In 2017 the crypto market was buzzed by Initial Coin Offerings ICO
s, which is one-way project owners generate initial funds for their projects.
In addition to project owners, crypto investors also benefit; as a result of the ICO, investors get an initial price that has the potential to rise significantly.
Unfortunately, in the ICO process, it is not uncommon for fraud and losses to be large enough that many starts to stay away from it over time.
One alternative to solve this problem is Initial DeX Offering, which provides a safer way of profit and fundraising for all parties.
Initial DeX Offering or IDO is a way to raise funds for new projects in the Decentralized Finance or DeFi Sector.
This initial dex offering is done through a decentralized exchange or DeX and not through a centralized exchange to provide more security than an ICO.
IDO, ICO, and IEO Difference
Initial Dex Offering is fundraising for projects using DeFi.
Fundraising ICOs are carried out independently by project owners, while IEOs are fundraising conducted on cryptocurrency exchanges in collaboration with crypto projects you want to promote.
The Purpose of IDO
The goal is to benefit project owners by selling their project tokens through DeX and earning profits to fund the project at an early stage.
Unfortunately, this initial dex offering has several limitations, where the funds obtained from the IDO will generally be smaller than the ICO.
This limitation is due to the lack of guidance and literacy on using DeX in crypto investors, especially beginners.
For project owners, this initial dex offering becomes an advantage due to fundraising that has the potential to generate funds for the initial development of the project. But for investors, this method is done to get a significant profit from buying crypto at the initial price.
It should be noted that although the profit potential is high, this IDO has limited opportunities for investors.
Many investors still do not understand this and do not know how to participate in fundraising.
How to Join IDO
Participating in IDO is like buying a ticket for a limited opportunity.
Not all investors can buy crypto sold in the initial dex offering. After all, there are only a few tickets available.
Generally, these tickets are obtained by buying and locking the tokens required to get tokens that are in the IDO.
By doing this, investors have purchased tickets for the IDO. The allocation of the amount that will be obtained depends on the party holding the IDO, just like a lottery.
But in detail, this method requires some additional steps to ensure investors can participate.
Listed on Launchpad
Generally, a new token that will be launched or sold for the first time will appear on the launchpad.
Currently, most launchpads on DeX have the exact requirements to participate in the IDO, namely the investor’s obligation to be listed on the whitelist or list of potential buyers.
Generally, getting a place in the whitelist requires the native token of the launchpad.
The more you have, the higher the chance to participate in IDO.
Later if it manages to get a place on the list, the original launchpad token will be truncated and replaced with crypto in the initial offering.
The nominal amount will depend on the allocation given by the project owner, so it is almost like a lottery or lottery.
Perform Verification or KYC
If you want to get a place on the whitelist, generally, users will be asked to do a KYC or Know Your Customer process.
This step is also necessary to convey the purpose of sending crypto listed in the IDO correctly.
This KYC process differs from KYC on centralized exchanges due to unsolicited data in Launchpad DeX.
But all the data required differs between Launchpad and DeX, so some will ask for more from a centralized exchange.
This process is carried out to avoid losses and scams common in Initial Coin Offerings.
Connect Wallet
Finally, to get tokens listed in the IDO, investors must have a wallet that can be tied to DeX, such as Metamask.
This wallet is vital because, unlike centralized exchanges, DeX does not have a directly connected wallet.
DeX generally takes the form of a Web 3.0 site or decentralized application and does not have a tied wallet due to having different uses.
After owning and doing these three things, investors can already participate in the IDO to potentially get new tokens.
IDO attracts market attention for providing credibility, maintaining the liquidity of the tokens involved, and maintaining the security of all the projects involved.
Generally, all projects wishing to implement IDO will be required to fill in data to prevent fraud.
Advantages of IDO
However, several other advantages can be provided by IDO, which is also the reason for a large number of participants in the process
High and Fast Liquidity
IDO provides easy and instant liquidity because all tokens launched on the DeX launchpad will be directly traded there.
So that all token trades will be guaranteed, so there will be no difficulty in selling or buying in the future.
Lower Fees
The second is that IDOs have lower fees, especially when compared to ICOs and Initial Exchange Offerings or IEOs.
Generally, ICOs and IEOs are conducted on a centralized platform or exchange, so beyond the blockchain fees, there will be fees from the platform.
Investor Justice
Next is equity for investors, where in IDO, generally, the allocation will be more equitable between large and small investors than in ICEO and IEO.
Faster and Easier
Finally, the launch is faster and more accessible due to the launch of projects through IDO no need to wait for manual verification from a centralized exchange.
Project security verification in IDO is carried out through a confirmation and tracking program of decentralized applications moving through intelligent contracts.
Disadvantages of IDO
Although IDO has many advantages, this fundraising process has its drawbacks, mainly in two respects.
High Data
Requirements The data requirements in IDO provide a lack of privacy which is generally found in crypto.
Unfortunately, this condition also makes IDO similar to IEO and makes DeX move like a centralized exchange.
Interest in Exceeding Quotas
Generally, the quota to enter the IDO whitelist is smaller than ICOs and IEOs, which sometimes makes requests that cannot be fully fulfilled.
So, unfortunately, this quota limit makes the profit for the project owner not maximized.
Some projects even need to do more than one Initial DeX Offering with different tokens.
The low quota also limits the token supply, which can increase the token’s volatility.
Overall initial dex offerings are currently starting to decline as they are getting beaten by IEOs and other fundraising methods.
However, the initial dex offering is still being carried out and is one way to generate profits for project owners and investors.
Examples of IDO
DEX that provides IDO is Binance DEX, Polkastarter, and Uniswap.
One of the first IDOs to launch was RAVEN, which was listed on Binance DEX in June 2019, then there was Sushiswap which also did IDOs.
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