In a bear market where retail investors generally lack investment opportunities, seemingly crude meme coins and BRC-20 have been sought after for their low cost, low threshold and fairer participation methods, becoming the investment targets of retail investors in the near future, creating a new round of wealth effect. In addition, the decentralized financing model IDO invented in the last round has also returned again, and its relatively fair and transparent opportunities and deterministic investment returns have become a sweet cake that retail investors are scrambling for.
This can be seen from the enthusiasm of investors in the IDO recently launched by Cetus, a DEX based on Sui and Aptos. The Cetus IDO launched on May 10 attracted a total of 108 million SUI participants, oversubscribed by more than 950%.
There are two main reasons why Cetus is so popular: on the one hand, the project's solid fundamentals and original product features give it great potential to become a leader in the SUI ecosystem; on the other hand, at a time when the primary market is currently being seized by institutions at high valuations and retail investors lack new opportunities, the transparency and fairness of the IDO model itself can bring certain returns to retail investors.
IDO usually opens a small amount of investment quota to the public at a lower price. Since the tokens are still in the vesting and lock-up period at this stage, there is almost no selling pressure. This means that as long as you grab the IDO investment quota of a popular project, you can get a high return. The necessary condition for participation is to hold eco-coins or platform coins and pledge and lock them on the platform.
Take Cetus as an example. The token sales price of this round of IDO on May 10 was 0.04 SUI. So far, the highest price of Cetus has reached 0.14 US dollars, and the current price is 0.11 US dollars. If IDO investors can successfully sell at the peak, they can get more than 2 times the profit. If they sell at the current market price, they can get about 1.3 times the return on investment.
It can be said that in the current investment environment where market liquidity is almost dried up, if you can grab a quota for an IDO project, it will be a sure win. Of course, it must meet at least two prerequisites: the project is high-quality and popular.
If we start from the above two indicators, then SuiPad, the tier 1 project of Sui, which is an ecological track that gathers the market's enthusiasm, will be a good investment target. As the official IDO Launchpad platform in the Sui ecosystem, it will inevitably play an important role in the future with the development of the Sui ecosystem.
Historical experience tells us that during the highlight moments of each mainstream public chain, participating in the IDO projects launched on their own unique Launchpad can obtain excess returns on investment, especially in the bull market, with returns of up to tens or even hundreds of times, which makes investors earn a lot of money. However, are the cases in the bull market applicable to the bear market? If participating in the IDO of Launchpad cannot guarantee 100% no loss, what risks should be paid attention to when investing? What key indicators should be referred to when participating in the IDO launched by Launchpad? Judging from these indicators, is SuiPad still a target asset worth investing in?
Introduction to IDO
IDO (Initial Decentralized Offering) refers to the first public sale of project tokens. The platform that launches IDO is called Launchpad. Almost every public chain has its own one or more Launchpads.
Usually a project needs start-up capital in the early stage. The Launchpad platform provides investment opportunities to early investors by launching the project's IDO. IDO is usually sold to community users at a lower price. At this time, due to the limitation of the vesting period, the tokens often have a lower market value. Therefore, for investors, as long as they can obtain the investment quota, it means that they are likely to get a good return on investment. As a matching platform connecting "early-stage crypto projects" and "retail investors", the IDO platform allows more start-up projects to obtain financial support in a decentralized manner, while also providing investors with more opportunities to participate in early projects.
As a win-win model, retail investors can get high multiples of return income. For investors, as long as they can get the maximum IDO investment amount, they are very likely to get amazing excess returns, at least at the first TGE (token generation event). For project parties, this can attract early start-up funds, and more importantly, it can attract investors' attention with high-return investment opportunities for a small number of seats, thereby creating market heat.
However, investment strategies that work in a bull market may not work in a bear market, and participating in IDO does not always earn huge returns. So, how do you evaluate IDO investment opportunities in a bear market?
IDO Investment Opportunities
When evaluating the return on investment of Launchpad, you can usually look at two key indicators: "historical highest average return rate" and "current average return on investment".
CryptoRank data shows that over the past year, the average all-time high (ATH) investment returns of various IDO platforms have achieved high returns, up to 12 times.
ATH ROI refers to the maximum return on investment, which is calculated based on the peak price of the token. The above chart shows that the average maximum return on investment of the BSCPad platform is as high as 12 times, which means that if you invest $100 in the token of a first-launch project on the platform, you will earn $1,200.
This means that if investors can grab a small amount of IDO participation quota and sell it within a short period of time after the IDO occurs (if they cannot always sell it at the peak price), they will most likely get a considerable return.
Another role of IDO is price discovery. Opening up investment quotas to a small number of investors at a lower selling price and a high return on investment can bring a lot of attention to the project. In fact, this is trying to create a strong market demand. If operated properly, the market demand is far greater than the supply, which is ultimately reflected in the price - the coin price reaches a peak within a period of time after the IDO.
