The quest to improve the fundraising process in the crypto industry has led to the emergence of various approaches. The first and most popular is the Initial Coin Offering (ICO), others are the Initial DEX Offering (IDO) and Initial Exchange Offering (IEO). The IDO was designed to fix the limitations of ICO such as investor protection and lack of control (centralization). During the era of ICOs, several issues emanating from the centralized process include lack of privacy, vulnerability to cyber theft, human error, and third-party discrimination. Many projects attempted to proffer a better platform but only a few succeeded till the IDO Launchpad came into existence.
In the simplest form possible, this article gives a basic explanation of what a crypto IDO is and this will remain a handbook for newbies as well as professionals in the crypto industry.
What is an IDO?
Initial DEX Offering (IDO) is a decentralized fundraising approach, a coin offering done on a decentralized exchange. It is the newest model for crypto projects which came into existence after the emergence of DEX platforms in 2019. The coin offering model is used by developers to raise funds from investors.
Crypto IDOs work with decentralized liquidity exchanges (DEX) and their trades are instant. This owes to the fact that IDO tokens are listed immediately on their launching DEX whereas ICO sells its tokens before it is listed. After an Initial DEX Offering, the pool is either formed on its own or via a third party on the decentralized exchange. Hence, project developers are saved from the stress of gathering assets for pools.
How Crypto IDOs Work
The concept of a crypto IDO can be likened to a business that intends to raise funds to produce new goods or expand operations. Business owners can turn to venture capitalists or banks to get loans. But due to some reasons, some business startups may find it difficult to get such loans. This is where building an IDO comes to play.
Here, the project developers build a token and list it on a DEX to raise funds for the business via its sales. It works with the principle of early birds buying cheaper and selling higher later on. Most crypto enthusiasts see IDO as a fair way of launching a new crypto project. It boycotts pre-mines, an issuance system in favor of the project developers over their community. IDOs also leverage the DEX liquidity scheme, a reason why liquidity pool providers receive good rewards.
The Importance of IDO Launchpad
To Create Awareness About the Project
The essence of launching a crypto project via an IDO Launchpad is to create awareness, particularly about fundraising and also, to expose it to a very large audience. Individuals interested in the project offer to buy into it as investors thereby raising funds for the team. This is part of what the initial DEX offering does. It helps to market new crypto projects and allows investors to gain early access to token sales.
Limited or No Third-Party Involvement
IDO’s decentralization and blockchain approach is a major contributing factor to its relevance today. Crowdfunding accommodates people from different backgrounds. Project owners are allowed to launch their blockchain projects directly without involving any third party. Investors can gain access to alter the liquidity locks, token sales, selling price, and other important parameters. This helps to boost their profit margin and trust.
Security is very vital to the growth of any crypto project. Investors prefer a project with good rewards and a guarantee of the security of their invested funds. IDO Launchpad eliminates issues regarding human error and cyber hacking. It manages all the smart contract transactions and stores traders’ and holders’ assets in their wallets with private keys issued to them alone.
It is Cost Efficient and Simple to Use
Since the project team or company intends to raise money, it is better to use a Launchpad that is cost-efficient. IDO Launchpad is cheaper and simple, you do not need to wait or pay an exchange to approve the project. The projects and tokens are vetted by members of the local community to enhance massive collaborations. The exchange handles the KYC and listing parts making the entire process stress-free. Launchpads also support several wallet types and it provides a trading platform in one interface hence enhancing its user experience.
ConclusionInitial DEX Offering has come to revolutionize the crypto fundraising process, but they need to enhance certain parameters to make it more robust. The KYC regulations should enable issuers to gain more control over buyers and the number of tokens they would buy. Also, maintaining a token value throughout the fundraising process would help to eliminate token price variations. However, the reputation still persists that IDOs are decentralized i.e, they are trustless and more trustworthy since there is no need for an intermediary. IDOs also offer a win-win opportunity for all as investors benefit more from instant tokens’ trading.