What Is Polkastarter? How It Works, Tokenomics, & More

PolkaStarter is a decentralized fundraising platform with the goal of helping new crypto projects launch and distribute their tokens through Initial Dex Offerings (IDOs). It uses smart contracts, supported by multiple different blockchains, including Ethereum, BNB Chain, and Polygon, to conduct these IDOs without relying on any centralized third parties like major exchanges.

Initial Coin Offerings (ICOs) were once all the rage in the crypto community, but the have become increasingly rare after regulators started to crack down on unregistered security sales and other violations of investor protections. Since then, the IDO model has become more and more common, allowing projects to transparently launch tokens without as many intermediaries. Polkastarter is one of a handful of token launchpads leading this new charge.

In this article, we’ll explain exactly what Polkastarter is, how it works, its benefits and limitations, and the role of its native POLS token. Finally, we’ll delve into the increasingly complex world of IDOs, detailing the major risks and seeing how Polkastarter fits in the larger ecosystem of launchpads.

What Is Polkastarter?

Polkastarter is a decentralized fundraising and token distribution platform that allows users to launch and invest in crowdfunded token sales on multiple blockchains. Its basic functionality is similar to other launchpad or IDO platforms like Pump.fun or Binance Launchpad. Polkastarter got its name from Polkadot, an interoperability focused blockchain ecosystem, with plans to launch its own network within it, though it has since moved away from that vision and doesn’t operate on Polkadot.

It’s important to note that Polkastarter isn’t a normal crypto exchange. It focuses on crowdfunding new crypto projects and doesn’t offer basic crypto trading. However, it has expanded to offer fundraising infrastructure for NFT launches and various gaming projects as well.

The platform was a smash hit when it first launched in late 2020 and helped crowdfund a handful of successful tokens. Its native token, POLS, was also remarkably successful in the early days, reaching an all-time high of $6.47, which translated to a $647 million market cap. However, both the token and the platform fell off quickly as the rest of the crypto market crashed.

Since its peak, POLS has fallen over 98% and the Polkastarter platform has struggled to crowdfund successful projects. According to Chainbroker.io, a crypto analysis platform, Polkastarter’s average ROI is 0.147x, indicating that most projects left investors with major losses. However, it also notes that the average All-Time High (ATH) ROI for the platform is 5.14x, which means that some investors could have made significant profits if they managed to sell at the perfect time.

The launchpad industry has become increasingly competitive since Polkastarter first launched, with dozens of new platforms offering similar or better services to developers and users. For example, Binance, the largest crypto exchange in the world, has its own launchpad. Pump.fun, a platform dedicated to launching meme coins with little capital up front, has also become a massive success, driving business away from other launchpads.

How Does Polkastarter Work?

Polkastarter’s IDO launchpad is powered by smart contracts that manage token sales by setting predefined rules, which can differ from project to project. Like many other launchpads, Polkastarter doesn’t let token prices freely float with Automated Market Maker (AMM) systems. It uses fixed swap pools, which sets prices at predetermined levels during the IDO.

The fixed swap pool system is a central mechanic of the platform as it is intended to help address common issues in IDOs, namely extreme price volatility and rapid price inflation due to low liquidity. Fixed prices are also beneficial for the teams behind the project because it doesn’t require setting up large, risky liquidity pools before the token is fully launched.

However, this can be a negative for regular investors because a fixed price could easily be mistaken for the token’s market value. There are never any assurances that the price will trade at or above the fixed price after the token is allowed to trade freely on the open market. In fact, it’s quite common for projects fresh out of IDOs and similar sales to drop in value right after launch.

Polkastarter also allows projects to set the main terms of their token sale, including its fixed price, tokenomics, total supply offered, accepted blockchain networks, and eligibility requirements. For example, a team selling a token on Polkastarter could force investors to verify their identity, stake tokens, whitelist their wallets, or meet a combination of these requirements. before they can participate in the sale.

Teams can also determine which supported blockchain they want to launch their token on. Polkastarter currently supports Ethereum, BNB Chain, Polygon, Avalanche, and Celo. Users may have to interact with the token’s blockchain to whitelist their wallets or stake required tokens before investing.

More recently, Polkastarter launched support for NFT projects as well as basic tokens. These sales work almost identically to the regular IDOs. Developers can determine the supply of NFTs, fixed prices, and eligibility requirements.  However, it seems like the vast majority of projects on the platform are tokens, not NFTs.

What Is the POLS Token?

As we mentioned above, POLS is the main utility token of the Polkastarter platform. It has a variety of uses, including supporting Polkastarter’s participation mechanisms, governance voting, and incentive structures. For the most part, it is not a payment or settlement token.

One of the main uses of POLS is for eligibility requirements. Some token sales on the platform require investors to hold or stake POLS to gain access to the IDO. Higher POLS balances may increase your chance of gaining access to the sale because of Polkastarter’s lottery-based system. This lottery takes balances into account, giving users with higher balances a greater chance of gaining access to the sale. These mechanics may not be relevant with certain sales, especially those that are not oversubscribed.

The other main function of the POLS token is for governance.  POLS holders get to vote on various governance proposals, helping determine Polkastarter’s development, policies, and general direction. However, it’s difficult to determine how much input regular investors actually have. Many crypto projects with similar systems are dominated by their team or founders, who are much more active and often hold the most tokens.

Benefits and Limitations of Polkastarter

Like any other crypto project, Polkastarter has its fair share of both benefits and limitations. First, let’s take a look at the main pros of the IDO platform.

Benefits of Polkastarter

• Highly structured token sales: Fixed prices and eligibility requirements can be very valuable for teams and investors.
• Reduced volatility: Fixed prices can help reduce extreme price swings during the IDO.
• Multi-chain flexibility: Teams can choose from some of the most popular blockchains.
• Smart contract enforcement: Instead of centralized parties making arbitrary decisions, smart contracts execute automatically.

Limitations of Polkastarter

• No guaranteed allocations: Oversubscribed sales may lead to investors failing to receive an allocation of tokens.
• Fixed price risk: Fixed prices often don’t reflect actual market value, sometimes leading to massive swings post-launch.
• Eligibility requirements: These requirements can make investing in a token frustrating and tedious, limiting accessibility.
• Little or no price discovery: Due to fixed prices, it is very difficult to gauge real market demand until after launch.

What Is the Future of Polkastarter?

While no one can perfectly predict the future of any given token or project, Polkastarter will likely need significant changes, a massive marketing campaign, a huge stroke of luck, or all three combined to be able to return to its former glory. It still offers legitimate utility to project teams as well as prospective investors, but it seems like it is having a ton of trouble competing with other more established launchpads like Binance Launchpad and pump.fun. If it can’t compete for the best token sales or users, there is a strong chance that the platform and its native token will continue to wither away.

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Julia Sakovich

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I’m a content writer and editor with extensive experience creating high-quality content across a range of industries. Currently, I serve as the Editor-in-Chief at Coinspeaker, where I lead content strategy, oversee editorial workflows, and ensure that every piece meets the highest standards. In this role, I collaborate closely with writers, researchers, and industry experts to deliver content that not only informs and educates but also sparks meaningful discussion around innovation.

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