Melvin: Hello everybody. Welcome back to meet the Founders session with Signum. Today we have Sharif from Polkapad. Hi, Sharif. How are you?
Sharif: I’m fine. Thank you for the invitation, Melvin.
Melvin: Yeah, no problem. Okay, so today we are very fortunate to have you. We’d like to find out more about Polkapad. Can you describe briefly what is Polkapad?
Sharif: Polkapad is basically a fundraising hub for Polkadot projects based on Polkadot natively. We’re the first launchpad to support Polkadot natively. You’re able to connect your EVM wallet, your Polkadot wallet, whatever it is, or it could be Polkapaddot JS, Talisman sub wallet. We support here all the ecosystem. The other thing we are working on really hard right now, it is analysing on-chain data of the users to provide based possible token distribution models in the market.
Melvin: Oh, that sounds interesting. So, what are the outstanding features of compared to the various launchpads that we know of?
Sharif: First thing, if we’re talking about the launchpad, it’s progressive allocation model. It means for example, if you stake 100 PLPD tokens on our platform, you receive $10 allocation. But if you stake 1000 tokens, you will not receive ten times more. You receive $50 allocation for example, only five times more. It’s like basically made for being welcomed, for new entrance to the ecosystem and to let tokens being distributed to the small wallets. I think it’s very important because if we’re talking about the current launchpads, 90% of them are based on the tier system. So basically, you have to stake more to get more allocations. And if we then look for example at Dao Maker token distribution, it’s visible on Etherscan. Right now, around 99% of the tokens is being held by top hundred holders.
It’s not really like a launchpad, it’s a small community of people who take all the allocations. It affects the project as it is not an ideal way of distribution. A lot have changed since we started from our vision of the market. We understood that the main problem of web3 projects right now are users. Our experience and analytics which we are preparing are saying that it’s only around ten companies on the market currently who are doing more than $1 million on-chain revenue per month. It’s a huge problem because there only a few companies who are able to achieve these results.
The big problem with web3 companies having with users are there are not many users. Everybody think there are 500 thousands or millions of people having wallets and there are so many bitcoin holders and ethereum holders and etc. But when you start to analyse smart contracts, interactions, etc., you start to understand that even very popular projects like MetaMask or equivalent, their daily active users who are using the swap functionality might be around the 10,000 mark. So yes, there are no infinite users everywhere and this is why we think it’s really important to let the tokens be distributed to as many people as possible because those guys have to be converted to customers.
The other insight which we got through chain activity analysis, we found out that it doesn’t matter how the company distribute their tokens. It could be airdrop, it could be like some incentivization program, it could be IEO or IDO. The statistics is always the same, that 95% of the people are not becoming the customers of the company, they’re not trying to use the application they received the token from. They will just sell it or hold it to sell it after. So only 5% of the people are even trying to use the app which the utility of the tokens which they actually received. This is a huge problem because afterwards companies are spending a large sum of money on market making, on ambassador programs, on marketing to attract some users, to generate some protocol revenue and etc.
In my opinion, this is a mistake from the beginning as people are not ready to use web3 applications, only ready to speculate on it. One of the biggest challenges for the market right now, as I said, are users and token distribution based on-chain activity. There are several big events that we’re holding in next couple of months. Some new side projects coming from Polkapad to attract users and for targeted token distribution to getting access to wallets and etc. What we do believe in is that in 2-3 years, your web3 wallet is going to determine if you are valuable for web3, and you will make money on it if you are really a valuable user.
What this means you try to be a good user for the applications, try to test a lot of things, try to move assets, do something and play around with the apps, these will get you access to more and more products, available products on the market.
Melvin: I think it’s moving towards the direction of the concept of Soul Bound Tokens about the online reputation and your activities online towards a project.
Sharif: Yeah, it’s about not only activities, we are not really focused on social activities of the people because here 95% of the people are bounty hunters, they’re not bringing any value, they just come to discord or telegram trying to make some activities short term till there is some incentivisation program. And as soon as they receive tokens, they just forget about these projects and move into the next one. This is how people make money. It’s normal. Especially in countries with low income, if you receive an airdrop of few hundred dollars and you’re able to do it every month, it’s a huge income for a lot of people. These people are not valuable for the projects. As I said, we are based on on-chain activities, so the person who just received tokens and sold it instantly without using the app is an example of an undesirable user. Which implied he might not be able to receive good allocations thereafter.
Melvin: Coming to the next question, I understand that you guys are issuing tokens very soon. What role does it play in your ecosystem?
Sharif: First thing is basically you will stake Polkapad tokens on our platform to receive allocations inside the product. The other feature is that inside Polkadot, will be available to stake Polkapad tokens plus some parachain tokens. As an example, you believe in EVM on Polkadot, and you like Moonbeam. You will be able to stake PLPD plus Moonbeam on our platform and you will receive more allocation on projects launching on Moonbeam. It’s like a big home for all projects on Polkadot right now. Everybody can stake our token in addition to a parachain token and receive allocation from the projects they like.
The other thing is that we are moving our on-chain data analysis out from Polkadot ecosystem as there are several projects from Ethereum ecosystem needed some analytics too. Our tokens are also going to be used for access to on-chain data. I’m not able to disclose the full details, but it’s also going to be a really important utility of Polkapad.
Melvin: Okay, got it. Are you able to share some current and future development plans of Polkapad?
Sharif: In a couple of weeks, I hope we can launch a really big event. It’s called test sales launching on Gear parachain, based on Gear test network. Polkapad is going to be used as the platform conducting it. Users are going to claim test tokens of Gear, test tokens of Polkapad and some rewards thereafter. If things goes well, sometime later we will do a token generation event and start doing real sales based on Polkapad. There is also another big event happening in Polkadot with other parachains. It’s concerning on-chain data analysis. Happening sometime in the beginning of October.
