Token Sale and Crypto Airdrop Glossary

What is Tokenomics? 

Tokenomics refers to the economic structure and principles governing a token or tokens of a crypto project. It encompasses key aspects such as token supply, vesting, distribution, and utility, the essential mechanisms that ensure the project's sustainability and growth. Tokenomics is designed to incentivize participation and align the interests of investors, developers, and users.

The tokenomics of a project can significantly influence its adoption and long-term viability. For instance, a well-structured token economy might include deflationary mechanisms like token burns to reduce supply or staking rewards to encourage holding. Additionally, tokenomics often dictates the allocation of tokens, such as portions dedicated to development, marketing, and community incentives.

Understanding tokenomics is crucial for investors, as it provides insights into the potential value and sustainability of a project. Projects with transparent and innovative tokenomics tend to attract more interest and maintain market confidence.

What is Fundraising? 

Crypto fundraising is a traditional approach for crypto startups to raise funds needed for scaling their growth. Fundraising plays a crucial role in the development and growth of cryptocurrency projects. It involves raising capital to support research and development, build and maintain infrastructure, expand the team, and execute marketing and community-building initiatives. 

Common fundraising methods in the crypto space include Initial Coin Offerings (ICOs), Initial DEX Offering (IDO), Initial Farm Offering (IFO), and IEO (Initial Exchange Offering). Successful fundraising enables projects to bring their vision to life, drive innovation, and contribute to the broader development of the cryptocurrency ecosystem.

What is a Token Sale?

A Token Sale is the initial offering of a cryptocurrency token to early investors before it becomes publicly available on exchanges. Often referred to as an Initial Coin Offering (ICO), this fundraising model allows blockchain projects to raise capital by issuing tokens in exchange for another cryptocurrency or, sometimes, fiat currencies.

Token sales play a critical role in the early development stages of crypto projects, providing essential funding for product development, marketing, and ecosystem growth. By engaging in token sales, investors gain early access to new digital assets, sometimes with conditions like token lock-up (vesting) periods to ensure healthy price action after the Token Generation Event (TGE) and support long-term growth.

There are various types of token sales, including ICO, IDO, IFO, and IEO, each offering different levels of decentralization, regulatory oversight, and investor access. Projects (or platforms handling the event) often detail token sale structure in whitepapers, including information about total token supply, distribution plans, and fundraising goals.

While token sales promise opportunities, they also come with risks. Market volatility, project mismanagement, and lack of regulation can impact token offerings. Despite these risks, token sales remain a popular way for investors to discover and acquire tokens of an emerging blockchain innovational project before it officially goes on the market.

What is a Pre-Sale?

A Pre-Sale is a preliminary token sale that occurs before the official fundraising rounds. It serves as a unique funding phase where a limited number of tokens are offered to a select group of early investors, including early-bird community, strategic investors, and venture capital firms, often at discounted rates or with added bonuses. Compared to the main token sale, the amount of capital raised during the pre-sale is relatively modest. For many projects, the pre-sale is a vital step in securing early funds, especially when they lack the budget to fully develop and promote their upcoming ICO, IDO, or IEO. The funds raised during this phase are often used for marketing campaigns, infrastructure development, and other operations, ahead of the token launch.

Beyond financing, the pre-sale serves as a strategic opportunity for project teams to:

• Build a core community of early supporters.
• Attract early adopters who can test the product.
• Debug processes and correct potential flaws.
• Gauge market interest and adjust marketing strategies accordingly.

By running a pre-sale, projects not only raise essential early funding but also refine their operations and marketing efforts ahead of the public launch. 

What is a Seed Round?

A Seed Round is the earliest stage of fundraising for a startup or cryptocurrency project, aimed at securing the initial capital needed to develop a product or business concept. This funding is typically used for early-stage operations, such as market research, product development, and assembling a core team.

Seed capital often comes from a mix of sources, including the founders' personal funds, angel investors, and sometimes from early-stage venture capital (VC) firms. In the crypto space, seed rounds can also involve selling a small portion of a project’s tokens at a discounted rate to strategic investors who can contribute beyond funding, offering expertise, connections, and market credibility.

