Early Stage DeFi Project Launchpads and Incubators: Do they add Value to the Crypto-Financing Space?

The following post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga.

In this age of crypto-financing, DeFi (or decentralized financing) has taken off like a phenome only rivaled by its underlying technology – Blockchain. Unlike its centralized peer, financing controlled by central bankers, one allure of DeFi is its relative “freedom” from human control. De-centralization not only removes the “human element” involved in the flow of finances from entity to entity; but it also adds anonymity, sophistication, and speed to financial transactions.  This may account for the fact that more start-ups and fledgling companies are now turning to DeFi incubators and launchpads as a source for venture financing.

DeFi Launchpads: Saturated…Or Room to Grow? 

But, with so many players already crowding the space, is there any room for yet another DeFi launchpad? Well, the answer is: Yes…there is! And the numbers bear testimony to that fact.

 

According to DeFi analytic and rating engine, DeFi Pulse, there is over $56 U.S. billion in total value locked (TVL) in DeFi – and that figure continues to grow. 

 

Let’s put that figure into perspective. Back on April 16, 2020, the TVL in DeFi was around UD$794 million. Fast forward approximately a year, and the TVL had mushroomed to slightly under $53B. That’s an over 6,575% jump in slightly more than 356-days!  

So, what does this exponential growth in DeFi TVL tell us? 

 

 

Well, for one thing, the numbers highlight the tremendous demand for DeFi projects – there’s no denying that. But there’s another important point that these numbers highlight. The rapid pace of growth in money flowing into DeFi leads us to conclude that there’s ample room for other DeFi launchpads to move in and add value to the community of start-ups, financiers, developers and investors. And that’s exactly what DeFiDrop aims to do!

The Genesis of Value Creation

DeFiDrop, the newest entrant into the DeFi space, is a specialized launchpad and incubator platform geared towards value creation by furthering the cause of decentralized finance and anonymous teams (more on that shortly). The platforms’ DROPS token debuted by listing on Pancakeswap in early April 2021.  So, what’s the value proposition here?

Invaluable Alternate Financing Option

Well, we’ve already discussed the vast – and ever growing – DeFi TVL, which highlights that there definitely is value that newer players bring to the space. As recently as last year, DeFi was considered a passing fad – something that would likely fade away in a few months. But with serious money continuously flowing into the DeFi space, this new financing paradigm has proven extremely resilient, and launchpads are one of the main reasons for that resilience. And here’s why:

• Many start-ups are cash-starved, with traditional lenders (Hedge funds, Commercial Banks, Venture Capitalists) preferring to hold back on financial commitments in this uncertain time. As a result, these fledgling companies are looking for new and innovative ways to fund themselves. They, therefore, see launchpads as a valuable ally in that respect
• If early-stage companies don’t explore “unconventional” means to finance themselves, they typically turn to the Crowdfunding model. But there’s limited hope for them there. As Entreprenuer.com noted, more than 2-thirds of them fail to meet their funding goals? Where else can they find value but in innovative DeFi launchpads!  

Start-up project sponsors would love nothing better than to simply focus on developing their concepts, and polishing their fledgling ideas, rather than going out to seek financing for their projects. And that’s yet another area where Launchpads deliver value. With DeFiDrop acting as the Launchpad, that leaves the start-up entrepreneur with more time and energy to focus on running, growing, and managing the business.   

Trusted Anonymity

One of the biggest value-adds that DeFiDrop brings to the table is their approach to developer anonymity. As highlighted above, many project developers prefer the anonymity of their boardrooms, laboratories, development centers, and incubators. They see little value in revealing themselves publicly – not for any nefarious reasons, but just because it gives them greater leeway to operate without the constant “glare of the investing public”.  And working with their Launchpad partners, they accomplish that objective.  

The world of crypto investing is sometimes filled with mistrust and misgivings. So, unfortunately, not every crypto investor or venture capitalist sees anonymity as a positive – perhaps rightly so. Because they put their money on the linebacking these start-ups, they’d like to assure themselves that the venture is kosher. DeFiDrop delivers value by bridging that gap – between the need for anonymity on the one hand, and the need for transparency and trust on the other hand.  

The platform’s team puts prospective projects, seeking to list on the launchpad, through a rigorous diligence process. Only after they’ve established the legitimacy and trustworthiness of the start-up, will they allow it to launch on the Drops platform. This “trusted anonymity” satisfies everyone’s needs, and establishes investor confidence in the project without revealing who the sponsors/entrepreneurs are.

The Keys to a Trusting Relationship

So, the DeFiDrop launchpad has established itself as a trusted partner for start-up project fund seekers and venture backers. But how do investors on the platform establish that the launchpad itself is legitimate and trustworthy? Well, the keys to a trusting relationship lie in independent third-party involvement, and that’s where blockchain auditors and consultants, as well as custodians, play a role.

The industry-leading crypto-specialist audit firm HashEx has performed its initial audit of the DeFiDrop platform. They assessed not just for potential vulnerabilities in the code, but also reviewed the system exhaustively for potential backdoors and malicious code that could be used to siphon off investor funds. The result: DeFiDrop passed with flying colors! The code and the platform were cleared of any questionable coding practices, which goes a long way in building that trusting relationship. 

But cynics may point out: That’s just a technology audit – what about the ongoing safety and security of users’ funds? Once investors buy in and lock their finds, what’s to stop the platform from misusing or misappropriating them? Well, that’s not likely to happen either! The platform uses reputed crypto industry player CryptEx Locker as the launchpad’s custodians. This means no one from the platform has physical access to investor funds.

Add to that, other credible industry partnerships, including Unimex and DeFiBoost, and it’s safe to say that DeFiDrop offers investors, merchants, developers and venture financiers a trusting and safe space within the DeFi ecosystem.

The preceding post was written and/or published as a collaboration between Benzinga’s in-house sponsored content team and a financial partner of Benzinga. Although the piece is not and should not be construed as editorial content, the sponsored content team works to ensure that any and all information contained within is true and accurate to the best of their knowledge and research. This content is for informational purposes only and not intended to be investing advice.