risks of crypto investments, the risk of losing the investment in most projects is great. For example in ICOs where mainly work with emerging projects. For this reason several of the tools we can use to make a good decision are:

1-Platforms like Coingecko, Coinmarket cap: They are designed to display all the information regarding a project, from the price of the coin, project foundation, developer team, usually always show the link and social networks so that we can verify for ourselves that a project is real.

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If it is not listed on either of these two sites... the project is probably a scam or might not exist.

2-Project web page: On this page, there should be information about the function of a project and its token. It should also contain information from the white paper and the road map.

3-Developer team: Researching this is of the utmost importance, as it is the people who give veracity and support to a project. A cryptocurrency will generally rise or fall depending on the people working to develop it.

_{Cardano Founders. Image taken from: ^Source}

It doesn't matter if you are going to do Holding, or participate in a yield farm or Pre-Sale. It is always necessary to review the people who make up the development team... if they are real people if they are responsible and capable of the development of a project.

2.1 Private Sale in Cryptocurrency.

As we saw in class, it is the first phase of the ICO, and it is essentially the sale of the first tokens of the project to raise capital. It is organized through a private meeting where the developers for the first time unveil the project to a small number of people ... hence the name private.

This sale is not made known on social networks but the invitation is direct between developers and investors.

In this phase, investors are offered many tokens at an offer price, since what is sought is the capital necessary to sustain the project. This sale is made with the promise that when the project is released the tokens will be revalued and investors will be able to not only recoup their investment but also make a profit.

Benefits

1-The token is sold at a much lower price than it will be when it goes to market.

2-If the project turns out as expected, it can produce great profits for the investor since he/she would be buying a token at a very low cost.

3- The attention is personalized. You have the opportunity to meet the developers directly.

Risks

1- At this stage, the project is more vulnerable and constitutes a great risk for investors to never see their investment return.

2- These sales are not regulated by any agency, so in case of a scam or failure to meet the terms of the agreement there are no authorities to turn to.

3- There is no clear time of return on investment, as it depends on how good the following phases are.

4-No liquidity to cash out.

2.2 Presale in Cryptocurrency.

This is the second phase of the ICO where the project is made more openly known to new audiences.

This pre-sale is not published through social networks, but usually through the project's website and the money raised will be used to finish building the cryptocurrency platform.

Again, the token is sold at a bargain price to attract new investors, although not at such a low price as in the private sale.

Benefits

1-The token is again offered at a price lower than the final market price.

2-The pre-sale also constitutes an opportunity for long-term profit.

3- More tokens are offered than in the private sale.

4- The project enjoys a little more solidity.

Risks

1-If the next phase is not good, may not see returns on investment.

2-There is not as much token supply as in the next phase.

3-The project is still relatively unknown, so few things support the project.

4-In this phase you don't get to know the developers as much as in the first phase.

5-Tokens can be locked up for a long time before they can be cashed out.

2.3 Public Sale in Cryptocurrency.

This is the last phase of the ICO in which the project becomes fully public, promoting the sale not only through the website but also through social networks and advertising media.

Even greater fundraising is carried out given the increased participation of people in the sale. With these funds, it is intended to finish shaping the project which at this stage has less risk and in theory, is on its way to being listed on an Exchange.

Some public sales are conducted on Exchange, and it is the same Exchange platform that promotes the cryptocurrency and allows the exchange.

Benefits

1-Lower risk since at this stage the project is more consolidated.

2-More liquidity of the token and more possibility to exchange it.

3-Less uncertainty about the future of the project, since judging by the private sale and pre-sale it is possible to foresee how strong the project will be.

Risks

1-The token would be purchased at a higher price compared to the presale and private sale.

2-There is still volatility in the price of the token, as if it is suddenly sold by the vast majority of upstream investors, the coin could lose value.

3-There may be much less profit than expected.

4-The supply is not unlimited, as it depends on the ICO goal being met.

3. What are the mediums used for Public/Pre/Public Sales in Cryptocurrency?

The means to promote the sale of new cryptocurrency projects depend on the creativity and reach of the developers. However, thanks to their low cost and wide reach, the most used media are:

Websites:

I think that universally it is the most common media, since creating a website is not expensive and gives a kind of formality to the pre-project. Through the website, you can find all kinds of information about the project, such as white paper, road map, contact with the developers, dates, etc.

_{Proteo website. Image taken from: ^Source}

Exchanges:

As I said before, exchanges also offer their service to promote the sales of a new project. Naturally, it is more expensive and demands more requirements to make a public sale through an Exchange, but for investors, it is safer.

