How Does a Crypto Presale Work?

How Do Crypto Presales Work?

Crypto presales work by allowing investors to buy a token at a discounted rate before its official launch. 

These sales typically take place on a project’s website or through an official ‘launchpad’ platform.

To buy a crypto presale before listing, you connect your wallet to the platform and place an order directly.

Cryptocurrency presales operate in two stages: private sales and public presales. 

Each stage of a crypto presale targets specific investors. Private sales generally are for investors with larger capital, while public presales are open to anyone. 

These sales allow developers to raise capital while offering investors early access to buy tokens at lower prices than may be available on the open market later.

For example, in 2014, the Ethereum presale raised over $18 million in just 42 days 1 nonfungible.com https://nonfungible.com/academy/blockchain/ethereum-history . Today, Ethereum is the second-largest cryptocurrency in the world. 

Stages of a crypto presale

1. Seed Funding and Initial Stages

The first phase of a crypto presale involves seed funding.

This is where developers raise and secure capital to develop and build their projects. 

During this stage:

• The core development team forms. This is when the team behind a project gets to work and lay’s the groundwork. It focuses on things like blockchain architecture and tokenomics. 
• Private investors step in. Angel investors, venture capitalists, or crypto funds are offered the ability to invest in the project. Private investors often receive tokens at a very discounted rate. 

2. Blockchain and Smart Contract Development

When initial funding has been secured, the project can begin focusing on the blockchain and deploying smart contracts. 

These contracts automate distribution during the presale phase. 

This stage includes:

• Contract auditing. Contracts are audited to ensure they are secure and free from bugs or other issues.
• Establishing the tokenomics. This is when details of the token are determined, such as supply, pricing, and vesting periods. 

3. Pre-Public Presale (Private Round)

At this stage, the project typically holds a private presale, often limited to a select group of investors.

These investors may include early supporters, strategic partners, or crypto insiders who bring more than just capital – for example, they often add value through their contacts, or marketing expertise.

During this stage:

• Early backers are offered exclusive rewards. Tokens are sold at a significant discount compared to the public sale price.
• Strategic alliances are built. Partnerships with industry players, influencers, or advisors are often formed to build credibility and generate buzz.
• Marketing plans develop. The project begins creating a roadmap for its marketing and PR campaigns to attract attention to its upcoming public presale or launch.

4. Public Presale

Once the private presale has raised enough capital and the project has gained traction, it moves into the public presale.

This is the phase where anyone – retail investors included – can participate.

At this stage:

• The token pricing is set. Tokens are typically sold at a slightly discounted rate compared to their anticipated launch price.
• Token availability is limited. The number of tokens available for the public presale is capped, creating a sense of urgency and scarcity.
• The project may launch on a third-party platform. Crypto presale platforms like launchpads (e.g., Binance Launchpad or Polkastarter) or decentralized exchanges (DEXs) can be used to facilitate the presale.

5. Community Building and Marketing Campaigns

As the public presale progresses, the focus shifts heavily toward community building and creating a strong online presence.

The goal is to drive presale activity, but also to build trust and anticipation for the token launch.

Activities during this stage include:

• Social media campaigns. Active engagement on platforms like Twitter, Telegram, Discord, and Reddit to attract a wide audience.
• Educational content production. Informational posts, whitepapers, and webinars help potential investors understand the project and its goals.
• Incentive programs. Some projects introduce referral programs, giveaways, or airdrops to drive further interest and investment.

6. Token Generation Event (TGE)

This is the official launch of the token. It’s a critical stage where tokens are minted and distributed to investors.

Depending on the tokenomics plan, tokens may be released in full or vested over time.

At this stage:

• Presale tokens are distributed. Investors who participated in the presale receive their tokens, usually directly to their wallets.
• The token is listed on exchanges. Tokens are listed on centralized exchanges (CEXs) or decentralized exchanges (DEXs), enabling live trading to begin.
• Price discovery takes place. The market determines the token’s value based on supply, demand, and the project’s perceived success.

7. Post-Presale Development and Expansion

After the TGE, the project transitions to delivering on its roadmap.

This stage is about proving that the project can deliver real value to its community and investors.

Key activities include:

• Building the ecosystem. Expanding the project’s infrastructure, such as dApps, staking platforms, or new blockchain features.
• Ongoing marketing. Continued efforts to engage the community, attract new users, and increase token utility.
• Developing partnerships and integrations. Collaborating with other projects or businesses to create value and increase adoption.

Types of Crypto Presales

Crypto presales come in all shapes and sizes, and not all are the same. 

Understanding the differences can help you navigate the presale market more effectively. 

Private Sale vs Presale vs ICO

• Private Sale. Private sales are exclusive to institutional investors, angel investors, or high-net-worth individuals. These types of sales are when tokens are offered at the lowest price but often come with restrictions. 
• Public Presale. As the name suggests, these are open to the public. This is where everyday retail investors can get involved. Prices are higher than private sales, but lower than ICOs.
• ICO (Initial Coin Offering). The final public sale before the token becomes available on exchanges. Prices are usually highest during this phase, and tokens are immediately tradable.

How to Invest in a Crypto Presale

Conclusion

Crypto presales give investors the opportunity to invest in new projects at very early stages and often at discounted prices. 

Presales are a popular way for developers to raise capital to develop their projects. 

Cryptocurrency presales offer excellent opportunities to get in at the ‘ground floor’, but aren’t immune to risks. 

The risks of a crypto presale are the volume of scams and project failures in the space, so it’s important to do your research before investing to find the best presale coins.