As with everything in life, the market has its ups and downs, but where should you stake your crypto in a bear market? Spot trading when the entire market is down will yield more frustration and heartache than income.
Staking coins in a wallet likewise becomes less fruitful as the value of the core currency drops. So where should you put your money?
In a launchpad!
What is a LaunchPad?
A launchpad is simply a fancy name for a company or group that helps new projects launch (release to the general public.)
The way they work is pretty straightforward. You have your idea or product that you wish to bring to market, you pitch it to the firm, and if they like it they fund it.
The concept is exactly the same as venture capitalism, except crowdsourced.
The part that is different is that they are structured in such a way that everyone can take part in the action. More on that in a moment, first, let’s cover some various ways you can make money in the crypto space.
Ways To Make Money In Crypto
There are a number of ways to make money in crypto. The way most new investors are familiar with is spot trading. However, as you mature in the space, you will start to learn of other ways such as staking which tends to be lower risk, to more advanced (and often riskier) ways like farming (liquidity pools) and sniping.
Spot Trading
In this form of investment, you find a coin you are interested in and you buy it directly. Generally, your objective here is to hold onto the coin in the hopes that it will increase in value so that you can then sell it for profit.
New investors, whether in the stock market or crypto generally start here. It’s the easiest to understand and execute.
There are of course more advanced actions you can take with spot trading like shorting, etc. However, those tactics are beyond the scope of this article and are best learned from official trading resources.
Staking
Staking your crypto is generally the next evolution of investment for most looking to maximize returns. As you invest and hold assets, inevitably the question you begin to ask is, “how do I make more money from the money just sitting there?”
The answer is staking.
Where can you stake your crypto? The simplest way is to use a crypto wallet that will let you stake directly from the wallet. However, you can also stake money directly from a centralized exchange (CEX) like Binance or Binance.us for those in the USA.
The way staking works is that you elect to leave your money locked (unusable) for a set duration of time, and in exchange, you get a percentage of all the fees that are collected on the network. Examples of stakeable coins are ETH and ADA.
As a note, not all staking requires locking it, it can vary on the coin and method of staking.
Farming
Farming, or providing liquidity to a decentralized exchange, is the act of providing a token pair to an exchange in return for receiving a percentage of the transaction fees collected by the exchange.
For example, you can supply VLX and WAG to WagyuSwap and every time someone attempts to exchange VLX for WAG or WAG for VLX, you will collect some of the fees the exchange charges.
When farming, the fees are shared between everyone participating in providing liquidity for the trading pair.
Sounds great right? In fact this can be a great way to earn a yield on coins that otherwise can not be staked. There is risk however.
The risk comes in the form of impermanent loss. Simplified, this is the loss incurred when the difference in price between the trading pair is such that if you were to withdraw it (un-farm it) you get back less in value than if you had just held the coins without farming.
For a more detailed reading on impermanent loss, check out this great explanation by Binance.
Lending
Lending is similar to staking in that coins are held in exchange for a high yield return.
In the case of lending, what you are doing is providing your crypto to a third party who in turn will use it to provide loans for others.
An example of such a platform is BlockFi, Celsius, and Gemini. The benefits of using these services are that they provide high returns for staking stable coins on their platform.
The downside is that while you do this, the crypto does not remain in your possession. You hand the crypto over to them and allow them to manage it as you would a bank.
The risk here is that you are trusting they are using your money wisely and that they will not go bankrupt resulting in a loss of all funds.
That all said, when we talk about where to stake crypto, this is not a bad option when you are holding stablecoins through a bear market.
Sniping
Sniping is the act of buying a coin as soon as possible when it is publicly released and sold for profit within minutes or a few hours after your purchase.
The guiding investment principles here are to get in early and buy low to sell high. The difference is that early means within seconds of release and likewise getting out of the asset within seconds or minutes afterward.
You are taking advantage of a pattern commonly seen when a new asset launches. An initial spike as excitement for the release of that asset is at its highest, followed by a quick drop as the excitement wanes and the price corrects itself to the true value.
Here is an example of how this usually looks on a graph:
This graph illustrates how within seconds of launch a coin’s price can skyrocket, followed by a correction down to a coin’s true value.
This pricing phenomenon can last anywhere between a few seconds to minutes. On rare occasions, a coin may retain its high value for more than a day.
Early Access
The above are some of the core ways of making money in crypto, but by no means an exhaustive list. In crypto, just as with stocks, the greatest returns are had when you can get in early.
The question and problem is, how do you get in early?
Getting in early, generally means finding out about a project while still under development, it means being in the right circle of people at the right place and at the right time. Then it means having the capital to supply and hoping the project succeeds.
Another way to gain early access is to join a launchpad.
Launchpads
Launchpads are nothing new. As explained earlier, at their simplest they are venture capital funding. The difference is, in crypto, anyone can take part.
When it comes to where you should stake your crypto in a bear market, Launchpads are a solid bet.
How Launchpads Work
Here’s how it works; launchpads have their own coin that you buy. When you buy a certain threshold, you are then able to get early access to new projects.
Many launchpads will also distribute the fees charged by them back to the coin holders.
This solves the problem of needing to find new projects and getting in early as they basically come to you. Risk is also reduced, as the project is pre-vetted by the launchpad.
Behind The Scenes
It might be helpful at this point to discuss what is happening behind the scenes, to gain a better understanding of why they allow just about anyone to participate. Rest assured, it’s not purely out of the goodness of their hearts.
Many folks in crypto either need money to develop or continue developing their idea. Others simply have no idea how they will market their idea to the masses and need help.
