Initial DEX Offering or IDO is a new fundraising model that provides greater liquidity for crypto assets along with fair and fast trading. Many in the industry hail the IDO model as the successor to other fundraising models like IEO, STO and ICO.
Before we look at IDO and the IDO token Launchpad, let us first brush up on the fundraising concept. Imagine a company looking to raise funds for building new products or expanding its business. These companies have multiple options available to them. Traditionally, these companies opt for financial loans or investments from banks and venture capitalists.
However, the arrival of Cryptocurrencies forever changed the way these companies approached fundraising. Cryptocurrencies like Bitcoin and Ethereum became instruments for raising funds through token sales. Here, companies create crypto tokens then issue them to the general public. In return, the users pay using cryptocurrencies or fiat currencies. The term for this process is fundraising through token issuance.
There is more than one way to approach token sales. Companies can opt for models like Initial Coin Offering, Security Token Offering and Initial Exchange Offering. The newest addition to this group is Initial DEX Offering or IDO. This article covers the last fundraising model, including the benefits and an understanding of the IDO Launchpad.
What is an Initial DEX Offering?
The IDO is a fundraising model where a company or business issues the IDO coin through a decentralized liquidity exchange. These exchanges rely on liquidity pools to conduct their operations. These exchanges enable the organization to launch a token and access immediate liquidity.
In an Initial DEX Offering, the IDO coins are issued through decentralized liquidity exchanges like Bancor, Binance or Uniswap. Binance DEX was the first to host an IDO. According to the platform, a fundraising method enables protocols for traders without being controlled by others. Anyone can organize an IDO, and it does not bear any assurance or guarantee as the issuer maintains the event. However, IDO is slowly becoming more popular as more businesses use it for fundraising their projects.
What makes the IDO different from earlier fundraising methods?
ICOs operate similar to IPOs. Here, the issuers manage the responsibilities. An IEO conducts operations through a centralized exchange. If you compare IDO to ICO and IEO, you find that they combine IEO and ICO. What sets IDO from the rest is that it replaces the centralized exchange with a decentralized exchange.
The Security tokens help back up the investment contract in a Security Token Offering. Additionally, the STO uses assets that provide monetary profits. STO follows the government regulations while there are no rules in place for IDO.
The Initial Exchange Offering and the Initial DEX Offering are almost the same. In fact, you can consider the IDO as a new IEO. Both fundraising methods revolve around the organization directly exchanging tokens to bankers, investors and traders. What sets IDO apart is that investors do not pay an exchange fee as it is self-organized and decentralized.
Additionally, the IDO overcomes the problems faced by the IEO. The most significant issues to IEOs include issuers unable to list tokens on competing exchanges, paying a large sum to exchanges as a listing fee and lack of control on the fundraising parameters.
What are the benefits of the IDO model?
Fair and open fundraising practices
A typical token offering period is where private investors purchase many tokens for a minimal fee. They resell these tokens on secondary markets at inflated costs and make a significant profit. That is not the case in the IDO model. Here, a company, business or entrepreneur can start a fundraising event without relying on a central exchange. Additionally, anyone can participate in the IDO token offering.
Increased trading speeds
The next benefit to the IDO fundraising model is that anyone can immediately trade the IDO coin. This approach enables investors to buy and sell their IDO tokens almost directly. An example of this is the UMA protocol fundraising. Here, the token price of 0.26 USD quickly rose to two USD during the initial sales.
Instantly access liquidity
Liquidity is the means to buy and sell anything on the market. In layman terms, it is how quickly anyone can get their hand on cash. The IDO fundraising model is where the project’s token can access liquidity immediately. This access positively affects the token price.
What is the IDO token Launchpad?
The IDO token Launchpad is a decentralized platform that creates value for users and cryptocurrencystartups. How does it accomplish that? It provides fair distribution and price discovery mechanics to users. This step brings in greater returns to IDO buyers and projects that participate in Initial Decentralized Offerings. Additionally, the launchpad supports multi-chains and enables entrepreneurs to add their BEP20 and ERC20 tokens. Hence, the IDO token launchpad tools represent an all-encompassing solution for decentralized funding.
The need for IDO development in today’s world
ICOs rose to popularity in 2017 and raised nearly five billion USD in sales during that year. There were several successful ICO projects alongside many failures too. However, many noted that ICOs had numerous weaknesses. The most significant problem was that ICOs relied on third-party involvement and had minimal privacy.
The decentralized nature of IDO aimed to solve the issues of ICOs while providing new solutions to the crypto industry. IDO development and crowdfunding meant that entrepreneurs could release a blockchain product that overcame every problem ICO faced. Additionally, the token holders and buyers can instantly secure their currency on digital wallets.
The best approach to IDO token Launchpad development
Start a whitepaper– The first step to any crypto project begins with a whitepaper. Draft a comprehensive and detailed document that aids in launching your new project on the market.
Create a strategy– The second step requires creating a strategic time-based roadmap and visualizing the product’s direction. A clear goal in mind helps any IDO development project, secure stakeholders.
Draft a marketing plan– The next step is to create a marketing plan for the IDO token Launchpad. A great marketing plan increases brand awareness and generates interest for the token launch.
Develop the coins– The next step requires you to create the tokens for the IDO. This step is where you get the help of a renowned IDO token Launchpad company. They can assist you in developing the coins.
Integrate the blockchain– The next step is to select the blockchain network for the IDO token Launchpad.
Launch support– The final step is where you capitalize on the marketing plan and launch the coin.
Future of IDO
IDO may be a new way to fund crypto projects, but there is room for improvements. Presently, the IDOs biggest drawback is the lack of a control mechanism. Other fundraising models like ICOs, STOs and IEOs have either a central authority or utilize KYC regulations.
The future of IDO is bright; however, there are not enough people who know about it. As the crypto market grows every day and more users become aware, IDOs could become the preferred fundraising model for projects inside and outside the crypto space.