MAV IEO has another group of losers. Recently, there have been more and more cases of people rushing to Binance Launchpad/Launchpool and ending up losing money.

Although there has been a recent surge, many people have not yet successfully recovered their investment.

This article will help you understand the basic valuation logic of various projects, so you can avoid blindly rushing to buy at the highest point. It will also review and compare the historical performance of Launchpool and Launchpad, and comment on the similarities and differences between these two sectors and their speculative postures.

A. Valuation Logic

If it is not a "meaningless governance token" or memecoin, theoretically it is possible to make a unified comparison on a large scale by giving rights to token holders. However, cryptocurrency is an attention game after all, and the so-called fundamentals are too small in the face of narrative, so valuations are generally based on benchmarking among similar projects.

For example, MAV belongs to the DEX track in the DeFi category. The general indicators of DeFi are the more commonly used TVL for evaluating scale, and the less commonly used total fee income and protocol income for evaluating the ability to make money. Specifically for DEX, there is an additional indicator of transaction volume Vol to evaluate the scale of the business.

As for the token itself, there are two indicators: current market value mcap and full circulation market value FDV, which correspond to short-term and long-term liquidity respectively.

Please refer to the valuation benchmarking chart made by @BiteyeCN, which uses TVL or fee income as business evaluation indicators and gives valuation opinions under mcap/FDV respectively.

Of course, there are often some tricks behind the data. For example, the problem with using more than one week’s transaction fee to evaluate MAV is that MAV is openly airdropped + listed on Binance, so there is naturally no shortage of people who come to increase the transaction volume, which is naturally inflated.

It is also a good idea to use more detailed logic and common sense to judge. A price of MAV $0.5+ will cause its FDV to be close to Pancake. No matter how close MAV is to Binance, it is not as close as Cake, so it is not realistic to expect the price to exceed $0.5 with the support of Binance.

DEX Hashflow, which was also launched through Binance launchpool, currently has an FDV of around 400M, and the corresponding MAV price is less than $0.2.

So if someone really wants to buy with the belief in Binance’s vision, $0.5 is obviously far beyond the range that the launchpool can support. The current market price of around 0.45 is already a relatively high position.

DeFi projects are more application-oriented and have a certain ability to make money, so they are relatively easy to evaluate. However, the important user activity data of public chain projects are basically swiped by the wool party, and the reference value is low, and only the TVL data is barely worth looking at. Therefore, compared with data, public chains seem to pay more attention to background, which is also one of the reasons why VC is so popular in this field. Anyway, it seems that it is easy to give 10B to those with good backgrounds.

Please refer to our valuation of ARB back then. We gave a valuation of 2 times OP FDV based on TVL and ecology. However, after ARB was issued, the price difference was very large and we were slapped in the face. Instead, after such a period of time, as the price of OP continued to fall, ARB successfully achieved 2 times OP FDV.

As for projects like EDU/HOOK that have no well-known projects in the same track and are born to be the leaders in the track, there is basically no way to benchmark them and it all depends on imagination. The advantage is that the upper limit is the limit of imagination, and the lower limit is zero for everyone anyway.

B. FDV is not just a number

FDV = Total Token Circulation ✖️Coin Price

When evaluating projects, people often prefer to use market capitalization (mcap) rather than FDV for comparison. However, this is mostly because the circulation of new projects with higher popularity is lower, so using mcap for comparison is advantageous. But FDV is by no means just a number.

Take SUI as an example. It was jointly held by OKX/Bybit/Bitget for IEO, and at the last minute, 40M tokens were given to Binance Launchpool for free to avoid repeating the mistakes of Blur. The price has been falling since the opening.

Recently, it was revealed that the project team was secretly unlocking and selling coins in advance, and they also claimed that they were flexible tokenomics. This is the painful process of MCAP gradually approaching FDV, and the increase will turn into selling pressure.

However, even if SUI follows the token unlocking plan, its growth rate will be very fast. Benchmarking and short-term speculation have allowed SUI to have 10B+ FDV at the opening. At this time, mcap<1B can barely be supported by market enthusiasm. However, in the long term, when there is no improvement in fundamentals, it is natural that the price will drop in the process of 10B FDV slowly converting into mcap.

C. Launchpool & Launchpad Differences and Speculation

Many people call MAV the XX Launchpad project, but it is actually a Launchpool project. What is the difference between Launchpool and Launchpad projects? Launchpool is free, while Launchpad requires BNB holders to pay for it, which implies Binance’s attitude towards it.

Especially for projects that are first launched through Binance, it can be said that the implicit support of the Launchpad project is a level stronger than that of Launchpool.

We have previously discussed Launchpad’s overall return data as shown in the tweet below.

This time we will analyze the following from the perspective of the users who rush to open the market.

The opening price (average price on the first day), the historical highest price (closing price) and the corresponding FDV, as well as the ROI of buying at the opening and selling at the ATH.

The left picture shows Launchpool data, and the right picture shows Launchpad data. Focus on the median in the last row.

Judging from historical data, the performance of previous Launchpool projects was far inferior to that of Launchpad projects.

Assuming you buy at the average price on the first day and sell at ATH, the median return rate for Launchpad is 2.9 times, while for Launchpool it is only 1.9 times

In addition, there are two projects on Launchpool that peaked at the beginning of trading, and people who bought them have been stuck until now, while Launchpad has not seen this situation yet (of course, the average price on the first day of trading is convenient for horizontal comparison, but it cannot reflect the whole picture. EDU is currently bought on the opening day and is likely to be stuck)

As for the reason, we can observe that in terms of FDV ATH, Launchpad and Launchpool are actually close, both around 1.9B.

However, the first-day median FDV of Launchpool is 780M, which is much higher than that of Launchpad at 460M.

This is mainly due to the liquidity problem of Launchpool. Launchpad generally gives about 5% of the shares, while Launchpool is a free token giveaway.

Usually it is given less, usually less than 2%.

Although the opening price of Launchpool is artificially high, since most BNB holders sell directly at the opening, the higher the opening price, the more beneficial it is for BNB holders, so Binance naturally has no motivation to distinguish this point.

For investors, the long-term gaming value of Launchpool is obviously lower than that of Launchpad, so it is even more important to do a good job in Launchpool projects.

Valuation analysis and more conservative preparation are required. It is easy to get stuck if you rush in without thinking and hold for a long time.

If you are too lazy to do valuation, you can refer to the median first-day FDV of Launchpad 460M. Once the opening FDV of a Launchpool application project exceeds this value, the probability of subsequent high returns is actually not very high.

Summarize

Using similar projects as benchmarks is the most common valuation method. The performance of Launchpool projects is not as good as that of Launchpad. The price of coins is often artificially high due to liquidity issues, so we need to be more cautious. There are a few Launchpool projects that have been trapped at the peak since the opening, but there are basically no Launchpad projects that have been completely trapped.