Data shows that most of the average all-time high (ATH) returns on investment (ROI) occurred a short time after the IDO. For example, the project Bloktopia launched on Seedify.fund, with a public offering price of $0.00025 and a maximum ROI return of 698 times, has been on a rapid rise since its token BLOK was launched through IDO on October 5, 2021, according to coingecko's historical prices, until it reached its peak price on November 1, 2021. In other words, the peak price of the token occurred within a month after the IDO.
Another project called Humans.ai launched the IDO of its token HEART on Polkastarter on December 9, 2021, with an offering price of $0.015. The price of the token began to climb after the IDO and reached an all-time high of $0.263 on December 27. Data shows that the historical high return on investment of the token HEART is 18 times, and the current return on investment is 1.1 times. The peak price of the token also occurred within a month after the IDO.
Looking at historical data, the prices of almost all tokens launched by IDOs follow this trend, that is, they reach their historical peaks within a period of time after the IDO. Considering the above price trend, we believe that participating in IDO is very suitable for short-term investment, that is, selling it within a short period of time after the IDO to obtain a stable return on investment.
However, the average all-time high (ATH) return on investment (ROI) is not the only financial indicator to measure investment efficiency. Although it seems that the average all-time high (ATH) ROI of almost all IDO platforms is high, it does not mean that investors always make a profit. The figure below shows the current return on investment performance of various Launchpads over the past year, among which the current ROI of most (if not all) platforms is negative.
Looking at the top 10 Launchpads by ATH ROI, 8 have an average current ROI below -31%, meaning that if one participated in all IDO transactions on these platforms and held on to today, the loss would be over 31%.
This is because investment returns are often related to two factors: one is the development potential of the project itself, and the other is the price shrinkage caused by the bear market.
This means that if you plan to hold the project's tokens for a long time, you need to consider not only the project's fundamentals and token mechanisms (only in this way can you consider whether you should hold it for a long time from the perspective of value investment), but also macro factors. Otherwise, even if it is a high-quality project, it is possible that you will end up with a tragedy where you wake up one night with nothing.
Is SuiPad a good investment?
As the first IDO Launchpad project officially recognized by the Sui public chain, SuiPad plays the role of an intermediary connecting new projects and early investors in the ecosystem. Its goal is to select the best new projects in the Sui blockchain for users through a unique planning process and industry access standards, while raising funds for early projects.
In the current crypto bear market, even high-quality projects cannot avoid losses. In response to this, SuiPad has made improvements to its product functions, adding an optional insurance mechanism for investors to reduce the investment risks of IDO participants. On the other hand, as the gatekeeper of high-quality projects in the Sui ecosystem, SuiPad's native token will inevitably gain more utility as the number of IDO launches on the platform increases in the future, and will be held and locked by more people. SUIP tokens will also continue to capture value in the process.
Bear-friendly insurance mechanisms
Although the returns of IDOs listed on Launchpad seem to be quite good, they are not 100% risk-free.
Usually, when a new coin is launched on Launchpad, the price of the coin will increase. Based on past experience, there are only a few cases where the price falls below the issue price. If you want to make a profit, you must ensure that the price of the new coin is higher than the subscription price when it is listed. Therefore, if the listing price is lower than the subscription price, you will suffer a loss, which is a price fall.
In the current bear market, the performance of the crypto market is much worse than before. In order to solve this problem and reduce investment risks, SuiPad has designed an insurance mechanism called "SuiPad Shield" to protect users' principal.
That is to say, when users participate in the IDO launched by SuiPad, they can choose to increase their investment funds (note that it is the winning amount) to purchase insurance by 15%, and the fee will then be sent to the Suipad Shield pool to compensate for any potential loss of the user's principal in the next 7 days. On the 7th day after the IDO is launched, if the average maximum price is lower than the IDO price, the SuiPad Shield pool will make up the difference to the user, so the user's principal is protected.
Review and evaluate projects in the form of a reality show
As the official IDO Launchpad of the Sui ecosystem, SuiPad acts as the gatekeeper of the ecosystem, that is, by conducting due diligence on the project parties, it screens out high-quality projects with potential for investors to invest in.
Interestingly, SuiPad has made the review process public and presented it to the audience in the form of a reality show. Specifically, the project founders will use this show to pitch their projects to a jury called Web3 Shark Tank, and the "sharks" composed of 6 professional VCs will evaluate the project from the perspectives of product advantages and business model, and then vote on whether to invest.
Before the show starts, the project party must give the exact amount of money to be raised and the investment amount. If the amount raised by the project party from the sharks is lower than this amount, it means that the fundraising has failed and the amount raised is 0. In other words, after the promotion is completed, the investment amount given by one or more shark reviewers must exceed the amount initially set by the project party. If this minimum amount is not reached, all shark invitations will be invalid.
