Recent analysis from Glassnode indicates that Bitcoin's realized volatility has hit a historical low not seen since March 2020. As cryptocurrencies lose their characteristic high volatility, they are fading from the spotlight for many investors. However, the recent announcement by Binance, one of the world's largest crypto exchanges, to list both Sei ($SEI) and CyberConnect ($CYBER) on its Launchpool has once again captured significant attention.
A major reason for the heightened interest in this Binance Launchpool event is the status of both Sei and CyberConnect as standout projects within the industry, each boasting a large and engaged user base.
Sei is a Layer-1 blockchain focused on scalability and speed, backed by investments from prominent firms like Multicoin, Coinbase, and Jump Capital. Even before its Binance Launchpool announcement, Sei's testnet attracted over 4 million users and processed more than 100 million transactions.
CyberConnect is a Web3 social network that enables users to own their digital identity, content, and connections. Data from Dune Analytics shows that CyberConnect's daily active users (DAU) peaked at over 200,000 and currently sits around 62,000. Following the Launchpool announcement, weekly active accounts grew by 30%.
Despite the excitement, some critics argue that Launchpool doesn't provide sufficient returns for users. It's crucial to understand that participating in Binance Launchpool is fundamentally different from Binance Launchpad. Launchpool acts more like a wealth management product for holders of BNB and certain stablecoins. It features longer cycles and relatively fixed returns, making it suitable for existing BNB holders and those with a lower risk tolerance. Binance also offers a stablecoin pool for farming, allowing users to earn new token rewards with minimal risk. This guide will break down the real returns of Binance Launchpool and outline strategies for optimizing your participation.
Binance Launchpool as a Financial Product: Cumulative Returns of ~15.37% Over Three Years
The difference between Binance Launchpad and Binance Launchpool is evident in the number of projects launched. To date, Binance Launchpad has hosted 32 projects, while Binance Launchpool has featured 37. In 2023 alone, Launchpool listed 6 projects—double the number on Launchpad.
Since 2021, the average farming duration for a Binance Launchpool project has been 28.69 days. Notably, 9 projects were already listed on Binance before farming began, allowing investors to better arbitrage based on annualized percentage yield (APY). To accurately gauge performance, we use the APY figures released by Binance (data for CYBER and SEI is as of August 16, 8:00 UTC) and calculate the actual return over the entire farming period.
Ignoring factors like overlapping farming cycles and fluctuations in BNB's price, the BNB-denominated returns for Binance Launchpool over the past three years would be approximately 8.06% (2021), 0.91% (2022), and 4.9% (2023). Note that the 2023 return for SUI is higher than 4.9% as official APY wasn't disclosed and farming lasted only 2 days. This means that if a BNB holder participated in every Launchpool since 2021 and converted all earned tokens back to BNB, their BNB holdings would have grown by roughly 13.87%. Additionally, data from 23 projects shows no direct correlation between the amount of BNB staked and the yield earned.
Furthermore, Binance's BNB Vault product offers an automatic staking feature with an APY of around 0.5%. This tool automatically allocates user funds to Launchpool, providing the base 0.5% return plus additional Launchpool rewards. Combined, this strategy would have yielded a cumulative three-year return of 13.87% + 1.5% = 15.37%.
Compared to Binance Launchpad, participating in Launchpool doesn't require additional capital outlay, making it ideal for existing holders of BNB and stablecoins. However, since farming periods are generally longer, using leveraged strategies like borrowing BNB requires careful consideration of each project's specifics rather than blind participation.
For extremely risk-averse users, the stablecoin farming option is available. Over three years, the cumulative return for stablecoin pools is approximately 13.16%. Users can typically earn about 4.1% APR by keeping stablecoins in flexible savings products, occasionally boosted by 1%–2% during promotions. Thus, the total return would be 4.1% + 13.16% = 17.26%.
Optimal Trading Strategy for Launchpool Tokens
For investors who don't hold BNB but still want to profit from Binance Launchpool, understanding the projects well enough to borrow BNB might be necessary—though this can be challenging in a short timeframe. Alternatively, we can infer profitable scenarios by examining Binance's rule structures.
There's usually a time gap between the start of farming and the token's listing on Binance. Statistics show that projects with a longer gap (often called "blind farming") tend to perform better. For non-BNB holders, choosing projects with a longer delay between farming start and listing might lead to higher returns.
Some investors skip farming altogether and instead trade on the secondary market. Excluding two delisted projects (Bitcoin Standard Hashrate Token and Anchor Protocol) and the recently listed SEI and CYBER, we analyzed 19 projects from 2021 onward.
After filtering out short-lived price spikes caused by initial liquidity and market sentiment, if you bought at the first-day closing price, every project would have been profitable, with an average return of 76.95%. However, 9 of these 19 projects reached their all-time high on the second day of trading. This suggests that selling on the second day might be the optimal strategy for Binance Launchpool tokens.
Reasons for price increases vary, but downturns are heavily influenced by Bitcoin's performance. Two projects hit their lowest points on May 12, 2022, when BTC briefly fell below $27,000 for the first time since December 29, 2020. Eight projects reached their lows on June 10, 2023, another day of significant BTC decline. Therefore, attempting to buy the dip on Launchpool tokens requires a keen understanding of Bitcoin's market trends.
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How Binance Launchpool Adds Value to BNB
After analyzing Binance Launchpool projects since 2021, one conclusion is clear: Launchpool acts as a stable wealth-building tool—and a potential lottery—for BNB holders. Binance leverages its industry dominance and influence to continually add value to the BNB ecosystem.
BNB currently ranks as the fourth-largest cryptocurrency by market cap, at approximately $36 billion. February 2021 was BNB's best month ever, with the price surging 374.2% from $44.3 to $210.2, and even touching $348.7 at its peak. While many factors contributed to this growth, Binance Launchpool undoubtedly played a significant role.
Unlike value-add mechanisms in other projects, Binance Launchpool's impact on BNB is direct and powerful. In the two months leading up to February 2021, Binance launched 5 Launchpool projects within just 10 days, with the highest APY reaching 26.96%.
While BNB's current market size makes such explosive monthly gains unlikely, the recent addition of high-profile projects like Sei and CyberConnect suggests that the ecosystem remains dynamic and worth watching.
Frequently Asked Questions
What is Binance Launchpool?
Binance Launchpool allows users to stake cryptocurrencies like BNB or stablecoins to farm new tokens. It's designed as a low-risk earning mechanism for existing holders, differing from Launchpad which involves new token sales.
Is participating in Binance Launchpool profitable?
Historical data suggests that consistent participation can yield positive returns. Over a three-year period, BNB holders could have achieved cumulative returns of around 15.37%, while stablecoin farmers might have earned up to 17.26%.
What is the best strategy for trading Launchpool tokens?
Analysis indicates that buying at the first-day closing price and selling on the second day could be effective. Many tokens reach their peak shortly after listing, though market conditions and Bitcoin's performance heavily influence outcomes.
Can I participate without holding BNB?
Yes, but it involves higher risk. You can borrow BNB to stake, but this requires careful project evaluation due to longer farming periods and potential interest costs.
How does Bitcoin affect Launchpool token prices?
Bitcoin's market movements significantly impact altcoins. Many Launchpool tokens hit all-time lows during major BTC downturns, so monitoring Bitcoin's trend is crucial for timing investments.
What are the risks of Binance Launchpool?
Primary risks include volatility in BNB's price, project failure, and broader market conditions. Stablecoin pools offer lower risk but also lower returns compared to BNB staking.