The primary goal of a seed round is to help a project move from an idea to a functional prototype or minimum viable product (MVP). This early support is critical for laying the groundwork for future fundraising rounds, such as private or public sales.

While seed rounds offer investors the opportunity to get in at the lowest possible valuation, they also carry significant risks. Early-stage projects often lack a proven product or user base, and their success heavily depends on execution and market conditions.

In the cryptocurrency industry, seed rounds have become an essential step for launching innovative projects, enabling teams to secure the resources needed to build and scale their platforms before engaging in larger funding rounds.

What is a Private Sale?

A Private Sale is an early-stage fundraising round where blockchain projects sell tokens to a selected pool of strategic investors before any public offering. These sales are typically invitation-only and not publicly disclosed, allowing companies to raise substantial capital from institutional investors, venture capital firms, or high-net-worth individuals.

Private sales provide mutual benefits for both projects and investors. Blockchain startups secure significant funding to support development, marketing, and ecosystem expansion, while investors gain access to tokens at deeply discounted prices compared to public sales. This pricing advantage gives early backers the potential for substantial returns once the token is listed on exchanges.

However, private sales have faced criticism for favoring wealthy investors while excluding the broader crypto community. By allowing select participants to purchase tokens at significantly lower prices, private sales can create market imbalances and expose projects to price manipulation and volatility once the tokens are publicly traded. In response to these concerns, the "fair launch" model, first popularized by meme coin launchpad pump.fun, has emerged as a more inclusive alternative. Fair launches allow all investors equal access to tokens at the same price, eliminating any early discounts. This transparent and community-driven approach has gained significant traction and is becoming more popular than traditional private sales, reflecting the growing demand for fairness and decentralization in the crypto fundraising space.

What is a Private Round?

A Private Round is an early-stage fundraising phase where a cryptocurrency project or startup raises capital by offering tokens, equity, debt, or other securities to a select group of private or institutional investors. This exclusive round typically occurs before public sales and is designed to secure significant funding from strategic investors who can provide not only capital but also valuable industry expertise and networking opportunities.

What is a Public Sale?

A Public Sale is the final and most widely accessible stage of a token offering, where a cryptocurrency project makes its tokens available to the general public. Typically, this phase follows private and presale rounds and offers tokens at a discounted rate before they are officially listed on cryptocurrency exchanges. Public sales are a crucial part of fundraising strategies, helping projects raise the capital needed to develop their platforms and expand their ecosystems.

Unlike private sales, which are limited to select investors, public sales are open to the broader crypto community. This democratized approach enables wide exposure to the new tokens. Public sales involve significant resources invested in marketing campaigns to maximize participation, often leveraging the funds raised during earlier rounds. While public sales might not provide the same opportunity to acquire tokens at prices offered during private or presale rounds, participants can still obtain tokens at lower prices compared to the listing ones.

The rise of a more community-driven fundraising model has challenged traditional public sales. Pioneered by launchpads like sun.pump, fair launch gives all participants equal opportunities to purchase tokens at the same price, addressing criticisms that early fundraising rounds favor wealthier investors. 

What is a Public Round?

During a public round, tokens are made available to the general public, allowing retail investors worldwide to participate in the token sale. Unlike earlier rounds, such as seed or private rounds, typically reserved for strategic investors, the public round is open to anyone who meets the platform’s eligibility criteria.

Public rounds are often conducted in the form of Initial Coin Offerings (ICOs), Initial DEX Offerings (IDOs), or other crowdfunding models on decentralized or centralized platforms. One of the key advantages of the public round is its inclusivity. It democratizes access to early-stage crypto investments, giving small-scale investors a chance to purchase tokens before they are officially listed on exchanges. This stage also helps projects build large, engaged communities, which can be vital for the long-term success and adoption of the platform. It is important to note that such rounds are often conducted at a higher valuation compared to private ones. Moreover, in the case of fundamentally strong and promising projects, the allocation available for a particular wallet tends to be relatively small.

However, public rounds carry certain risks. The token price can be highly volatile due to sudden market demand, and without proper regulatory oversight, some projects may fail to deliver on their promises. Overall, public rounds remain a cornerstone of crypto fundraising, offering broad market access while helping projects gain visibility and secure the capital needed for growth.

