Iskra: Rethinking the Launchpad
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Disclaimer: Following article was written with the sponsorship of Iskra. This article is intended for general information purposes only and does not constitute legal, business, investment, or tax advice. It should not be used as a basis for making any investment decisions or relied upon for accounting, legal, or tax guidance. References to specific assets or securities are for illustrative purposes only and do not represent recommendations or endorsements. The opinions expressed in this article are those of the author and do not necessarily reflect the views of any affiliated institutions, organizations, or individuals. The opinions reflected herein are subject to change without being updated.
1. About Launchpad
1.1 Overview
Crypto Launchpad is a unique platform that offers investment opportunities in early-stage cryptocurrency projects. Through a combination of crowdfunding and token funding, it makes it relatively easy for early-stage projects to raise funds and awareness for their projects at a fraction of the cost. Meanwhile, investors have the opportunity to discover new projects that are proven and promising, and to purchase their tokens at a low cost through Launchpad.
1.2 Past and Present
The success of Launchpad is highly dependent on market conditions. The number of projects funded through Launchpad and the total amount of funding peaked in late 2021, when market conditions were favorable, and has been steadily declining since then.
If we look at the average return on investment (ROI) of IDO Launchpad platforms over the past year (June 2, 2022 — June 2, 2023), we can see that while some platforms made money, many more lost money. So, it’s already clear that Launchpad is not a quick way to make money.
1.3 The Future of Launchpad
So, has the potential of Launchpad been exhausted? The answer to this question is still unclear. However, the recently launched Iskra Launchpad presents a new model for launchpads that solves some of the common problems faced by existing launchpads. In doing so, it shows that launchpads can still play an important role in the crypto ecosystem. Before we dive into the details of the Iskra Launchpad, let’s take a look at two of the most popular launchpad projects, DAO Maker and Gamestarter, to see how they work.
2. Overview of existing Launchpads
2.1 DAO Maker
DAO Maker is a traditional IDO launchpad project that has hosted 119 IDOs to date, raising a total of $56.87M in funding. Notable projects that have raised funds through DAO Maker include My Neighbor Alice ($ALICE), GameFi ($GAFI), and DeRace ($DERC). DAO Maker’s launchpad is called Strong Holder Offering (SHO), which is divided into public SHO and private SHO.
2.1.1 Public SHOs
Projects that want to run their own token sale through DAO Maker first apply to DAO Maker’s Launchpad, and DAO Maker selects projects through its own screening process. Users will then be able to participate based on the eligibility requirements of the public SHO. DAO Maker’s Public SHO is only open to users who have at least $500 in tokens in their wallet and have followed the project’s Telegram group and Twitter account. The odds of winning a public SHO are determined by the Wallet Asset Score, which represents the total crypto assets held in a wallet connected to the EVM (Ethereum Virtual Machine). This includes Ethereum, Avalanche, BSC, Phantom, Polygon, and more, with new staking contracts included each week to reflect participants who are staking or farming. Users who win SHO will receive their tokens according to the vesting conditions, where tokens are locked for a certain period of time and unlocked sequentially.
2.1.2 Private SHOs
Unlike the public SHO, the private SHO is a launchpad for only $DAO stakers, the token of DAO Maker. To participate in the Private SHO, you must have staked at least 250 $DAO, or the equivalent in DAO/USDC LP tokens. The Private SHO has a tiered system, where the rewards vary based on the amount of $DAO staked. If you unstake $DAO during vesting, you may lose the right to your locked tokens.
2.2 Gamestarter
Gamestarter is a gaming-specific launchpad that has hosted 38 IDOs to date, raising a total of $5.57M in funding. IDOs on Gamestarter start with a VIP round, followed by a private round, and then a public round. To participate in the VIP round, you need to stake a significant amount of $GAME, the private round requires a smaller amount, and the public round is open to everyone. However, if you participate in the public round without staking $GAME, you will pay a fee of 10% of the tokens purchased. This fee is used to purchase and burn $GAME on the market. Winning users in each round will receive their tokens according to the lockup and vesting conditions like DAO Maker.
2.2.1 Protection Protocol
Gamestarter’s unique Protection Protocol is designed to protect community members participating in the Launchpad. This protocol only applies to Private Round participants who staked $GAME and provides refunds in the following situations:
- 100% of the tokens have been listed in the Token Generation Event (TGE) and the token price has dropped by more than 20%.
- A vesting period is set, and the price of the token drops by more than 20% within 7 days of vesting, and the price has not recovered to its initial price within 24 hours.