Our focus right now is to make sure the launchpad is working well and then do first token distributions based on-chain activities. This is what keeps us really busy working hard.
Melvin: On this aspect, how are you guys dealing with the smart contract security?
Sharif: We are doing smart contract security audit and we are supporting Binance smart chain because we accept dot and KSM from Binance. For smart contracts based on Gear, they’re going to be checked by the Gear team and afterwards by the external auditors. So yeah, we’re taking care of security, of course.
Melvin: Okay. Do you think launchpad has lost their value proposition for new projects to launch?
Sharif: Obviously yes. The systems who are based on that tier system right now, there is no value proposition in it. And the other argument, they lost it because they have not help projects find meaningful users. I don’t believe that in 2-3 years, token distribution can be based without some form of data and currently launchpads are not working on it completely. They’re just launching some low-quality projects. It’s a question we faced because if you want to make something huge or something big, there is this problem, we can call it the chicken and the egg. For example, on the market there are Coinlist and Tokensoft.
So those guys, they don’t have their own tokens as a launchpad and their services are really expensive. It’s sometimes a six digits per sale. They focus on tier one big companies which already have their community and they just need a good platform which can accept payments and some technical stuff to do the token generation event. These launchpads are not exactly launchpads as they are company arranged. They care about their customer because their customer is basically the company who is making the IDO, not the retail investor. In the case of a normal launchpad, which is most of them in the market right now, the final customer is the retail investor.
In a typical launchpad, when a new project comes, the launchpad tells them the rules. Like look, we have our tokens, it’s our ecosystem, it’s our users, we spread allocation on how we want, we don’t care about your ambassador program, etc. This works only for small projects. And I think this is the problem why nobody can compete with Coinlist and Tokensoft because they are company oriented. What we are doing right now with the on-chain data analysis is basically also company oriented. We are able to work right now with tier one companies, really big one, cool ones, which normally won’t be working with launchpads. It has opened a lot of doors for us for token distribution. And we ask them “Look guys, what on-chain activity you think is valuable for you? We can find users across our database and etc. And invite these users to do something valuable for your product.” This is the future. For normal launchpads, I think they are not going to survive, I believe.
Melvin: Got it. Then what are your plans for profitability and how do you see launchpad business model evolve over time?
Sharif: Launchpad is going to be a platform for projects to gain active and meaningful users and rewarding them for that.
For crypto, you receive something back from the companies because you are a valuable person. Similar concept for launchpad, it’s ARPU per user. If we’re talking about venture capital here, one thing we have to understand, companies should be profit driven. The majority of companies are sponsored by investors’ money or they spend their treasury. They’re not making money on commissions, on-chain activity. There are many companies who cost a fortune in the market, but they don’t generate any money. There will be a paradigm shift in the next few years where investors are concerned about revenue.
It’s going to be a big segment on the market for companies who are able to provide users because the ARPU is really high. For example, Opensea is making around $440 per user monthly. It’s a good number. MetaMask is doing $40 per user. It’s also a very good number. Lido and some other DeFi services on Ethereum have an average APRU of $300 + dollars. So actually, in crypto, if you have an user, it means you are making good money on it, on this guy and he’s making a good money of you vice versa.
But the question is how to basically attract these people, how to motivate them to use your platform. This is the questions we’re solving and launchpads has to solve it.
Melvin: Got it. Coming to the question that you mentioned, you guys are trying to attract users and investors to Polkapad, right? In terms of marketing, what is the strategy then?
Sharif: In terms of marketing, there are a lot of activities we are doing. I would say we have some traffic, we organised AMA sessions, we chat a lot with our community, some service, some competitions inside the community. It’s growing. We are checking the quality of the community. It’s really important for us. As mentioned earlier, we are looking forward to the test sale. It’s several partners there with a big community. We think that we can grow from around 15,000 people to grow to 50, 60,000 people till the end of the year.
Melvin: That’s good. Okay, that’s great. Thanks. So maybe I will end the interview with one last question. What is your take on crypto regulation and retail investors protection given there are so many platforms. And everybody is talking about DYOR. What’s the take on that?
Sharif: I think US is going to be a lot of pressure to the companies who want to organise an IDO and alot of companies who did IDO in 2021, they might face problems soon, especially if they registered in the United States and if they were accepting money from United States citizens. I think for big companies like tier one projects with big VCs and big investment size touted as hot projects which everybody wants to participate, the amount of IDO activities in these segments are definitely going to decrease. Because for them, it’s better to attract money from accredited investors than to go to IDO and use some other ways to distribute their tokens. For example, leveraging on the service we are providing base on on-chain data analysis.
We believe that the amount of IDO from quality projects are also going to decrease in the next 2-3 years because of regulations and the SEC’s position concerning retail investors. Here we are checking the projects in a really detailed way for months. I think from our conversation, it’s quite evident that we’re not like an average launchpad. We have completely different thinking and we’re not running after quantity of projects every month, rather we’re focusing on the quality.
We are also aligned with our retail investors as one of the main sources of Polkapad’s revenue, is collecting the projects’ tokens which are locked for some period of time. If our users make money, then we’re making money. And I think they might even do it earlier then us because they have some unlock token generation event. This let us choose long term projects which we like because it’s our business.
Melvin: Got it. Thanks a lot, I mean a lot of insights from Polkapad and thank you for the interview.
Sharif: Thank you very much Melvin, for questions.