What is an ICO (Initial Coin Offering)? 

An Initial Coin Offering (ICO) is a classic way for a project to raise funds. ICOs have historically been the most popular method for raising funds in the cryptocurrency space. During an ICO, tokens are available for purchase to early investors through a project's platform before they are eventually listed on exchanges. 

ICOs gained significant traction during the 2017-2018 crypto boom but also attracted criticism due to numerous scams and failed projects. Today, ICOs remain a popular fundraising option but are subject to greater scrutiny and regulatory compliance.

What is an IDO (Initial DEX Offering)? 

An Initial DEX Offering (IDO) is a fundraising method that involves selling tokens directly through decentralized exchanges or specialized platforms (launchpads). The main advantages of IDOs are the immediate liquidity of the tokens and the trustless trading environment. Leveraging liquidity pools, this innovative token sale model enables participants to swap acquired tokens right after the Token Generation Event (TGE), often without a need for relying on intermediaries. All the contributors deposit stablecoins or other crypto assets into a liquidity pool and, thanks to the Automated Market Maker (AMM) mechanism, receive a proportional share of IDO tokens after the token distribution ends. However, it is important to note that an IDO does not necessarily mean the token will be listed immediately on a decentralized exchange. Some projects delay the listing to manage price stability, implement vesting schedules, or complete further development.

IDOs have become popular for their efficiency and accessibility, allowing projects to raise funds quickly while minimizing barriers for investors. However, they also come with risks, such as volatility and limited regulatory oversight.
 

What is an IEO (Initial Exchange Offering)?

An Initial Exchange Offering (IEO) is a fundraising mechanism where a cryptocurrency project launches its token on a centralized cryptocurrency exchange. Unlike traditional Initial Coin Offerings (ICOs) that are conducted independently by the project team, IEOs leverage the credibility and platform of a reputable exchange to facilitate the token sale. The exchange typically conducts due diligence on the project, ensuring a degree of vetting and potentially enhancing investor confidence. This model offers several advantages, such as increased exposure to a wider audience, enhanced liquidity due to the exchange's platform's large user base, and a potentially more secure and regulated environment. However, IEOs are not without risks, as the success of the token sale and the long-term performance of the token are still subject to market volatility and the overall health of the cryptocurrency market.

What is an IFO (Initial Farm Offering)? 

An Initial Farm Offering (IFO) is an innovative fundraising model often utilized by launchpad platforms, combining token sales with yield farming mechanisms. Hosted on decentralized exchanges like PancakeSwap, IFOs allow investors to participate in presales by staking the platform’s native tokens in liquidity pools. In return, participants receive newly launched project tokens once the sale concludes.

IFO projects are carefully vetted by the DEXs hosting the event to ensure quality and reduce risk, making them appealing to DeFi enthusiasts. Despite the unique fundraising mechanism, the tokens acquired through IFOs are still subject to market volatility and carry similar risks to other popular token sale models.

What is a Lock-Up Period? 

A lock-up (vesting) period refers to a predetermined duration during which allocated tokens cannot be sold or transferred. This mechanism is used to prevent early investors and team members from dumping large quantities of tokens immediately after launch, which could destabilize the asset price.

Lock-up periods are often outlined by the team behind the project, specifying such conditions as vesting schedule and other important details. Lock-up periods are frequently implemented to maintain market stability and encourage long-term commitment from stakeholders. Understanding lock-up terms is essential for token sale participants to plan their liquidity and investment strategy as their crypto might be illiquid for quite some time.

What is Market Cap (Market Capitalization)? 

Market capitalization, referred to as the market cap, is a metric used to measure the total value of all the coins that have been mined. It is calculated by multiplying the current price per token by the circulating supply. For example, if a token costs $10 and there are 1 million tokens in circulation, its market cap is $10 million.

Market cap is a useful indicator of a project's scale and market position. Cryptocurrencies are often categorized into large-cap, mid-cap, and small-cap based on their market capitalization, providing insights into their risk and growth potential.

What is the Circulating Supply? 

Circulating supply refers to the total number of tokens currently available for trading in the market. It excludes tokens that are locked, reserved, or unavailable for some reason. The circulating supply is a critical factor for investors in the project evaluating process, as it not only directly determines a token's market cap, but also frequently influences token price dynamics.

