What Is an IDO?

Snorlax

Nov 23, 2022•3 min read

An initial DEX offering, or IDO, is a new and exciting type of decentralized and permissionless crowdfunding platform that is ushering in a new era of crypto fundraising.

When a project launches an IDO, it is launching a coin or token through a decentralized liquidity exchange. This is a type of crypto asset exchange that is based on liquidity pools and allows traders to swap tokens such as crypto coins and stablecoins. USDT/ETH, for example, is a liquidity pair.

What makes an IDO unique?

IDOs instantaneously list tokens on a decentralized exchange, as opposed to conventional fundraising techniques that offer tokens that must be sold before they are posted. Two more distinguishing characteristics of IDOs are:

Accessibility

Tokens may be purchased by anybody during an IDO, and participation does not need vast quantities of money. There is also no necessity for identity or verification, and the investor's jurisdiction is unimportant.

Security

The investor does not require to pay money to the exchange's internal accounts while using an IDO. Each transaction is instead carried out using smart contracts. DEX is the exclusive provider of these smart contracts. The platform does not store the user's money, private keys, or other sensitive information.

What are the benefits of an IDO?

Fair fundraising

Many IDO fundraisers do not rely on traditional private fundraising to begin their businesses. Instead, when the token sale becomes public, investors acquire the cryptocurrency at a lower price. They make a tidy profit by reselling these tokens to the general public. Furthermore, because there is no CEX or clearance required to begin fundraising, anybody, not just private investors, may organize or participate in an IDO.

No slippage

An IDO gives project coins instant liquidity. At whatever price level, the liquidity pool ensures liquidity without slippage. An IDO increases financial inclusion and provides more options for project token distribution.

Fast trading

From the day a project's token is released, investors can begin trading it. As a result, traders try to buy a new token as soon as it is available and then sell it at a higher token price later.

Lower costs

A DEX runs on self-executing smart contracts. When a project uses a DEX without an intermediary, deploying a new smart contract that manages the asset's liquidity pool and tokens only costs "gas fee"

Secure transactions

A DEX handles trades and adds them to the blockchain via smart contracts, allowing for secure transactions. Furthermore, because a DEX does not retain funds, it is less likely to be targeted by bad actors.

How to enter an IDO?

To participate in an IDO, you must have a crypto wallet that can connect to DApps, such as MetaMask or Binance Chain Wallet. You will also need cryptocurrency to purchase the tokens and pay transaction costs. The exact cryptocurrency you'll need will vary depending on the sale, and it could even be LP tokens if you're participating in an IFO.

You will now be provided precise instructions on how to secure your cash in advance of the token-generating event. Make sure you have enough money to cover your transaction costs. In most cases, the tokens will be transferred to your wallet once the subscription period has expired. However, some sales may lock or stake your new tokens for a set period of time. Before participating in an IDO, make sure to read the fine print.

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