_{Poloniex. Image taken from: ^Source}

Social networks:

Various social networking platforms such as Discord and telegram have become very common lately for pre-sales of new tokens and new projects. The positive factor of these mediums is that they are a very inexpensive way for developers to maintain constant communication with investors and the general public.

_{Illuvium Discord channel. Image taken from: ^Source}

Business lunch or other types of social meeting

In my case, I once attended one. It was in a very luxurious hotel in the city where a talk was given about cryptocurrency (I don't remember its name). Although at that time I knew absolutely nothing about cryptocurrencies, today I understand that I was at a private sale, since in total there were about 20 people at that meeting, and it had been the same developers of the project who invited us.

Usually, these types of meetings tend to be very exclusive, and not just anyone is allowed in.

On the other hand, I suppose that if a large company wants to create a blockchain project they could have other means to push their project such as advertising on TV, newspapers, radio, internet, cinema, billboards, etc.

4. Research about any recent (2021) successful ICO or IEO and give detailed information about the project. (Note: BETA token is excluded).

PROTEO

I want to tell you about this DeFi project within the Binance Smart chain blockchain. Proteo has been fully developed in Latin America, specifically in Costa Rica. It is a liquidity currency with which it seeks its users to obtain profits through participation in liquidity pools, yield farms, and staking. (Liquidity Mining)

It is currently in phase 3 of its ICO, i.e. it is in public sale with a value of 1.38 USD per token.

_{Proteo website. Image taken from: ^Source}

Their presale occurred between the first of April and the first of June. I participated in it, where the token was sold at a value of 1.1 USD.

They plan to launch their first platform release by the end of 2021 and the first quarter of 2022, for which they will have a limited supply of 3,000,000 tokens, which will allow them to earn users fixed profits from liquidity pools and additional profits thanks to the demand for the token.

Currently, they have not given information about how much money they have raised, nor is it listed on Cornmarket cap, but we can locate all the information regarding the project on their website: https://proteodefi.com and on BSC scan.

_{Image taken from: ^Source}

It can be found on the DEX pancakeswap whose value on the exchange can be as high as 0.5 USD and is currently in a liquidity pool next to WBNB, which has total liquidity of 652 USD and APR 6.59%. The token is compatible with Trust Wallet and Metamask.

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According to its roadmap, the public sale will be until November 1st, which will be the day of the official launch of the platform and the token. It is in November 2021 that it is planned to be listed on coinmarket cap.

_{Proteo Roadmap. Image taken from: ^Source}

Here we can see more information about Tokenomics and Hodl rate.

_{Proteo Roadmap. Image taken from: ^Source}

_{Proteo Roadmap. Image taken from: ^Source}

5.Create an imaginary token. Write about the project including its use case. Develop an ICO which includes Private sales (3 stages) and Public sales (1). Note that: You are expected to explain what the funds are intended to be used for, your Private sale should have 3 stages, and specify the initial supply available, and the price you are issuing the token in each stage. Also, specify the price you are issuing the token at the Public sale phase (including the supply).

GANDALF

For this part, I will continue the work I once invented for another class about a project called Gandalf, which is a sports betting platform on the Ethereum Blockchain. Its token is an ERC-20 called Galdalfcoin (GDF).

_{Gandalf. Image taken from: ^Source}

Gandalf's mission is to provide a free, decentralized platform where sports betting operations are carried out on a peer-to-peer basis, without the intervention of third parties.

The platform's algorithm will be in charge of matching two customers who upload opposite bets, from a catalog of options that will vary depending on the match or sport selected.

Gandalf will be developed on the Ethereum blockchain and its bets will work through smart contracts, which will ensure that the winning party receives its winnings.

In other words, When uploading a bet a customer will select a sport and match, being able to bet on results, amount of points scored, etc. Each bet will be uploaded separately and matched with other customers on the platform who have uploaded a bet on the same line but with opposite or different outcomes.

ICO

Through certain market research, our development team determined that a total amount of $4 million is needed to fully build the Gandalf platform. The total amount of funding is intended to be raised through a two-part ICO, private sales divided into 3 stages, and a public sale.

A token supply was agreed to be 20 million GDF of which 15% (3 million) will be allocated to the 3 private sales and another 15% (3 million)will be allocated to the public sales. The sales were developed as follows:

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First Private Sale:

The first private sale will be held at the Hilton Hotel in the city, inviting some well-known investors in the field such as athletes, coaches, broadcasters, team owners.