Investors should also consider a total and maximum supply alongside circulating supply to understand the token's inflation or deflation potential and its long-term viability.

What is Total Supply? 

Total supply represents the total number of tokens minted (created) tokens, including those in circulation and those locked or reserved. It is a fixed number determined by the project's tokenomics and can change only in specific scenarios, such as additional minting or burning.

What is Fully Diluted Valuation (FDV)? 

Fully Diluted Valuation (FDV) represents the total market capitalization of a cryptocurrency if all of its possible tokens were in circulation.

FDV is calculated by multiplying the current token price by the total supply of tokens, including those that are currently circulating and those that may be issued in the future through mechanisms like mining, staking, or vesting schedules.

FDV provides a more comprehensive perspective on a cryptocurrency's potential market value compared to the current market capitalization. It helps to account for future token issuance, which can potentially dilute the value of existing tokens. A high FDV relative to the current market cap may indicate potential future dilution and associated risks. Investors should carefully consider FDV alongside other factors when evaluating a cryptocurrency investment.

What is the Burn Rate? 

The burn rate is the rate at which tokens are removed from circulation, typically through a mechanism called token burning. Projects burn tokens to reduce supply, often to counteract inflation or increase scarcity. This practice can positively impact a token's price by lowering the total available supply. The teams often use occasional token burn (and its announcement) to enhance the interest of investors and therefore increase the buying pressure.

Burn rates are often outlined in a project's whitepaper and are considered an essential aspect of tokenomics. Monitoring burn rates can help investors assess a project's long-term value proposition.

What is a Whitepaper? 

A white paper in cryptocurrency serves as blockchain companies' foundational document. This comprehensive document provides a deep dive into the project's core aspects, including the underlying technology, its objectives, the proposed solutions, and the roadmap for future development. By outlining the project's vision, tokenomics, and the team behind it, white papers aim to educate potential investors, developers, and users while building trust and attracting investment. Whitepapers are crucial for showcasing the project's sincerity, transparency, and commitment to long-term success. However, it's essential to remember that white papers may contain forward-looking statements and should be considered alongside other factors when evaluating a cryptocurrency project.

What is a Token Generation Event (TGE)?

A Token Generation Event (TGE) represents the moment when, for the first time, tokens are minted on a blockchain and made available for public trading.

What is Minting? 

Minting is the process of creating new tokens for a cryptocurrency. It is often tied to consensus mechanisms like Proof of Stake or Proof of Work, where validators (in the case of PoS) or miners (in the case of PoW) are rewarded with newly minted tokens for maintaining the network.

Additional token minting plays a crucial role in expanding its supply. However, excessive or poorly managed minting can lead to inflation, affecting the token's value.

What is a Crypto Airdrop?

A Crypto Airdrop is a promotional strategy where blockchain projects distribute free tokens to specific wallet addresses to increase awareness and raise engagement rates, attracting a broader community. Coins or tokens are sent only to eligible wallets. Participants may need to hold certain tokens or complete special tasks (e.g., interact with the blockchain dApp contract, hold a minimum quantity of the crypto coins in a wallet, or refer some new users to the platform) to qualify.

The primary goal of the airdrop campaign is to encourage greater participation in the project. This method of launching a token is very popular among wallet providers, infrastructure platforms, decentralized exchanges (DEXs), and decentralized applications (dApps). Airdrops are typically announced through the company's official channels and within cryptocurrency communities. Following the announcement of the airdrop plan, the community became more active and engaged with the project, seeking opportunities to earn bounties.

Types of Airdrops:

• Standard Airdrop: Free tokens for signing up or providing a wallet address.
• Bounty Airdrop: Rewards for completing promotional tasks.
• Holder Airdrop: Requires holding a specific cryptocurrency to receive tokens.
• Exclusive Airdrop: Tokens given to selected users based on influence or contributions.

Airdrops help projects boost visibility, grow communities, and encourage early engagement within the project ecosystem.

What is a Crypto Retrodrop?

