The world of cryptocurrency and blockchain continues to grow each year, with exciting new projects launching all the time. Many projects hold a presale or private sale before the public token sale to rise initial funding. Getting into these early sales means securing tokens at a discounted price. However, entering a presale also comes with risks if you don’t understand the project properly.
Doing too little research on the project
The first big mistake is not researching the crypto project enough before entering the presale. When tokens are priced low in the presale stage, it is tempting to dive in quickly without proper due diligence. However, not understanding what the project is building, how it works, and who is behind it is hugely risky in cryptocurrency. Before buying any tokens in a presale, you should dive deep into the whitepaper, research the team members and advisors, and check for audits and verifications, the tokenomics, roadmap, and business model. Don’t risk money on a project you don’t fully understand – that’s no different than gambling. Proper research should give you confidence that there is substance, potential, and competency behind the crypto start-up.
Failing to check presale details
Crypto enthusiasts get burned by failing to check the fine details around vesting schedules, bonuses, presale formats, and more. For example, a project might offer much discounted token prices. However, the tokens then have a multi-year vesting schedule meaning you cannot access most tokens for months or years after the presale. Some presales have tiered bonus structures where buying more tokens gives you a bigger bonus. However, the biggest bonuses might require an impractical investment for most buyers.
Be sure to comb through blogs, announcements, and offering documents to understand vesting schedules, bonuses being offered, the minimum and maximum buy-ins, and any other presale details relevant to your investment amount and strategy. Don’t presume anything – crystallize how the presale works in writing from official sources before purchasing.
Investing more than you can afford to lose
Retik Finance’s presale stages cryptocurrency presales remain high-risk investments, no matter how promising the project seems. Many presales require a minimum buy-in of $100 to $500. However, only invest what you lose without impacting your finances or life. Never take on debt or liability to invest in a presale or put in so much money that the failure of the project would be catastrophic for your net worth. Approach presales as high-risk, high-reward speculation where a total loss wouldn’t change your financial plans.
Considering vesting schedules
As highlighted earlier, many presale token allocations have vesting schedules lasting months or even years after the initial purchase. It means even if you want to sell or send your tokens after launch, most of them will be locked up for a set period. Failing to account for the locking of tokens limits your ability to take profits on price spikes or use the assets.
Before entering a presale, analyze the published vesting schedule in detail including cliffs, release portions, and duration. They are comfortable with when you will be able to access tokens fully and factor that into your post-launch strategy. Also, be aware that vesting contracts have bugs too so diversity across multiple presale investments is key.
