The way new cryptocurrency projects raise their capitals has evolved over the years. From ICO to IEO models seen in the past, new crypto projects have now opted for a different approach in their fundraising for their project development. Both developers and investors have chosen to generate capital by using a launchpad.
But how safe is a launchpad? How can a mere investor trust a project in a launchpad without the fear of a “rug pull?
Introducing LIFTOFF’s Crash Insurance
Crash Insurance is as the name implies, insurance offered to investors — the way it works is simple: if for whatever reason the investor is unhappy with their investment in the first week of the project going live, tokens can be redeemed for 100% of the presale price, minus a 2% ETH service fee (LID fee).
What can LiftOff Crash Insurance do?
- Crash insurance guarantees a floor for all tokens in every sale in LIFTOFF. Anyone may redeem their tokens for eth at the original price of the sale minus a 2% fee. This insurance covers 100% of tokens for the first week after the sale and a declining amount for the following 9 weeks until it fully expires.
- Crash insurance guarantees deposits and covers 100% of the sale for the first week. So if after the sale finishes the developers do not appear to be performing their duties as they claimed, then the buyers should seriously consider selling their tokens for profit or redeeming them for insurance at the original sale rate.
Crash Insurance and Project Developers
The developer’s pay is reduced by insurance redemptions. If these redemptions are quite high, then they receive little to no pay. Accordingly, developers are heavily incentivized to perform their duties diligently. It does not force them to do anything but does create better economic incentives.
Gradual payments relate to how developers and promoters are paid. First, they receive no tokens from the sale so there is no risk of insider dumps. They must buy their tokens at the market rate from their raised eth. Furthermore, their eth payments are 10%/week and reduced by insurance redemptions.
How insurance works
The insurance is provided by the deposits themselves. Crash Insurance provides full protection for 1 week and reduced protection for an additional 9 weeks.
For the next 10 weeks, the insurance is still available but reduced. If no claims were made in the first week, the insurance fund is reduced to 42.5% (however, 100% of the presale price can still be claimed). The insurance fund then reduces 10% per week. Crash Insurance will be offered and available on all LIFTOFF launches.
During the first week, the developers and promoters receive no eth at all so the insurance contract is able to completely unwind the sale.
After this first week, the developers and promoters must be paid. Ten weeks is a compromise to encourage a speedy payment of funds to the developers while providing ample time for the community to evaluate the progress.
There is a total allocation of 112% instead of 100% because LIFTOFF uses XETH instead of WETH pairs.
Even at 10 weeks, some developers may complain that the payment is too slow, but better protections for buyers will always mean some additional restrictions for developers.
Launchpad and Community
For a launchpad to be successful, there should always be support from a community. LIFT token is entirely designed to create community.
As a launchpad, we aim to take care of our community, and LIFTOFF’s Crash Insurance is our one way of doing so. On top of that, our guaranteed instant liquidity help give assurance to the community of not losing their hard-earned money should they decide to participate in any ongoing projects on the launchpad.
Even if a launchpad performs perfectly on a technical level if the community fails to earn a decent return on the sales they will leave and go elsewhere no matter the reason.
With the guarantee of liquidity being instantly locked, and crash insurance offering investors the potential for their money back, it is a win-win for both team and investor alike.
Stay tuned for more updates and announcements.
For more information about the project, please check out:
Whitepaper link: whitepaper.liftoff.eth.link
Liftoff platform: https://liftoff.eth.link
Xeth wrap/unwrap: https://xlock.eth.link
Lid Protocol: https://lid.eth.link
LiftOff Announcements: https://t.me/LiftOffNews
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