Date: October 30, 2021

Supply: 1,000,000 GDF

Price:0.3 USD

Total raised: 300,000 USD

Use of funds: Payment for developer team, office and IT equipment rent and expenses for the next 3 months.

Then the next two private sales will be conducted with two online bookmakers interested in investing in the project.

___________________________________________

Second Private Sale:

It will be held at the offices of the online bookmaker Bwin.

Date: 15 November 2021.

Supply: 1,000,000 GDF

Price:0.75 USD

Total raised: 750,000 USD

Use of funds: Payment of new equipment, payment of image rights of sports teams and famous athletes. Expansion of the current Gandalf Sports headquarters.

___________________________________________

Third private sale:

It will be held at the offices of the online bookmaker Betcris.net.

Date: 28 November 2021.

Supply: 1,000,000 GDF

Price:0.9 USD

Total raised: 900,000 USD

Use of funds: Payment of requirements for listing on Exchanges, closing of Beta development, and payment of advertising campaign.

During the entire private sales process, a total of 3 million GDF was sold and a total of 1,950,000 USD was raised, almost half of the expected capital to finance the entire project. Due to the great receptivity of the project, we will move to the public sale phase.

___________________________________________

Public sale:

With the money raised in the last private sale, we will start an advertising campaign in sports media, such as ESPN, Fox Sports (now Star channel), etc. It is stipulated that the public sale period will be between January 15, 2022, until March 1, 2022, and the purchase of the token will be made through the Gandalf Sports website.

Date: January 15, 2022 - March 1, 2022.

Supply: 3,000,000 GDF.

Price:1.3 USD.

Total raised: 3,900,000 USD.

Use of funds: Final payment of sports branding requirements as well as the final launch of Gandalf's platform.

I can say that before the deadline the minimum required for funding could be reached, exactly on February 1.

In total 6,000,000 GDF were sold between all sales phases, reaching an amount of 5,850,000 USD of funding.

6. What are the criteria required for listing a token on CoinMarketCap. Is there a criteria for listing an asset on a Centralized Exchange? If Yes, use an exchange for your explanation in response to the question.

CoinMarketCap

To know the listing criteria of Coinmarket cap we can go to the FAQ of the platform and there we can find the Criteria which are the following:

1-Fill out the Online application form.

2-Tracklisting Guidelines. Within which are the following requirements for new tokens:

-Leverage cryptography, consensus algorithms, peer-to-peer technology, smart contracts.

-Have a website and a block explorer.

-Must be exchanged on at least one exchange.

- Have a legal representative through whom Coinmarket cap can be addressed.

3-Evaluation Framework

In this phase coinmkarket cap evaluates the exchange volume of the token, the peers offered, the team, and the community that makes up the project. They actually evaluate the project in general.

4-House Rules Something that caught my attention in the house rules, is that the Coinmarket cap listing is free, and project developers are exhorted not to fall victim to scams or scams.

5-Delist policies It consists of the causes that may cause Coinmarket cap to remove the token from your listing, such as:

-Low liquidity.

-Lying in the information provided to Coinmarket cap.

-That the project is under investigation.

-Low receptivity of the community.

All these requirements were taken from the Coinmarket cap website: https://support.coinmarketcap.com/hc/en-us/articles/360043659351-Listings-Criteria

Centralized Exchange

I will make my explanation through Binance CEX, which like Coinmarket cap also has its requirements for listing a token on its platform: https://www.binance.com/es/my/coin-apply

1-Fill in the basic project information: This section will ask for the project name, token symbol, full token name, and an email address to contact the development team.

_{Image taken from: ^Source}

2- Complete the form with the detailed information of the project.

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The form requests information such as Applicant's name, e-mail address, position within the company, project website, as well as certain disclaimers documents to be attached.

3- Finally the process ends with a confirmation period where Binance will review all the information and documents submitted.

_{Image taken from: ^Source}

If all the requirements established by the exchange are met, then the developer who made the request will be notified via email.

CONCLUSION

Knowing the steps of how a blockchain project is created and understanding the mechanisms used to obtain funding is very important for us as traders as it will help us to detect which projects are good investment opportunities.

We cannot deny that private sales, pre-sales, and public sales are great opportunities to obtain large profits with little capital and in a short time, however, they also constitute a high risk, since we cannot predict the outcome of the project development.

We must remember that above anything we may be told it is important that we do our research before considering an investment. Knowledge is power, not only to make us money but to prevent us from losing it.