The Pike PIU Program Part 3 - Why a Presale?

March 20th, 2024

The Pike PIU Program Part 3

This is Part 3 of a 3-Part Blog Series

You’re all familiar with points - but have you heard of $PIU?

Today, we’ll be diving deeper into why we decided to go with a Community Presale, rather than raising money privately from VCs like most protocols.

TLDR:

$PIU is a freely tradable community token that serves the utility of whitelist qualification in order to participate in the Pike Community Presale
The Pike Community Presale is an early investment round designed exclusively for the Pike Community
$PIU holders can exchange $PIU for whitelist qualification in order to secure priority access and valuation discount
We are deliberately creating an opportunity for the Pike community to be a part of the Pike cap table from the ground floor

Pike Community Presale - Why?

Today, we’ll be explaining why we’re organizing a Community Presale, rather than a typical “Private Sale” which involves institutional investors or a “Public Sale” which caters to the general public.

What is the Pike Community Presale?

The Pike it Up Program is a transparent and fair approach to incentivize community members and protocol users before the launch of Pike’s governance token. $PIU is a freely tradable community token that serves the utility of whitelist qualification for the Pike Community Presale.

The Pike Community Presale is an early investment round designed exclusively for the Pike Community. In typical whitelists for presales/investment rounds, it is often decided manually by the team based on relationships within the industry and what value early investors can provide.

However with the PPP, we have democratized this and instead, $PIU holders can exchange $PIU for whitelist qualification in order to secure priority contribution access and valuation discount.

By deliberate choice, we have not raised any capital from institutional investors. In a way, we are reversing the capital formation playbook by creating an opportunity for the Pike community to be a part of the Pike capitalization table first from the ground floor.

We wish to share this opportunity with our community first and foremost because we feel this is the most direct way to align interests with those who share our long-term vision.

In short, the Pike Community Presale is a hybrid approach that draws reference from both private and public sale. $PIU holders can qualify for a whitelist in order to participate in Pike’s early investment round.

What is a Private Sale?

Let’s take a look at how most crypto projects are typically funded in a “private sale”. For this example, we’ll use Solana - a Layer 1 everyone is familiar with, and has raised a total of $25.4M or so from private investors. Also, keep in mind that Solana’s seed round occurred in 2018 hence the low valuation by today’s standards.

In normal startup land, companies will raise money from investors by selling shares, or ownership in the company to them. Since these startups aren’t publicly traded (on a stock exchange), these are all “private” investments, and you either need to be an accredited investor, or simply an institution like a venture capital fund in order to invest - you cannot be a random person on the internet, and invest in these deals. When the company goes public, say on the NASDAQ, and these shares become publicly tradable, the private investors can either hold, buy more, or sell - as I’m sure we’re all familiar with.

Within crypto, the same sort of thing happens, but instead of selling equity in a company, you sell token rights from the total token supply (which serves the same purpose), and the price of said tokens is based on the valuation - or more specifically, the FDV (Fully Diluted Valuation). Just looking at the seed round of Solana (or the first private sale) in 2018, you effectively bought bulk $SOL for $0.04 each, with the FDV of Solana being only $20M at that time. We’ll let you do the math based on SOL’s ATH of the returns for those initial investors.

When protocols announce they’ve completed a raise of XYZ million dollars - this is what is happening on the backend, and this is how most crypto projects are funded. To look into these kinds of things yourself, you can use CryptoRank or ChainBroker for any protocol you like.

What is a Presale?

A presale is basically what we’ve just described above in a “private sale”, but instead of offering the Pike token to private investors and institutions like VCs, we’re offering it to the community and members of the public. You, as a community member, effectively have the opportunity to become Pike’s VC through the presale of Pike’s token.

Rather than nameless investors receiving the bulk of the benefit from price action from a new protocol token going live, that benefit is instead realized by the individuals who contribute to the Pike presale. In our opinion, this is more fair, as it’s you, the community, who have pushed Pike to innovate and build new products and features.

With a presale, the token isn’t distributed to contributors immediately, and often takes place a couple of months in advance of TGE (token generation event).

What is a Public Sale?

A public sale is generally a token sale event that allows anyone to participate, with no differentiation between tiers, and usually accepts funding from anyone. These often take place after other rounds of investment (whether they be private, or a presale), and hence the valuations are often higher, with the maximum amount you can contribute being lower.

ICOs (Initial Coin Offerings) were great examples of this, and a popular way for projects to raise money and also distribute their token simultaneously, with famous examples being Ethereum, Cardano, Chainlink, and many others. With a public sale, tokens are usually distributed to buyers once complete, and are able to be traded immediately.

Example:

A great example of how a Presale and Public Sale can work together in tandem is Cosmos Hub.

The team initially raised a strategic round in March 2017 from a whitelisted selection of individuals, raising $300K, and selling $ATOM for $0.025 per token. While quite a small raise, it would’ve been next to impossible to be a part of this Presale due to the low valuation, and due to how exclusive it was.

Followed by this, was the Public Sale, or in this case, an ICO, where the team was able to raise $16M with a per token price of $0.10 - 4x the Presale price which occurred only a month earlier!

As you can see, being able to be among the first individuals into the fundraising of a meaningful crypto project could result in quite incredible returns, as well as deep involvement into the trajectory of the protocol through governance. As a result, since the community has been hugely involved in Pike growing and gaining mindshare - we believe it’s fair to open this opportunity to the very same people who helped get us here.

Who are we targeting?

So now we know how much of an opportunity being able to invest into a protocol like Pike at the ground floor is, but we want to also give people the chance to increase how much of the Pike token they can buy, and also give incentives in the form of discounts on the Pike token itself.

But how do we determine who “deserves” these increased allocations and discounts The only way, and we mean the only way, is to prioritize those who have been here early, or those who have strong conviction - either in terms of their participation within the protocol (with money) or within the community (with time).

Hence the reason for the supply caps, the roles, the PPP and $PIU itself!

More specific details surrounding the presale will be released very soon.