In essence, a retrodrop is somewhat similar to an airdrop. It is a way for cryptocurrency projects to reward their most loyal and supportive early adopters. Unlike airdrops, retrodrops might be announced post-factum after the snapshot (with a checker). This way blockchain companies are rewarding individuals who believed in the project's potential from the very beginning and contributed to its early success. Retrodrops are a way to show appreciation for this early support and incentivize continued engagement with the project. Typically, the tokens are distributed after a certain period of time (or a specific event).

Recipients are selected based on specific criteria, such as:

• Early product testing: Having used or interacted with the project before its official launch.
• Long-term token holding: Owning and holding the project's tokens or NFTs for an extended period.

What is a Snapshot?

Snapshots are a crucial mechanism in cryptocurrency airdrops. The primary purpose of this snapshot is to determine the eligibility and allocation of airdrop tokens. By analyzing the snapshot, the airdrop organizers can identify which addresses held the required amount of tokens or fulfilled other eligibility criteria (e.g., participated in specific activities) at the time of the snapshot. The snapshot data is used to calculate the amount of airdrop tokens each eligible address will receive. This is often proportional to their holdings of the relevant cryptocurrency or their on-chain activity. To clarify the calculations for each wallet allocation, the project team typically provides clear explanations of these computations on their blog.

What is ROI (Return on Investment)? 

Return on Investment (ROI) is a measure of the profitability of an investment, expressed as a percentage. It is calculated by dividing the net profit from the investment by the initial cost and multiplying it by 100. For instance, if you invest $1,000 in a token and later sell your position for $1,500. In this case, your ROI is 50%.

ROI is a key metric for evaluating the success of an investment and comparing opportunities in the crypto market. While high ROI is a desirable outcome for investors, it often correlates with higher levels of risk. This means that investments with the potential for substantial gains may also carry a greater chance of significant losses.

What is a Whitelist? 

A whitelist is a pre-approved list of participants who are granted access to join a token sale or other blockchain-related events. Projects use whitelists to control access, ensuring that only eligible individuals can participate. 

To secure a spot on the whitelist, users typically need to fulfill certain requirements set forth by the project team, such as actively engaging with the project's community through social media, or holding tokens from other projects within the same ecosystem. Whitelisting may involve verifying eligible participants' identity through Know Your Customer (KYC) and Anti-Money Laundering (AML) procedures.

By carefully vetting participants, projects can gauge genuine interest, manage the distribution of tokens effectively, and foster a dedicated community of early supporters. For investors, securing a place on the whitelist offers several advantages, including priority access to potentially more favorable token prices and a higher likelihood of securing an allocation in highly anticipated sales. Furthermore, some projects may extend exclusive rewards or benefits to whitelisted members, such as airdrops or early access to future projects. While the process of joining a whitelist may involve certain steps, it ultimately contributes to a more orderly and fair distribution of tokens, enhancing the overall credibility and success of the presale.

What is KYC (Know Your Customer)? 

Know Your Customer (KYC) is a process by which cryptocurrency projects and exchanges verify the identity of their participants, and source of funds in some cases. This verification ensures compliance with regulatory standards and helps prevent money laundering and other fraud activities.

Participants in token sales are often required to provide personal information, such as government-issued identification and proof of residence, as part of the KYC process. While some view KYC as a barrier to entry, it is increasingly seen as a necessary step for legitimizing cryptocurrency projects, protecting investors from scams, and building trust with regulators and investors.

What is Rug Pull?

In the dynamic world of decentralized finance (DeFi), a rug pull signifies a devastating event for investors. This type of crypto scam occurs when the developers behind a project unexpectedly withdraw all invested funds, therefore abandoning the project. This leaves investors holding worthless tokens or coins, as the project's value plummets to near zero.

Other deceptive tactics can manifest in two primary ways:

1. DeFi Scams: These involve manipulating the underlying smart contract of a cryptocurrency token. Scammers may change the contract settings to:
   
   
   • Restrict token sales (honeypot): Making it impossible for investors to sell their tokens, effectively trapping them.
   • Mint unlimited tokens: Diluting the existing token supply, significantly diminishing their value.
   • Impose exorbitant fees: Charging excessively high fees on any transactions, making trading impractical.
2. Exit Scams: In this scenario, scammers employ deceptive marketing tactics to lure investors before abruptly abandoning the project. These tactics may include:
   
   
   • Creating fraudulent websites: Presenting misleading information about the project and its team.
   • Announcing fake partnerships: Falsely claiming collaborations with reputable entities to enhance credibility.
   • Engaging in wash trading: Artificially inflating trading volume to create a false sense of liquidity and demand.

