The crypto space is for everyone, whether you are new to it or a seasoned investor. Like many opportunities, the way to get ahead is by getting in on the ground floor before the public gets involved. One way to do that in this industry is by participating in crypto presales. These presales, as the name suggests, are a way for early adopters to buy crypto projects at much lower prices before they go on sale to the public with their Initial Coin Offering (ICO). The ICO is the crypto equivalent of an Initial Public Offering (IPO) in the stock market. Just like the stock market, not all ICOs or presales are successful. If you can understand how they work then you stand a better chance of navigating your way as an investor or a developer.
Core Components of a Successful Presale
Every year, a series or list of crypto presales pops up as developers are constantly innovating to come up with solutions that address current problems or create profit opportunities. The successful presales among them have the following core components:
1. Strong Project Fundamentals
A successful presale begins with a solid foundation. As simple as this sounds, this is often overlooked by investors during their diligence checks. Think of this as building a skyscraper. The taller the building, the deeper and stronger the foundation has to be. Investors are more likely to trust a project with a clear and transparent purpose. They would want to know what problem is the crypto project addressing or why is it being built in the first place.
Next, seasoned investors always look at the team behind the project. Do they have any credibility and track record? How did their previous works perform? Are they experienced in this field or not?
All of these concerns can be presented in a project’s whitepaper. The whole essence of whitepapers is to allow investors to understand the purpose of the project, its vision and mission, and learn the background of the developing team. It also shows the details of the technology involved, the roadmap to execution, and the tokenomics of it all. This document should be written in clear and simple terms so that even beginners can understand it fully.
2. Robust Tokenomics
Tokenomics (token + economics) is basically referring to the economics of a crypto project such as how it is distributed, the mechanics of minting and staking, its utility, governance, and even scheduling. Everything that could affect its value. A successful presale has a balance of allocating tokens between developers, early investors, and future incentives.
It also allows the developers the chance to buy back some tokens if they need to or offer more staking rewards to select investors. As you might suspect, some early investors buy plenty of tokens during presales and then dump them immediately during ICO when the value goes up. This significantly affects the long-term success of the project. To protect against this, developers use vesting schedules to ensure that doesn't happen. With vesting, developers control the release of tokens into circulation.
3. Compliance
No matter how good a crypto project is, if it is not in compliance with the law, it will fail at the presale stage. A term used to describe this is ‘dead on arrival’ (DOA). Other times, it could be due to fraudulent activities, which is more common than you might think. In December 2024, the founder and former CEO of Celsius Network pleaded guilty to manipulating the price of his company’s crypto token. While this event occurred after the token’s presale, it is an indication that compliance with the law should be adhered to throughout the lifecycle of every crypto project.
Presales that have strong Know Your Customer (KYC) and Anti Money Laundry (AML) measures also stand a better chance than those without because having these measures means the developers comply with the law.
4. Strategic Marketing and Community Engagement
In this age of social media, it is much easier to connect with investors and prospects than it was 10 years ago. Successful presales have a strong presence on platforms that promote discussions such as X, Discord, and Telegram. They also collaborate with social media and industry influencers to help promote their project. The main goal here is to create hype first, then back it up with concrete reasons so that it's not just full of hype alone.
If a presale is constantly putting out content and updates via multiple channels like emails, newsletters, and press releases, then it is most likely going to succeed because that is what trusted projects do—they are transparent and keep you updated. This is exactly what investors need to build trust.
Case Studies
Solaxy (SOLX)
Solaxy is Solana’s first Layer-2 solution. It is created to solve Solana’s congestion problems and slow transaction processing. Solaxy has raised over $20 million in its presale so far and has an active presence on social media (with over 68,000 followers on X).
Wall Street Pepe (WEPE)
Wall Street Pepe, a meme coin, is another case of a successful crypto presale. WEPE has raised over $70 million in its presale so far. One of the key factors that makes it successful is its use of humor with financial tools. It has an amazing marketing team that puts our updates in such as way that followers (investors and non-investors) enjoy interacting with them.
Red Flags to Look Out For
There are some red flags to look out for whether you are an investor or a developer. Some of these may catch you off guard if you are not careful.
The first is a lack of transparency. While it is understandable that some developers may want to keep some key information private for personal reasons, others neglect to have a good PR/marketing team thinking it's not necessary at the presale stage. This can be fatal to the success of the project. As an investor, avoid any presale where you find yourself having to do extensive research to find basic information.
Another red flag to look out for is overly ambitious projects. If it sounds too good to be true, it probably is. Any presale that overpromises may open itself up for disappointments or even lawsuits if doesn't deliver. And just because a presale has raised millions doesn't mean it would spend it wisely. Remember that a great presale project clearly states how it plans to spend funds raised during presales and after. If that information is vague, the project will most likely fail before or immediately after launch.
Final Thought
As an investor, it is important to understand the very basics of how presales work at least. Just because it is popular doesn't necessarily it will succeed in the long run. Sometimes it's just hype. However there are successful presales that provide enough information for clarity and transparency, comply with the law, and have strong fundamentals. These are the ones you should go for.
