You may have some experience in the world of Web3 and cryptocurrencies and you want to take the next step by investing directly in a project. Excellent choice!
As is usually the case with a startup, if you want to make more money, investing before everyone else is the best thing to do. But it’s also way riskier. Among the opportunities for early investment, we have the so-called public sale.
Public sale is when a token from a company or a project can be bought by anyone usually before being available to all investors through exchanges like Binance or Coinbase. However, most public sales require applicants to complete a KYC process, which may exclude some people based on nationality or their country’s laws.
A public sale is usually linked to an Initial Coin Offering (ICO), of which it is the last step. The first two stages are the private sale and the presale. The first is reserved for a small group of individuals (the team and some super early investors, like private and accredited investors), while the second is only open to people who meet the conditions defined by the project.
A public sale may be launched when the presale has not reached the goals set in terms of sales. It can also be a normal part of token distribution, being planned before the private sales. If you want to participate in a public sale, here are 5 things you need to know.
As we indicated above there are some considerations when deciding to participate in a Public Sale, so you're going to need to carefully review and follow the information and directions published by the project.
Thus, if the public sale is carried out directly on the website of the project or the company, you may need a compatible wallet. On the other hand, if the project is associated with an exchange platform, only registration on this specific platform is required.
This relative absence of condition is the big difference with the private sale and the presale. Indeed, they are reserved for a group of people who either know the team or have a lot of funds, like a Venture Capital (VC). For the presale, it is necessary to complete the KYC and have regularly kept up to date to know when it happens?
Answering yes to this question would unfortunately be too optimistic from us. In addition, it all depends on what you put behind the word “safe”.
If you are wondering if it is a scam, be relieved. There are fewer and fewer scams in Web3 projects. But you always have to remain cautious by doing thorough research before participating in a public sale.
The risk of scam is therefore very low. However, you should take a few minutes to read the project's whitepaper and do some research on the team.
If you are familiar with crypto projects, the tokenomics of a project tell you a lot. There are a number of scenarios which could be potential problems, such as large insider allocations, or if the team is keeping a large majority of tokens.
On the other hand, if the word “safe” is applied to risk taking, the risk here is greater. Indeed, many projects fail. It is therefore possible that you have invested in a serious project with a great team, but which has just not worked because it didn’t meet the market.
In this case, you must hope to resell your tokens so as not to lose everything. This is the risk of any early investment: you can win big, but also lose a lot. Such is the case in private equity.
You have now understood that the public sale comes after a private sale and a presale. Thus, you should know that the tokens of the project on which you wish to invest have already been partly issued.
Generally, a public sale takes place directly on the project's website. Thus, you must connect a compatible crypto wallet. Some projects accept a relatively known wallet such as MetaMask or Eternl. Then you have to fill this wallet with at least enough funds to pay the transaction fees. For example, if the project is based on Ethereum with the need to use a MetaMask, you will need ETH.
In addition, before actually participating in the public sale, find out about the vesting schedule for the project’s tokens. To simplify, this is how the tokens that you will acquire are released. For example, they may be all locked for 2 years or part of them may be directly tradable and the rest may be unlocked in predefined stages (weeks, months, years).
Finally, some projects have a partnership with an exchange platform. It is often a lesser known platform, which also takes the opportunity to get some publicity. Therefore, you do not need to connect a specific wallet.
It depends on your country of residence. There are relatively few countries in the world that prohibit all cryptocurrency-related activities. A majority of countries regulate ICOs.
When a country regulates a public sale, it is often limited to verifying the identity of the investors (KYC) and guaranteeing the security of the transactions. If you live in Europe, there is no country that prohibits ICOs and public sales.
On the other hand, if you live in the United States, many public sales will not be open to you. This is due to specific provisions of US law or even the law of certain states. This prohibition is even possible when the public sale takes place on an US website such as CoinList.
Participating in a public sale, like any other financial instrument involves the risk of substantial losses or high returns.
If you invest in the right project, you can make a lot of money. First of all, the price of the token during a public sale is often lower than during its official launch on an exchange platform when it can be freely traded. However, the price is supposed to be higher than during the private sale or presale.
Some people reduce their risk by diversifying their funds among multiple investments. For example, an investment of $10,000 may be split into 10 public sales at $1,000 or 5 public sales at $2,000 rather than just one at $10,000. This helps to dilute the risk.
Even if many projects fail, some people may have a better chance of succeeding and catching up with all the others.
If you want to be an early investor, participating in a public sale is one of the best opportunities available to you. Indeed, you are a bit of a “privileged investor” without fulfilling the conditions of the first two stages of the ICO.
Even by buying a project's tokens at a public sale, you can earn a lot of money, while supporting a project you may like. However, you should be aware that this is still a really big risk and success is not guaranteed.