All competition processes are open to the audience in the form of live broadcast, so it has certain educational significance. By watching the reality show, small and medium-sized retail participants can fully and objectively understand the true situation of the project and eliminate some misunderstandings and prejudices caused by the opacity of most current projects in AMA and other publicity activities.
SuiPad Token Utility
Generally speaking, the operating logic of a typical Launchpad is as follows: users purchase the native tokens of the Launchpad and stake them on the platform for a certain period of time. In return, the stakers can obtain the investment quota of the IDO project initiated on the platform. Each Launchpad has its own specific rating system for allocating token sales quotas among stakeholders. Generally speaking, the more tokens staked, the more IDO allocations you will receive.
Like most Launchpads, the main utility of SuiPad's native token SUIP is to evaluate user loyalty. The user's loyalty level is determined based on the number of platform tokens SUIP pledged and the weighted pledge time, thereby screening out different levels of membership access rights.
That is to say, to obtain a specific level of qualification, users must stake a corresponding number of SUIP tokens for a specific period of time on SuiPad. The more SUIPs a user stakes, the higher the level they get, and the greater the probability of winning the lottery for the allocated quota when participating in the IDO project on the platform. It is worth noting that there will be a 15-day cooling-off period for the tokens after staking.
The higher the membership level of SuiPad, the greater the chance of obtaining investment quotas for scarce projects, and higher membership levels are positively correlated with the number of SUIP tokens and the staking time. In other words, the larger the number of SUIP tokens held and the longer the staking time, the higher the level obtained, and relatively speaking, the greater the probability of winning the platform IDO.
In the overall market environment that is not optimistic, Sui has attracted the most market attention with its solid fundamentals and popular ecological projects. Judging from the number of IDO participants and the amount of financing (estimated), the possibility of Sui's future ecological projects having high liquidity market value is not low. As the only officially designated IDO Launchpad platform in the Sui ecosystem, SuiPad has the power of life and death over the future coin projects in the ecosystem. At the same time, it is also the only entrance for retail investors to invest in Sui ecological projects at a lower cost, which means that as long as there are continuous popular ecological projects in the ecosystem, the market demand for SUIP tokens may be pushed up again and again. In addition, its time-weighted membership level mechanism means lower selling pressure.
SUIP’s economic model and upside potential
According to the token economic model released on the official website, the supply of SuiPad's platform currency SUIP is 100 million, the initial circulation is 20 million, of which 20 million are liquidity supply, the initial market value is 1.03 million US dollars, of which 500,000 US dollars are liquidity supply. The private placement price is 0.035 US dollars, and the public offering price is 0.05 US dollars.
Judging from SUIP’s current market performance, the highest return that investors participating in IDO can obtain is 9.98 times, and the current return is 4.41 times.
Based on the current market value, does SUIP still have room for growth? Below we compare the current market value and maximum market value of several IDO platforms that also rely on the ecosystem to estimate how much room there is for SUIP tokens to rise.
Data shows that the current market value of Polkastarter (token POLS) is 35.44 million US dollars, and the highest market value is 360 million US dollars. The current market value of Avalaunch (token XAVA) is 10 million US dollars, and the highest market value is 360 million US dollars. The current market value of Seedify.fund (token SFUND) is 49.8 million US dollars, and the highest market value is 330 million US dollars. The highest market value of DAO Maker (token DAO) is 420 million US dollars, and the current market value is 240 million US dollars.
It is worth noting that, unlike other IDO platforms, DAO Maker adopts a membership mechanism that is a points system that does not require staking of tokens. Judging from the price history of the platform's token DAO, the historical price of the token has fluctuated greatly.
Based on the current supply of SUIP tokens of 20,696,000 and the market price of 0.2197, it can be calculated that the current market value of SUIP tokens is 4.35 million US dollars. Compared with the current market values of several other similar IDO platforms on the market (including Polkastarter’s current market value of 35.44 million US dollars, Avalaunch’s current market value of 10 million US dollars, Seedify.fund’s current market value of 49.8 million US dollars, and DAO Maker’s current market value of 240 million US dollars), we believe that as the leader in the SUI ecosystem, the price of SuiPad’s native token SUIP still has room for growth.
However, although SuiPad is the only IDO Launchpad platform officially designated by Sui, it does not mean that it is the only IDO Launchpad in the Sui ecosystem. Since the creation of the IDO Launchpad platform does not require permission, a properly operated Launchpad may also become a master of customer acquisition and share the liquidity and market value in the ecosystem. Taking this into consideration, Cetus, another IDO Launchpad based on the Sui ecosystem, may become a competitor of SuiPad and take a share of the Sui ecosystem, making SuiPad's position as the leader in the ecosystem uncertain.
But in any case, considering that the Sui ecosystem has just started, it is an undervalued and low-market-cap potential stock in the current similar track. Therefore, whether as a value investment or as a short-term operation in a bear market, the first IDO, ISO and INO Launchpad project SuiPad built on the Sui public chain is a good investment target.