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EVERYTHING YOU NEED TO KNOW ABOUT IDOS

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Reading Time: 3 minutes

Do you know your ICOs (Initial Coin Offerings) from your IEOs (Initial Exchange Offerings)? What about your IDOs from your STOs? There has been a huge change in fundraising models in cryptocurrency investments, and fundraising methods seem to evolve yearly. Welcome to IDOs (Initial Dex Offerings). The growth and rise of decentralized exchanges have brought in a new way for crypto projects to launch their tokens – Initial Dex Offerings (IDOs).

Read on to find out more. 

WHAT IS AN IDO IN CRYPTO?

Whenever a company first launches a DEX, they use a fundraising method called an Initial DEX Offering (IDO) to raise money from investors. The IDO was developed to solve the problems underlying the “traditional” ICO crypto-crowdfunding structure. Let’s look at what an IDO is in crypto before discussing its benefits. 

The IDO, or Initial DEX Offering, is a crypto token offering on a decentralized exchange (DEX). In contrast to an ICO, where tokens are sold before they are listed on an exchange, tokens in an IDO are listed on the DEX and launched instantly. This means that project developers no longer need to collect pool assets; instead, the pool is established on a DEX when the IDO is completed via its own or a third-party launchpad.

BENEFITS OF INVESTING IN IDO

·        OPEN FUNDRAISING

An IDO is acrowdfunding method for cryptocurrency using a decentralized exchange (DEX). You can start a fundraising campaign without going through a central authority or trade money. Anyone can join the fundraising party – thanks to the decentralized nature of the IDO crypto architecture.

·        LIQUIDITY IMPROVEMENT

No pricing oracle is used in initial DEX offerings as in initial exchange offerings. Instead, IDOs use a decentralized exchange’s automated market maker, a mechanism that estimates the demand for a token given the amount of collateral in the exchange’s liquidity pools. This makes trading smaller currencies easier, which might be good for the token’s price if the project’s token gains access to quick liquidity. By changing the ratio of tokens to collateral in the liquidity pools, the buying and selling of tokens is the sole activity that can affect the price of an asset on a DEX with an automatic market.

·        QUICK TRADING

One potential advantage of IDO is that this information might be sent immediately. Because of this, investors may get in on the ground floor of the IDO by purchasing tokens at the moment of their release and then selling them later at a premium. For example, during the UMA protocol project, the value of their tokens, which started out worth about $0.26, went up to about $2.

HOW TO PARTICIPATE IN AN IDO?

You only need a wallet and funds to participate in the sale, and no personal data is required. There is also no need to comply with KYC or AML verification processes. This makes it an open process for all types of users. Make sure you have enough funds available to cover any transaction expenses. Ensure you’ve read all the required material before participating in an IDO. When the subscription period expires, the tokens are typically delivered to your wallet. You should be aware that certain token sales may stake or lock your new tokens for a set period of time.

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