Fortunately, despite the current challenges, things have changed and there are more straightforward ways to launch a token. One of the best options for projects to launch a token is through a DEX via an Initial Decentralized Offering or IDO for short. They also ensure that the IDOs launched have sufficient liquidity by incentivizing liquidity providers with their native tokens, which are required to win whitelist slots. This is also something that almost every launchpad platform requires potential investors to do. If they want to be eligible for an allocation, they must hold a certain number of its tokens or provide liquidity in some shape or form. To get an allocation in an upcoming IDO, most platforms now ido crypto meaning require their users to hold their own native tokens (as mentioned above) to increase the odds of participation.

What Is an Initial Dex Offering?

Inspired by an initial public offering (IPO), initial coin offerings (ICOs) https://www.xcritical.com/ are crowdfunding methods that help crypto projects raise capital. During an ICO, a crypto project offers individuals the chance to invest fiat or crypto in return for a proportion of a new native coin or token. The event is hosted by the crypto project’s blockchain platform and, therefore, relies on no intermediary third party. IDO is a crowdfunding method to raise funds for crypto projects via a decentralized exchange. Once an IDO starts, funds are pulled in to create a liquidity pool, and tokens are allocated to investors.

The Rise of Initial Exchange Offerings

With the IDO fundraising approach, companies, especially startups, don’t need a centralized exchange and permission to kick off the fundraising event. Also, anyone can organize or participate in IDO, not just private investors. On the other hand, Initial game offerings (IGOs) are a crowdfunding method that is specifically used by blockchain-based gaming projects. Instead of investing and receiving a native crypto coin or token, IGOs offer individuals the chance to invest in fiat currency or crypto for early access to in-game accessories and assets. Ownership of in-game assets is transferred using non-fungible tokens (NFTs).

Where Are IDOs Headed in the Future?

The project team can start the token sale with the IDO launchpad’s approval. During this phase, investors can purchase the project’s tokens at a discounted rate. Before launching an IDO, the project team should develop a comprehensive business strategy.

What If A Project Isn’t Quite Ready For An IDO Launch?

Tokens can be used for various functions, including farming, staking in governance mechanisms, or paying for transaction fees. The concept behind crypto is to open the doors of finance by making it decentralized. IDOs are one step to making this happen, but who’s to say if a new project is the next best thing or a rug pull waiting to happen?

• By the time you have made it to this step, a solid business strategy should be in place along with a robust website, socials, marketing plan, and public relations built up.
• They allow investors to buy tokens at launch prices, providing liquidity through post-sale liquidity pools.
• In late 2017 and 2018, we saw the appearance of initial coin offerings (ICOs), where teams would raise money by selling a part of their total token supply to the public.
• Some of the strengths of the IDO also bring about some of its weaknesses.
• Always conduct your research before making your investment decisions.

Differences Between an ICO and an IDO

An IDO is an Initial DEX Offering, where a “DEX” is a Decentralized Exchange. A decentralized exchange is like a regular exchange, but no one is in charge. So, instead of the exchange buying coins from sellers and selling coins to buyers, the buyers and sellers just do business with one another. Another new opportunity is an upcoming NFT drop, which will let POLS holders stake tokens in exchange for NFTs, which will give access to exclusive liquidity pools. To participate in an IDO, users have to interact with the launchpad platform first to invest and, second, to receive their tokens.

What distinguishes IDOs from ICOs?

Another possible change to IDOs may be the requirement of KYC (Know Your Customer) and AML (Anti-Money Laundering) processes. Financial regulators worldwide are taking a bigger interest in DeFi and its regulatory status. AML and KYC are now standard for centralized exchanges, and DEXs may also be subject to the same rules in the future. BNB-CAKE LP tokens are then locked for the new tokens, and the project receives the BNB while the CAKE is burned. The number of tokens you get will depend on how many participants there are in the sale, and any excess funds staked will be returned to you. There may even be measures in place to make it fairer for small investors to get a share of the IDO, such as the [Basic Sale] and [Unlimited Sale] features on the PancakeSwap IFO below.

Get Whitelisted on IDO Launchpads

This can help eliminate variations in token prices until the fundraising has finished. Also, by using KYC regulations, issuers can gain more control over buying tokens. Compared to IEOs and ICOs, which involve an initial waiting period, IDOs provide immediate access to liquidity and trading. Added to that, IDOs help streamline users by delivering a secure wallet and trading platform support that’s built into one interface. It’s also possible for IDOs to support several types of wallets, thus simplifying the user’s experience.

In contrast, only projects selected by a DEX’s decentralized community are authorized to perform an initial DEX offering. Although IDOs are viewed as more complicated, thanks to the instant creation of a liquidity pool, investors can begin trading cryptos instantly. For these reasons, the IDO model has become favored by both projects and investors. By the time you have made it to this step, a solid business strategy should be in place along with a robust website, socials, marketing plan, and public relations built up. Once all these things have been completed, it’s finally time to talk to a DEX launchpad to help begin the actual IDO process. It’s important to find the right ones that have a good interest in your project.

Looking back at the ICO (Initial Coin Offering) craze of 2017 on Ethereum (ETH), it wasn’t all entirely positive. Scams and rug pulls were widespread, and investors often suffered big losses. They offer immediate liquidity, a faster turnaround time to investors, and transparency to crypto project owners. IDO has overcome some of the drawbacks of ICOs, making it a better choice. IDO makes it easy for people to sell their tokens and create projects. Since there is a low obligation to start an IDO, it attracts scammers.

Plus, this provides a guaranteed liquidity from the project’s standpoint, assuming it’s successful. IDOs will lock up some of the funds raised in liquidity pools to create a liquid market post-sale. Some of the funds raised are used to create a liquidity pool with the project’s token. Another example of Initial Dex Offering was the UMA protocol, an Ethereum-based platform for issuing and trading synthetic assets. Recently a decentralized autonomous organization, MahaDAO, announced that they would launch IDO for MAHA, their governance token.

A few of these are not absolute requirements for launch but an IDO will be hindered greatly without them and an IDO launchpad may not even accept a project if they are not at least attempted. An IDO is the first real chance at showing the public world what they have to offer and how investors can make a call to action as a result. From mid-2019 to now, IDOs have risen to become the most popular fundraising technique in the crypto space. But while they have some clear advantages, there are some challenges too.

According to them, a fundraising method enables protocols available for traders without being controlled by others. So, it does not bear any assurance or guarantee as the issuer controls the event. IDO is gaining popularity as more businesses are considering it for fundraising. An initial DEX offering has many clear advantages compared to initial exchange offerings (IEO) and initial coin offerings (ICO). Arweave is a decentralized storage protocol that offers businesses a method to store large datasets across a distributed network.

Instead of an offering being hosted by a crypto project, an initial exchange offering leverages the existing infrastructure of a crypto exchange to launch a new coin or token and raise money. For a project, one advantage of an initial exchange offering is that all technical details are handled by the exchange platform. With larger user bases, centralized exchanges can also offer an instant audience and a thorough vetting process. In IEOs, a centralized exchange (CEX) vets the crypto project, manages investors’ funds, creates and runs smart contracts and lists the token.