Rug pulls are a serious concern within the DeFi ecosystem, highlighting the importance of thorough research, due diligence, and careful evaluation of projects before investing.

What is All-Time High (ATH)?

All-Time High (ATH) refers to the highest price a particular cryptocurrency has ever achieved since its inception. This significant milestone represents the peak of a cryptocurrency's value, showcasing its past performance and the level of investor enthusiasm at its peak. Reaching an ATH often signifies a strong market sentiment and a surge in investor confidence. While it serves as a historical marker and can act as a psychological level or resistance point for traders, it's crucial to remember that past performance does not guarantee future success. The cryptocurrency market is highly volatile, and prices can fluctuate dramatically.

What is All-Time Low (ATL)?

All-Time Low (ATL) signifies the lowest price a cryptocurrency has ever reached since its inception. This represents a significant trough in its price history, reflecting a period of low investor confidence and potentially bearish market sentiment. Reaching an ATL can have a significant psychological impact on investors, potentially leading to panic selling or a loss of confidence in the project. However, it's important to remember that ATL is just one point in the price history of a cryptocurrency. Market cycles are cyclical, and many cryptocurrencies have recovered from ATL levels to achieve new heights. Therefore, while ATL can be a concerning event, it's crucial to conduct thorough research and consider long-term fundamentals before making any investment decisions.

What is a Soft Cap?

In the context of cryptocurrency, a soft cap refers to the minimum amount of funding that a project must raise during its Initial Coin Offering (ICO) or other format of a token sale in order to proceed. Furthermore, if the project fails to raise the soft cap within the specified timeframe, the entire sale is typically canceled, and all invested funds are returned to the participants. 

By setting a minimum fundraising target, the soft cap helps protect investors from supporting projects that lack sufficient initial backing. By reaching its soft cap, the project ensures there is sufficient initial funding to cover essential development and launch costs.

While the exact amount of the soft cap varies significantly depending on the project's scope and goals, it plays a crucial role in determining the success or failure of a cryptocurrency fundraising campaign.

What is a Hard Cap?

In turn, hard cap refers to the maximum amount of funding that a project aims to raise during its initial coin offering (ICO) or token sale. Once the hard cap is reached, the token sale is immediately closed, and no further investments are accepted.

By setting a hard cap, projects can ensure a fairer distribution of tokens among investors, preventing a scenario where a few large investors dominate the allocation. Hard caps provide clarity for investors by defining the maximum funds raised and the total tokens issued. While hard caps offer several benefits, it's crucial to remember that reaching the hard cap quickly doesn't necessarily guarantee the project's success. 

What is a Roadmap? 

A roadmap summarizes and visualizes the planned development trajectory of the crypto project, detailing key milestones, timelines, and the features or upgrades that will be implemented over time. The roadmap outlines a clear vision and direction for a specific product, providing transparency and clarity to the community and investors. It typically includes key stages such as research and development, initial launch, product enhancements, community building, and partnerships. By mapping out the project's vision and the steps required to achieve it, the roadmap builds trust and confidence among stakeholders. It's important to note that roadmaps are subject to change based on various factors, including market conditions, technological advancements, and unforeseen challenges.

What are Funds and Backers in Crypto? 

Crypto funds and backers play a vital role in supporting the growth and development of the cryptocurrency ecosystem. Crypto funds are investment vehicles that pool capital from various investors to invest in promising blockchain projects, DeFi protocols, dApps, crypto platforms, infrastructure projects, and more. These funds conduct thorough research and due diligence on potential investments, providing crucial financial support and guidance to innovative projects. 

Backers, which can include individuals, venture capital firms, and other institutional investors, also contribute significantly to the success of cryptocurrency projects by providing funding, mentorship, and industry connections. This support network is essential for driving innovation, fostering growth, and propelling the cryptocurrency industry forward.

