The Dark Side of Web3 Launchpads: How Retail Investors Foot the Bill

Web3 promised a revolution in how capital is raised and distributed-democratizing finance, empowering founders, and opening doors for retail investors. Yet, as the dust settles on hundreds of token launches, a troubling pattern emerges: launchpad malpractices often leave retail investors holding the bag, while founders lose control and value, and the true cost of fundraising is hidden behind complex mechanics and hype.

How Launchpads Shift the Burden to Retail Investors

1. Excessive Token Allocations and Hidden Dilution

Most major launchpads require startups to give away 5–15% of their total token supply-ostensibly for “community rewards” or “liquidity.” In reality, these allocations often serve as hidden fees, diluting the founder’s stake and setting up retail investors to buy in at inflated valuations. If the token appreciates, the value lost can dwarf the original funds raised.

2. Upfront and Ongoing Fees

Beyond token allocations, startups pay tens or even hundreds of thousands of dollars for audits, legal compliance, and marketing-costs that are ultimately baked into the token price. Retail buyers, eager to participate in the next big thing, are often the ones left absorbing these costs as projects scramble to recoup expenses post-launch.

3. Hype Over Substance

Launchpads thrive on hype cycles, with communities ballooning to tens of thousands pre-launch-only to see 90% of users disappear once the token drops25. The focus on short-term speculation over long-term value means retail investors often buy in at the top, fueling pump-and-dump cycles that benefit insiders and early participants at the expense of the broader community.

4. Poor Onboarding and User Experience

The complexity of Web3 onboarding-cryptic wallet setups, confusing tokenomics, and lack of real support-alienates newcomers and leaves retail investors vulnerable to mistakes and scams5. Instead of democratizing finance, launchpads often reinforce barriers, favoring insiders and whales.

5. Regulatory and Security Risks

Many projects rush to market without proper compliance or security audits, exposing retail investors to legal uncertainty, hacks, and rug pulls237. When things go wrong, it’s the small investors who suffer most.

Who Really Pays?

At every stage, the system is structured so that the retail investor shoulders the risk:

• Dilution: The tokens they buy are worth less because of excessive allocations to launchpads and insiders.

• Fees: The cost of audits, marketing, and compliance are passed on via token pricing.

• Volatility: Hype-driven launches lead to dramatic price swings, with retail often buying high and selling low.

• Lack of Recourse: When projects fail or vanish, as over 90% of Web3 startups do2, there’s little protection or recovery for retail participants.

OnlyFounders: Redefining Fundraising for Founders and Investors

The Web3 ecosystem needs a new model-one that puts founders and genuine innovation first, while protecting and empowering retail investors. OnlyFounders is building exactly that.

How OnlyFounders Changes the Game

• Objective, Data-Driven Capital Allocation:

  Funding is based on real business metrics, not hype or insider connections. This eliminates the subjective “pattern-matching” that excludes diverse founders and ideas.

• Founders Retain Strategic Control:

  No more giving away double-digit percentages of your company just to get listed. Founders stay in charge of their vision and roadmap throughout the company’s lifecycle.

• Flexible, Needs-Based Capital Deployment:

  Capital is released as needed, not in arbitrary cycles. This ensures startups get the right resources at the right time, reducing waste and misalignment.

• Open Access for Global Investors:

  Investment opportunities are accessible to a broader, more diverse pool-not just whales and insiders. This levels the playing field and democratizes access to high-potential startups.

• Education and Knowledge Sharing:

  OnlyFounders embeds education and transparency into its platform, systematically improving outcomes for founders and investors alike.

A Better Future for Web3 Fundraising

The $300B+ annual venture capital market is overdue for disruption. OnlyFounders is building the infrastructure to ensure:

• Innovative ideas get funded on merit, not marketing.

• Founders keep control and build lasting value.

• Investors-especially retail-get fair, transparent, and meaningful opportunities.

• The entire ecosystem grows stronger through shared knowledge and aligned incentives.

The current launchpad model too often leaves retail investors paying the price for opaque fees, hype-driven launches, and founder dilution. OnlyFounders offers a fundamentally new approach-one that aligns capital with innovation, empowers founders, and finally delivers on the promise of a truly open, fair, and transformative Web3 funding ecosystem.

Citations:

1. https://www.reddit.com/r/learnprogramming/comments/197vzvz/is_web3_a_scam/

2. https://www.linkedin.com/pulse/why-most-web3-startups-failand-how-avoid-diego-katzman-tdpnf

3. https://www.ledger.com/academy/basic-basics/web3-security-essentials/web3-scams-explained

4. https://sowhat.terminal3.io/p/a-controversial-trademark-claim-may

5. https://dev.to/resourcefulmind/why-web3-keeps-losing-users-and-how-we-actually-fix-it-in-2025-12g

6. https://www.crowdcrux.com/best-low-cost-fundraising-websites/

7. https://audita.io/blog-articles/web3-security-myths-in-smart-contract-audit-process

8. https://whydonate.com/en/blog/us-crowdfunding-platforms/

9. https://givebutter.com/blog/free-fundraising-sites