These days, IDO (Intial DEX Offering) is one of the hottest topic of crypto market. Why it is launched, when it is launched all we know here today. In 2017 and 2018, ICO was launched, where communities would raise money by selling a part of their complete token supply to public. ICOs deployed through ETH protocol, and within just no time first ICOs in 2016 raised around a few million funds, but after a year they able to raise fund between $20 or $30 million. At that time, the hype was so strong of ICO and some projects managed to raise large amount of funding. So, In the current rein of crypto trying to get an upper hand on the global financing scenes, IDO can’t be left behind. In 2021, a new concept is introduced which is known as IDO(initial DEX Offering).
Working as the source of all funds in the crypto market scene, below is a complete guide on IDO, its what’s and whys, and ways by which you can also make money out of this new internet frenzy.
What is IDO (Initial DEX Offering)?
In the most basic terms, Initial DEX Offering or IDO is a method of sourcing funds in the cryptocurrency market. The most major difference between IDOs and other crypto market tools is that it is based on a decentralized exchange (DEX), as opposed to centralized exchanges like blockchain networks. The main motive behind the creation of IDOs was to overcome the shortcomings of its predecessor ICO (Initial Coin Offering), a traditional crowdsourcing method which was being used in the crypto markets earlier.
In an IDO, tokens are launched on a decentralized system. It can be created for anything ranging from music albums to pieces of art. While IDOs are still growing and evolving, the current version provides a cheap, yet effective way for projects to distribute their tokens, in order to raise funds.
Let’s discuss some advantages of IDO:
Overtime, IDO has become a favorable choice for both project makers and investors for a variety of reasons
1. Instant Liquidity Provided After Sale: IDOs secure some funds post sale to maintain the liquidity of assets in the market. It also reduces chance of slippage and volatility.
2. N0 KYC Required
Only funds and a wallet are required by a buyer to take part in the sales. The user doesn’t need to submit any personal details in order to take part in an IDO.
3. Favorable For Small Projects
IDO’s are a much-favoured platform for small and cheap projects to get funding, through its decentralized exchange system, rather than reaching out to a centralised exchange system.
4. Presence of Anti-whale Measures
IDOs have anti-whale measures set up, which means that no single investor, linked to a particular wallet, can buy a large number of tokens
Disadvantage of IDO
With a lot of reasons to favoring IDO, also come a few drawbacks.
1. No KYC
As much an advantage lack of KYC might seem, it is equally a con as well. Lack of check on investors can also be a key cause that might lead to money laundering and evasion of economic sanctions. Many countries don’t even allow their public to deal in transactions solely on the basis of digital wallets, without any identity attached to it.
2. More Likely To Have Frauds From Side Of Projects
IDOs make it easy for small projects to gather funds, which acts as a con as unreliable projects can take funds from the market, ultimately cheating the investors. This is not an issue in bigger, centralised exchanges that set bar for the projects to put out their tokens.
How to take part in IDO or How to invest in IDO?
Nowadays, most people searched about how to take part in IDO, how to invest in IDO? The first and foremost step of taking part in a project’s IDO is finding a project itself. Once you find a project you like and hope to invest in, you should stay well connected with the project’s community and socials just in order to stay up to date with the details. You can also keep an eye on the DEXs, like PancakeSwap or DODO, to see the upcoming IDOs as they get listed on the exchange.
Now, in order to enter the IDO you need a crypto wallet which you can connect to apps like MetaMask or Binance Chain Wallet. Then you would need some cryptocurrency to subscribe to tokens and pay the transaction fees to secure them.
After you are set with a wallet and some crypto, you need to connect it to the IDO app, using the “connect” button which is usually found on the top right corner of the app.
After this you will get the instructions on how the token subscription event will take place. Make sure you have enough funds in your wallet before the event. Once you subscribe to the tokens of your choice, you’ll son find the bought token in your crypto wallet. This is the case in most IDOs, while some IDOs even lock their tokens so it is best advised to go though all the details of an IDO before participating in its subscription cycle.
New Alternative to IDO and ICO:
As an all-evolved version to all the previous crypto crowdsourcing methods available, we present to you IFO or Initial Farm Offering. It is launched by a platform called PankcakeSwap to generate liquidity of token trade along with obtaining financing for the projects. This crowd souring project is getting highly preferred as investors get extra token for providing said liquidity, over and above getting the token at a pre-sale price.
IFO events are of 2 types-
1. Unlimited Sale
Here investors have to pay a predetermined fees to stake as many tokens as they like
2. Basic Sale
Here investors do not have to pay a participation fee, and they are allowed to subscribe to only a fixed number of tokens
With a lot of pros and its adjoining share of cons, IDO has become one of the most favoured methods of obtaining crowd funding. Anyone who wishes to start investing via same should do their research well, both in the project as well as the whole crypto space in general. One must remember that like any other investing platform, crypto can be equally risky and we must only invest what we can lose.
Ques 1. What is IDO?
Ans. IDO or Initial DEX Offering is a way of obtaining funds in a crypto market.
Ques 2. How can I join IDO?
Ans. Taking part in IDO needs two things, first pre buying of launchpad tokens and luck in lottery.
Ques 3. What is ICO?
Ans. ICO is Initial Coin Offering.
Ques 4. How does IDO works?
Ans. IDO works on a decentralized exchange system, or a DEX.