It is very true that the crypto space has always been striving to figure out a novel approach to encourage promising projects and raise funds as well. Fundraising has now become crucial, and the new concepts and technologies have made it a great alternative to the traditional methods. To be precise, it comprehensively relied on venture capitalists who used to fund the projects. It was considered to be a cumbersome and time-consuming process. Gradually, IPO, ICO, STO, IEO, etc., showed up to make the process effortless. Today the market is flooded with umpteen fundraising projects with the hope that the right idea at the right time will make the project come out in flying colors. Amidst these fundraising methods, Initial Dex Offering (IDO) is an upcoming fundraising model that offers instant liquidity to fundraisers. This blog is to make you understand all the ins and outs of IDO – Keep reading!
What Is Initial Dex Offering (IDO)?
Before getting into the concept of IDO, it is mandatory to know the difference between a regular decentralized exchange and a liquidity exchange. The former is a one-of-a-kind exchange that depends on an order book to pair the makers and takers. The primary drawback is that it may result in high slippage and doesn’t guarantee instant liquidity. In order to jounce off this struggle, a decentralized liquidity exchange was introduced. It entirely relies on liquidity pools, which allows traders to swap tokens readily. This is where IDO comes into the picture.
IDO is a fundraising model, Initial Dex Offering (IDO) is a fundraising model, which facilitates the quick raising of funds for your decentralized exchange platform. The assets in the DEX platform will be in the form of either cryptocurrencies or tokens. To be more precise, IDO lends financial support from the individual investors, with the only difference that investors will not possess any equity in the project. It aids you in making accurate judgments and makes the community actively participate in your product/services. The first-ever IDO model launched was Raven Protocol. It was listed in the Binance decentralized exchange in June 2019.
What Is The Necessity For IDOs?
Initially, ICOs were popular among the fundraising model. Though it served as one of the indispensable methods, it had certain obstacles to jump over. It is a centralized system that encompasses third-party discrimination and more prone to human errors and lack of privacy. This made IDOs an effective fundraising model. It magnificently solves the issue of ICO and simultaneously adds brand-new possibilities. It paves a path to instant liquidity by the reliable use of decentralized exchanges. At the same time, it ensures utmost security to the owners by safeguarding their blockchain products from third parties or hackers. Apart from it, it secures the coins that are held on the wallet with unique private keys. All together, it made IDO an emerging crowdfunding platform for promising projects in the crypto space.
Perks Of Initial Dex Offering
Let’s have a glance at the supreme perks of Initial Dex Offering that made it a groundbreaking model.
- Rapid Trading: It commits to render a faster trading experience to the users. The investors are left with a splendid opportunity to purchase tokens and sell it for a higher price in the future.
- Instant Liquidity: IDO is an amazing platform to provide instant liquidity for projects. This aids in enhancing the cost of the token.
- Open-Source Model: It doesn’t involve any special permissions; anyone can organize or participate in the process.
- Transparent In Nature: Since the process entirely takes place on-chain, transparency of the platform is an added advantage.
- Affordable price: It consumes less gas fee to make the best use of smart contracts through offering a liquidity exchange for the listed projects.
Steps To Investing In An IDO
The IDO participation depends on the chosen launchpad. Putting it under a common approach, the following are the steps involved.
- KYC Verification: It is the prime step involved in participation. The investors should undergo KYC/AML screening as it is an essential regulation for this kind of crypto-based platforms to stay away from legislative issues.
- Hold Required Tokens: Depending on the IDO launchpad, investors are asked to hold the required tokens to make themselves eligible. It is to provide liquidity to the listed projects.
- Whitelisting Process: In order to be further eligible for an allocation, the whitelisting process is imperative. Aside from KYC verification, they must undergo some tasks as well to complete the whitelisting process.
- Keep a Wallet Ready: Participating in an IDO involves investing and receiving tokens. This requires a wallet. Being ready with a web 3.0 wallet would optimize the process.
- Access The Exchanges: After getting an allocation, tokens can be exchanged and stored in wallets. Being familiar with decentralized exchanges would make the process much more efficient.
Assuredly, the IDO fundraising model is all set to bring in a magnificent change in the industry due to its robust features and benefits. It has commenced gaining the attraction of crypto enthusiasts and also stands robust for the prosperity of new token projects.
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