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First of all, many friends added me. One of the main reasons is that they are curious about the primary market, or they want to explore and understand the primary market. Whether it is new or old, they have a vague concept of the primary market. Even if there are many crypto friends who have heard of the primary market, their understanding of the primary market is also very one-sided. Therefore, when launching many projects, many people will ask what the contract is and why they can't find it on the exchange. In order to avoid such misunderstandings from happening again. So today, I will give you a detailed explanation of what the primary market of the crypto is. It can be regarded as a popular science.
The primary market in the crypto is actually a very broad concept, but before explaining the primary market, I want to make one point clear to everyone!
It is the project launched by our community. It is not the so-called on-chain on-chain meme or the short-selling project, nor the three-no cx project. Because on-chain meme is what everyone often calls the primary market, many people will have a preconceived idea when we launch the project, thinking that the project we launch is the on-chain on-chain meme. So I declare again that it is not a on-chain on-chain meme project! It is not a small cx project! It is a mainstream value project, a project directly listed on a large exchange.
First, let's distinguish what is the first level and what is the second level
First of all, whether it is the primary city or the secondary city, they are all markets, and this market refers to the financial market.
The primary market refers to the issuing market, that is, the market where token quotas or SAFTs are sold to investors for the first time.
Let me explain briefly. The primary market is where issuers, VCs, and market makers, these super-large investors, can get token quotas and release token quotas to retail investors. In other words, transactions like ours are called the primary market.
The secondary market is transactions between retail investors. After the token is launched, investors can buy and sell the token in the secondary market.
The difference between the two is the word "mutual" in the secondary market. The currency prices here refer to the transactions in the secondary market.
Crypto primary market
The primary market of the crypto needs to start with private placement, which is SAFT.
This method has actually been used in traditional industries for many years. There is actually no essential difference between private equity in the crypto industry and traditional private equity. Investors and project owners can just negotiate the terms.
However, most projects did not issue tokens when conducting private financing, so the SAFE of equity investment developed into SAFT.
SAFT stands for Simple Agreement for Future Tokens. This method is highly compliant and almost all mainstream projects now use this method for financing. (Jinshan Community launches all mainstream coins, and some projects do not even have to pay the listing fee. They rely on popularity to directly list on well-known exchanges, such as Ouyi, Binance, and Coinbase, such as zksync)
However, this method is mainly suitable for professional financial investors, and the threshold for retail investors to participate is still a bit high.
Generally, projects will go through seed round, private round, and public round. The price of each round increases, and it is common to see a multiple price difference, especially the seed round price of the project is also very low. The sooner you get the token quota, the higher the return you can get.
The token quota that the community strives for is the private placement quota, so there is no need to ask which app you can use to buy the token quota. The token quota for large projects follows the same process as traditional finance and does not go through the chain.
Seed round: In the early stage, institutions mainly provide initial team building funds.
Simu round: mainly institutional investors or institutions, with large investment amount and favorable price. Community token quota is in this layer.
Public offering round: You can understand it as Coinlist IPO and Launchpad
Advantages of the primary market
It is not a wise choice to chase the rise and fall in the secondary market now, because you will stand on the top of the mountain if you are not careful. But it will not happen in the primary market, because you know that you will eat meat together with VC, and you understand the cost of the chips of the institutions.
The primary market is the market before the exchange. Before the currency is listed, the exchange will issue an announcement. Many people know that the currency will be listed on the exchange, but they just don’t know how to buy it. They can only chase it back and forth in the secondary market, which is undoubtedly very dangerous. The primary market is to buy the project’s tokens at a lower price.
Before the launch, many people will choose to rush to buy the new currency when they see it go online, but the volatility will be very large at the moment of launch, and many people will be left hanging.
Why did they choose to get in early and get hung up on the tree by accident? I think it’s because they don’t understand the information gap. I have said before that an information gap is a gap of several zeros. They can choose to get on the train in advance in the primary market without worrying about the risk of being hung up at a high point.
Classic primary market example
Take Ethereum ETH and EOS as examples. They both started from the primary market and moved to the secondary market, and eventually evolved into other ways of playing, such as contracts. The initial primary market price of Ethereum ETH was RMB 1.89 per coin, and EOS was RMB 7 per coin. The primary market is where these digital currencies were first born, and the prices are also very low.
In the last bull market, our community launched SOL, which is also a 100-fold coin, and the price is also very low. It may be a 100-fold in the second level, but it will be more than a 100-fold in the first level.
Explaining what the primary market is is far from enough to answer all your questions. In the following articles, I will answer other questions. You can see them at the top of my circle of friends.
