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The financial industry is highly dependent on new technologies and has recently undergone significant changes. Currently, due to the development of blockchain technologies, the cryptocurrency market is now able to compete with banks and stock exchanges. An analogue of traditional financial instruments are decentralized financial systems (DeFi). DeFi has a number of advantages:
Decentralization – DeFi has neither a single structure nor a central management apparatus.
Transparency – every project has an open-source code that can be reviewed by anyone, which provides transparency of workflow.
Availability – the launch of a DeFi project is available for anyone without any permission from banks and regulators. You can also use decentralized financial services, excluding intermediaries.
Currently, there is a huge variety of cryptocurrencies with its own characteristics, advantages and disadvantages. There are 3 main types:
Bitcoin – the first cryptocurrency, is out of categories.
Altcoins are any other cryptocurrencies that operate on their own blockchain (based on the open source BTC code).
Tokens are digital assets that do not have their own blockchain.
Tokens are widely used due to the ease of creation and freedom in choosing parameters. Almost any blockchain has developed special standards for tokens, on the basis of which you can create your own. Tokens are divided into fungible and non-fungible tokens (NFT).
Fungible tokens can be used as a currency that represents access to a service in a particular ecosystem (for example, a commission for the purchase on a marketplace will be charged in platform tokens) or used as a means of exchange for another currency.
Anyone can issue their own token – from an enthusiast to multi-million dollar corporations. But a successful launch requires investors. At this point, project owners seek to enter a large market, where their main task is to ensure the successful implementation of their project. Thus, projects with a well-developed business plan, with a fresh, promising idea, can receive funding through ICO.
ICO (Initial coin offering) is a form of attracting investments in the form of selling a certain number of new units of cryptocurrencies.
Investors get the opportunity to buy tokens of an attractive project at a low price and sell it at an increased rate.
As noted earlier, the process of seeking funding has become available to any user. As a result, a huge number of different kinds of projects have already appeared and continue to appear with similar functionality, but with their own characteristics. And in order to use the functions that are beneficial for the investor, it is necessary to buy tokens of specific projects. Tokens whose ecosystem covers several functions are more versatile, and therefore more in demand and stable.
But how to find a promising project, not miss the ICO stage, and at the same time avoid scammers? For these purposes, special Launchpad platforms are used, which are gaining more and more popularity. The tasks of the Launchpad platform include:
presentation of new projects;
verification of the viability of projects, readiness to enter the market, and assessment of the competence of the development team;
organization of an ICO;
organization of a community that unites investors and developers.
Launchpad platforms as an intermediary between investors and developers. Investors invest in the project token on the launchpad, if the ICO reaches a predetermined amount, the money is transferred to the developers. If the established limit is not collected, then a refund is made. In addition, thanks to checks, investors are guaranteed protection from fraudulent and obviously failed projects.
Launchpad owners benefit by using one of the different ways to implement the logic of the platform. To distribute tokens among investors, most of the well-known launchpads are combined with staking.
Staking – blocking assets (tokens) to receive passive income. The process of staking tokens is similar to a bank deposit at a certain percentage.
Each platform sets its own rules and builds its own unique process, but the general mechanics and trends are as follows. Investors buy launchpad tokens and stake them. The size of the stake (contribution) determines the participants and their allocations for each project.
Allocation – the percentage indicator of the completion of requests for the purchase of tokens at the opening of the sales stage. For example, a 10% allocation means that the user will be able to redeem a maximum of 10% of the total number of tokens offered for sale.
It is important to note that not every successful project at the ICO stage has completed the development or lived up to expectations. The platform administration provides only analytics and does not guarantee the success of investments. Also, the problem with such investments is that the projects in the prevailing majority are based on intellectual work. They have no property or tangible property behind them to provide compensation in case of failure.
The situation is different in the market of non-fungible tokens (NFT).
These tokens are designed to transfer ownership of unique assets to the blockchain, such as works of art, 3-D models, game items, etc.
But, at the current moment, at the legislative level, the NFT does not protect content creators from plagiarism in any way. The issue of NFT plagiarism is exclusively regulated by the NFT marketplace community. It is not possible to physically copy an NFT object, but nothing prevents you from copying the file to which the NFT is linked and creating your own token. The original object in most cases is involved only when creating a token.
The gaming industry is actively using blockchain technology, allowing players to earn in-game assets in the form of NFTs and/or rewards in the developer's own (fungible) cryptocurrency. NFTs provide real ownership of in-game items. Once collected, earned, or purchased, players can move NFT assets from one game to another compatible space, store them in wallets, or transact with other players on the publisher's marketplace or NFT marketplaces.
The situation with combining physical assets with NFTs is a bit more complicated. The prospects are promising – the process of proof of ownership can be implemented in a digital format. For example, the real estate industry uses physical documents of property ownership, and the creation of NFTs of these documents can “move” assets (house or land) to the blockchain. At the moment, regulatory authorities have not yet provided support in this matter, since this way of using NFT requires significant preliminary work at the legal level.
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