These features are part of Gamestarter’s commitment to providing the most secure launchpad for its users, and are important measures to keep participants’ investments safe.
3. The Lockup Dilemma, a Fundamental Problem with Launchpads
Current launchpads, including the above projects, share a common problem: the lockup dilemma.
In most launchpads, allocated tokens have a lockup period during which users cannot utilize them. This may not be a big deal if the tokens don’t have much utility, but if they are used for actual gameplay, such as tokens in a game project, this can be a problem. Users who contributed to an IGO for a game project are often the earliest supporters of the project, and not being able to use their tokens for real-world gameplay and having to wait out the entire lockdown period is a very frustrating aspect of the user experience.
That said, it’s also not an option to remove the lockup period, as it’s the most basic measure to prevent users with only speculative intentions. Without a lockup period, many users would be able to allocate tokens cheaply and then sell them immediately, which could hinder the growth of nascent projects.
Therefore, launchpads are currently faced with the lockup dilemma of wanting to get users involved early with tokens allocated through the launchpad, but at the same time maintaining a lockup period.
4. Iskra Launchpad
4.1 Express Tokens
The Iskra Launchpad attempts to solve the lockup dilemma through a mechanism called Express Tokens. This is similar to the principle of staking a token on Lido and receiving the corresponding $stETH. When you are allocated $TOKEN through the Iskra Launchpad, you will receive the equivalent $expTOKEN. Express tokens are tokens that have claims on the vesting contract, and an equal amount of Express tokens must be redeemed to receive the locked tokens. Express tokens cannot be traded with third parties or sold on the market, but they can be utilized for related game content within the Eskra platform. For example, in a social casino game called WOW Casino, the $expWOW you receive for participating in the IGO has a utility equivalent to the native token $WOW in the game. Diamonds, which are required to participate in content within the game, can be purchased with $WOW and $expWOW, and according to the WOW Labs team, exclusive content that can only be participated in with $expWOW will be available in Q3.
In this way, the Iskra Launchpad will maintain a lockup period, while allowing early supporters who join the Launchpad to utilize the utility of the token from day one.
4.2 Vertical Launchpad
Unlike other launchpads, the Iskra Launchpad, powered by the Express token, is more than just a platform for early stage projects to raise funds; it is an end-to-end gaming platform that supports the entire web3 gaming cycle, from IGO (token sale) to post-IGO (gameplay and reward distribution). As shown in the figure below, whereas traditional launchpads are horizontal, with IGOs for various early games, Iskra’s launchpad is vertical, supporting the entire life cycle of a single game.
There are several benefits to having a vertical launchpad: first, by ensuring that the Iskra Launchpad is responsible for the game’s operations beyond the IGO, the incentives of Iskra, the game studio, and the IGO participants are aligned: the success of the game released through the Iskra Launchpad. Secondly, by supporting the game after the IGO, the Launchpad prevents potential rug-pulls (fraudulent schemes that defraud investors in the early stages of a project) and ensures that only teams with a proven track record of launching quality games participate in the Launchpad.
4.3 The Future of Iskra Launchpad
Iskra, the first company in the industry to introduce a vertical launchpad model using the Express token, is taking it a step further by envisioning a hybrid launchpad model, which is a cross-game marketing service that not only covers the Post-IGO of one game, but also the Initial Offering of multiple games. Mixed Launchpad is a model in which the experience of a user who participated in a specific IGO extends beyond the lifecycle of that game, and extends to the lifecycle of other games.
For example, let’s say Game A runs an IGO on Iskra’s Mixed Launchpad, in which case the following can happen
- Game B can airdrop in-game assets or native tokens to Game A’s $expTOKEN holders.
- Game C can use Game A’s $expTOKEN as in-game currency.
- Game D, which is preparing a new IGO, can offer Game A’s $expTOKEN holders various benefits or whitelists for participating in the IGO.
As gamers play multiple games, our interactive platform can provide a more vibrant gaming experience, and as the number of games featured on the Iskra Launchpad grows and becomes more popular, the platform will play an important role in providing gamers with a unique and integrated gaming experience.
5. Conclusion
Iskra Launchpad is more than just a place for early web3 game projects to raise funds, it is an E2E gaming platform that supports the entire gaming cycle. The key mechanism that makes this possible is the Express token, which solves the lock-up dilemma common to traditional launchpads, allowing for a seamless transition from early investors to early gamers. As more projects launch on Iskra Launchpad, we look forward to seeing the transition to cross-game marketing services.
Thanks to Kate for designing the graphics for this article.
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