What is Launchpad? 

A launchpad is a platform that facilitates the launch of new cryptocurrency projects by providing a platform for them to conduct token sales. Because crypto launchpads are designed to raise funds for new projects by selling their tokens directly to investors, these platforms typically curate and vet projects before allowing them to launch, aiming to reduce risks for investors. They often incorporate innovative mechanisms such as lottery systems, and tiered allocations to distribute tokens fairly among participants. 

Launchpads play a crucial role in the cryptocurrency ecosystem by providing a structured and regulated environment for project launches, while also offering a platform for investors to discover and participate in promising new projects. 

What is Launchpool? 

A launchpool is a platform that distributes tokens to users as rewards for staking their crypto assets. Unlike launchpads, which focus on raising funds for new projects through token sales, launchpools incentivize holders by offering rewards in the form of newly launched project tokens. This mechanism fosters community engagement and allows users to earn new tokens by contributing to the ecosystem. 

Launchpools often utilize staking pools for various cryptocurrencies, enabling users to earn rewards by holding and staking their existing assets. This approach fosters a more decentralized and community-driven distribution model compared to traditional token sales.

What is Staking? 

Staking is the process of holding and locking up cryptocurrencies to help operate a blockchain network. By staking their crypto assets, users contribute to the security and validation of transactions on the blockchain. In return for their participation, stakers earn rewards, which can come in the form of newly minted tokens, transaction fees, or governance rights within the network. The specific staking mechanisms can vary depending on the blockchain and cryptocurrency involved. 

Native Staking lies in the core Proof-of-Stake (PoS) consensus mechanism, which involves choosing stakers (validators) to validate transactions based on the amount of cryptocurrency they hold. Staking not only provides a passive income stream for cryptocurrency holders but also supports the decentralization and security of the blockchain network. While native staking offers essential security and rewards, the evolution of decentralized finance has introduced more flexible and yield-enhancing strategies, such as liquid restaking.

Liquid restaking builds upon the flexibility of liquid staking by allowing users to maximize the utility and yield of their staked crypto assets. When users stake their assets in a Proof-of-Stake blockchain, they receive Liquid Staking Tokens (LSTs), representing their staked holdings. These LSTs aren't locked away; instead, they can be freely traded, transferred, or used in other Decentralized Finance (DeFi) protocols to generate additional returns. Liquid restaking takes this a step further by enabling users to reinvest their LSTs to secure and support the operations of various other protocols and decentralized networks. This process allows staked tokens to simultaneously secure multiple networks, amplifying the potential yield. For example, platforms like EigenLayer facilitate this by allowing LSTs such as stETH (issued by Lido for staked ETH) to be used across various applications, maximizing their utility and earning potential while maintaining the underlying security of the original staked assets. This ensures that staked assets remain liquid and productive, contributing to a more dynamic and efficient DeFi ecosystem.

What is Total Value Locked In (TVL)? 

Total Value Locked (TVL) is a key metric in the decentralized finance space, representing the total value of crypto assets deposited and locked in various DeFi protocols across blockchain networks operating on the PoS consensus mechanism. This includes assets locked in protocols such as lending platforms, decentralized exchanges (DEXs), yield farming platforms, and staking contracts. 

TVL provides a valuable indicator of the overall health and growth of the project’s ecosystem. A rising TVL signifies increasing user participation and growing confidence in DeFi protocols. Conversely, a declining TVL may indicate a decrease in user activity and signal a potential downturn in the price of a particular native or governance token of the staking protocol. By tracking TVL across different protocols, investors and analysts can gain insights into the popularity and growth potential of various DeFi projects and the overall health of the network’s ecosystem.

What is AuM? 

Assets under management (AUM) represent the total market value of investments that a person or entity manages on behalf of clients. This key metric encompasses the financial assets overseen by an investment manager, such as mutual funds, stocks, bonds, and other securities. 

AUM serves as a crucial indicator of the size and scale of an investment firm, influencing factors like its revenue generation, reputation, and ability to attract new clients. While the specific assets included in AUM calculations can vary depending on the institution and industry standards, it generally reflects the overall scope of an investment manager's responsibilities and the level of trust placed in their expertise by clients.