Initial DEX Offering, or IDO for short, is a new way to raise money for cryptocurrency projects that lets them launch their own token or coin through decentralized exchanges (DEXs). IDO is the next step after the well-known Initial Coin Offering (ICO). It is a foolproof way for projects to self-fund or raise money for growth and development. The IDO model has become more popular because crypto projects can raise money without going through intermediaries, and investors can make money by trading tokens right away. This is a win-win situation for everyone. No longer do project developers have to collect assets themselves. Instead, the pool is made on a DEX after the IDO is done through the project’s own launchpad or a third-party launchpad.
Here’s How IDOs Began
The IEO model is the one that came before the IPO model. So let’s take a closer look at each of these chronologically:
For a long time, businesses couldn’t get enough money to reach their lofty goals. Angel investors, venture capitalists, and eventually an initial public offering (IPO), in which a portion of the company’s shares are sold to the public, were some of the most common ways for a business to get money. But the concept slowly evolved and in cam the initial coin offering or ICOs.
When the crypto industry went mainstream in 2017, projects copied this strategy by selling a portion of their total supply of crypto tokens to the public through initial coin offerings (ICOs). As a result, ICOs quickly became popular in the cryptocurrency world, and investors rushed to take advantage of the chance to try to raise billions of revenue by the end of the year. But the rise of scam projects and other such schemes caused ICOs to become much less popular very quickly afterward. But with the right companies, you can be sure of your safety. As a result, such companies helped maintain the worth, popularity, as well as value of initial coin offerings.
An IEO (Initial Exchange Offering) was similar to an ICO in that it was launched on a centralized exchange and promised that the token would be listed on an exchange and that investors would not be fooled. Also, in IEOs, crypto projects were carefully looked at, and there were a lot of hurdles for projects that wanted to take part. Because of this, investors and the rest of the crypto community developed trust in the ecosystem they worked in. Moreover, some of the most well-known blockchain projects today, had started out as IEOs.
When DEXs came out in 2019, many crypto projects were interested in them because they were decentralized. In addition, many believed they were a better way to launch tokens and raise money without having to deal with the problems of centralized exchanges. So, the idea of IDOs was created and launched. Then there were the IDO launchpads, which gave new projects that were doing IDOs services that were made just for them. This made IDOs a more popular way to raise money in the cryptocurrency space.
What started with the ICO (Initial Coin Offering) boom in 2017 and continued with the IEO (Initial Exchange Offering) is now focused on IDO, or the Initial DEX Offering. It is a new type of decentralized and permissionless crowdfunding method. With the start of initial coin offerings (ICOs) in 2013, the crypto space got a whole new way to raise money for blockchain projects. But because there were no rules, it was used by swindles and scammers. Because of this, ICOs lost their appeal, and new ways to raise money came about.
Irrespective of this, many ICO projects flood the market with their tokens. ICOs have made cryptocurrency-based crowdfunding more popular, and many projects have used this method to raise millions of dollars to pay for their development. ICOs make it easy for new projects all over the world to raise money.
IDO and ICOs: The Steps That Matter
Instead of exchanges, members of the voice community are in charge of projects and tokens. This is why IDO tokens are listed on the DEX. Most importantly, IDO lets people from different countries join an exchange that sells tokens from a specific token provider. IDO also fixes some problems that IEO has. For example, issuers are not allowed to list tokens on exchanges that compete with IDO.
Token issuers participating in initial coin offerings (ICOs) and initial distribution offerings (IDOs) do not directly reward intermediaries, which is more in line with the ethics of Bitcoin and its progenitors. However, those who are issuing IDO and ICO are solely responsible for the marketing channels. Each must create a smart contract for selling tokens, including arranging and conducting their own due diligence. A business that is working on an ICO project is required to provide a white paper, a website for the associated product, and a team that will carry out the project’s approach. In the case of an ICO, the issuer gets all of the responsibility. This is very similar to the initial public offering or IPO process.
IDOs and IEOs are both listed directly on exchanges, but IDOs are a do-it-yourself process, just like ICOs. So in a way, ICOs and IDOs have more in common with each other than they do with initial exchange offerings, which are similar to traditional initial public offerings on the stock market in myriad ways. But unlike ICOs and IEOs, where tokens are sold before being listed, IDO tokens are listed on a decentralized exchange (DEX) right away, which is how the name came around.