IDO (Initial Dex Offering)
Initial offerings of cryptocurrencies are generally good investments for those interested in the crypto world, but one must be cautious. It can be extremely tempting to purchase a cryptocurrency at its introductory price, but it can also be extremely risky. In retrospect, the excitement surrounding Dragon Coins (DRG) in 2017 was not exactly a positive experience. Investors often lost their funds as a result of scams and rug pulls.
Since then, the crypto community has developed alternative methods of offering tokens/coins such as Initial Exchange Offerings (IEO), Initial Dex Offerings (IDO), and Security Token Offerings (STO).
Unlike IEO and STO, which are facilitated by centralized parties, IDOs enable cryptocurrencies to be offered on decentralized platforms through smart contracts that are not subject to centralized control.
IDOs are cryptocurrency Initial offerings that take place on a decentralized exchange (DEX). In contrast to an ICO, where cryptocurrencies are sold before being listed on the exchange, in an IDO, the tokens / coins are listed immediately on the DEX through which they were issued. Consequently, project developers are no longer required to raise funds for the liquidity pool (LP), which can also be understood as the liquidity provided by investors to execute DEX orders more efficiently. After the IDO is completed, the pool is created on DEX by using a custom launchpad or a third-party launchpad.
IDOs are becoming increasingly popular due to their unique ability to allow crypto projects to raise capital without the involvement of intermediaries. Investors on the other hand have the opportunity to take advantage of instant trading of tokens and coins, resulting in a win-win situation. As a general rule, IDO requires participants to connect their wallets prior to joining the whitelist through a website or other platform.
The difference between ICO and IDO
The main advantage of IDO over ICO is that pre-mining is completely avoided. It can increase the confidence of investors, particularly those who make their investment decisions based on fundamental analysis. The high allocation of pre-printed assets may cause fear among investors who are interested in the total supply of cryptocurrencies issued.
In addition, IDOs are considered to be fairer in the distribution of cryptocurrencies to investors. To be more specific, IDO tokens / coins are instantly tradeable. This is in contrast to ICOs, where tokens / coins are often locked up.
It is not intended to imply that IDOs are not flawless. The price has been manipulated by bots on several occasions. This can result in huge profits for a small number of investors at the expense of others. Another potential threat is hackers who can exploit the flaws in smart contracts.
Generally, IDOs do not generate as much money as ICO. Many ICO projects have reached valuations of more than 1 billion USD, but IDOs have not reached this level.
Decentralized finance (DeFi) has experienced rapid growth in recent years. Even popular DEX, such as Uniswap and PancakeSwap, have difficulty providing liquidity in comparison to their centralized counterparts.
- Low cost
- No slippage
- Fair distribution of finances
- No KYC required
- Significant amount of fraud
- Price manipulation
- High volatility at launch
- Vulnerability of smart contracts
Cryptocurrency initial offerings are becoming increasingly popular in the crypto world. This will soon become the most effective method for promoting new tokens and coins, as well as ideas related to cryptocurrency.
The IDO has been able to resolve most of the issues associated with its previous incarnation, the ICO. Nowadays, it is a decentralized method of launching a project and attracting investors.
Where to find IDO?
A list of upcoming IDOs can be found on coincodex, cryptorank. Their website contains a list of ongoing and upcoming token / coin offerings. Various launchpads are also available. Most of them have a list of upcoming projects that are currently available for investment on their website.
- PAID Network
If you are interested in a crypto project without a cryptocurrency, make sure you follow it on social media. It is common for projects to announce upcoming IDO on their Discord and Twitter channels. There, you will find out how to whitelist for the upcoming IDO.
It is difficult to predict what the future of IDO will look like. However, this method of fundraising has grown significantly since the first offering of this type. The IDO environment is still relatively fragmented, and the number of DEXs on multiple blockchains has been steadily increasing over time.
There is a strong likelihood that new regulations from government authorities will have a significant impact on the future of IDO. The growth of cryptocurrency research companies will also benefit frequent investors in IDO. Thus, it will be easier for them to find quality deals and avoid scams.