A launchpad solves these problems for them. If a launchpad likes the idea, they will provide capital to the person or entity for development and they will fund the marketing.
In exchange, they expect an upfront fee and a certain allocation of the new coin associated with the project.
The Purpose Of The LaunchPad Currency
What purpose does the launchpad coin serve?
Put simply, it offsets some of their cost. When a launchpad is first created, it’s entirely venture capital in the traditional sense of the word to get it going. This means every founding member of the launchpad has put in their own money to start.
From there, as with any crypto project, they have their own token, of which a percentage is allocated for funding new projects.
For this to work, launchpads need their token to retain value. The higher the value of their own token, the more capital they can utilize to fund projects.
In exchange, for token holders, they offer a cut of the fees they charge for their services as well as allow holders access to buy into these new projects before launch.
Win/Win.
Why Launchpads In A Bear Market?
When the market is down, making money in crypto via spot trading, staking and farming becomes more difficult. The reality of crypto is that the biggest gains are had when a coin is experiencing explosive growth.
Explosive growth doesn’t happen in a suppressed market.
Likewise, gains from staking can be wiped out from the loss in value of your coins. Farming also sees reduced returns as fewer transactions will occur in slower markets.
Even worse, often your trading pair will be decreasing in value simultaneously to the market decline.
Launchpads aren’t immune to these effects either, but they are mitigated a bit and also offer some additional advantages.
Fees Charged Are Not Subject to Coin Value
The first advantage is that the fees a launchpad charges are not tied to the value of its coin. Said another way, if a launchpad charges $10,000.00 for their services, even if their coin drops 90%, they will still charge $10,000.00 for their services.
Why does this matter? Because for the launchpads that offer this, when they distribute the fees charged to their token holders, the amount you receive will be determined by the number of coin holders, not the current value of the launchpad token.
This means your returns are less susceptible to market conditions and that you will still make great returns even in a suppressed market.
Access To New Projects
This second advantage is where launchpads are breadwinners. The greatest returns in crypto are had by getting in early.
Short of starting your own crypto project, you can get no earlier than a pre-public sale.
If there is any time in a bear market where a new crypto coin will experience explosive growth, it will be right at launch.
Launchpads offer this access via an initial dex offering (IDO).
The idea here is that you as a member of the luanchpad dex, buy in at the presale event. Then on launch day, as the price is climbing from initial demand, sell. This is where you can make your 3X, 10X and 100X gains.
Or, you can simply hold and hope that in a year or two, you might see a 1,000X on your investment. It happens.
Be aware that some launchpads and or projects will be subject to KYC verification first.
Launchpad Niches
Just as crypto has a variety of projects ranging from DeFi to medical to gaming, so do Launchpads have a variety of niches to which they cater to.
There are too many niches to site, but just keep in mind that we are talking about venture capital funding. These folks generally have a specific industry that they understand well and it is these industries that they serve.
So where should you stake your crypto among the launchpad nices? We’ll get to that in a moment, but first, lets cover some risks.
Risks
As with all things, there are some risks. Here are the ones you should keep in mind with launchpads.
They are centralized entities.
Some launchpads only require that you hold their coin in your wallet to qualify for staking. Others, however, may utilize smart contracts to hold them in escrow while they are staked.
In these circumstances there is the risk that the launchpad could abscond with the funds or a bug in the smart contract could result in the loss of the funds or they could just go bankrupt.
They may also be subject to new regulations that could endanger your funds.
New Project Are Risky
While gaining access to new projects is arguably a launchpad’s greatest benefit, it is also your greatest risk. There is no guarantee a new project will be successful and gain more in value than you paid in the presale event.
While unusual, there are instances of projects decreasing in value at launch.
Which LaunchPad Should I Choose?
The question is not so much which, but what type.
Or, another question to answer the same thing is, what sectors will continue to have growth, even in a bear economy? Gaming & NFTs.
The gaming industry has had continued steady growth for years with no sign of slowing down. In fact, the explosion of the metaverse combined with macro events keeping most people indoors. It’s pretty safe to say that even in a bear market gaming will continue to do well.
NFTs have already demonstrated a divergence from the pricing action of Bitcoin and other cryptocurrencies. They continue to show explosive growth while the rest of the crypto market stutters.
Because of this, launchpads dealing with gaming and the metaverse as well as NFTs might well be worth your interest. I would argue, though, that getting into any launchpad is better than none.
Examples of Launchpads
At this point, you may be wondering what some actual launchpads are. Seedify is one example that caters to the gaming space. Another that caters to gaming, as well as other projects, is CoinXPad.
A big player in the space with launchpads spread across a variety of blockchains is BlueZilla.vc
Final Thoughts
There are lots of amazing and creative ways to make money in crypto, but as the markets start to slow down, where is the best place to stake it?
When it comes to accessibility and value return, ther eis a clear winner. Launchpads.
The benefits of staking and early presale access to new projects simply can’t be beaten. The greatest returns in crypto are had by getting in early and launchpads let you do just that.
With the recent explosion in metaverse projects and NFTs, launchpads that cater to these industries may just be your best bet.
All writers’ opinions are their own and do not constitute financial advice in any way whatsoever. Nothing published by MonumentalExpansion constitutes an investment recommendation, nor should any data or content published by MonumentalExpansion be relied upon for any investment activities.
The content provided herein is purely for educational and entertainment purposes only.
MonumentalExpansion strongly recommends that you perform your own independent research and/or speak with a qualified investment professional before making any financial decisions.
Author does own some of the currencies discussed in this article.