What is IDO?
Difference between IDO and ICO, IPO and IEO
Benefits of IDO
How to Invest in IDO?
Learn How to Use Decentralized Exchange
Initial public offers (IPOs) and Initial coin offers (ICOs) aren’t the only types of initial offerings in the world of crypto-asset Investment. Yet, an IDO, or initial dex offering, is also available. Zipmex will explain what an IDO is and how to join one in this article.
What is IDO?
Initial dex offering, or IDO, is a decentralized crowdfunding platform that is a new way of raising funds in the crypto industry.
Typically, this sort of fundraising is done by swapping tokens that represent various assets hosted on a decentralized exchange (DEX). IDOs are frequently carried out when a project releases a currency or token through a decentralized liquidity exchange.
Initial Dex Offering (IDO) relies on a liquidity pool where traders can swap tokens, including crypto assets and stablecoins, for one another. Examples of liquidity pairs are USDT/ETH.
Similar to Initial Coin Offering (ICO), Security Token Offering (STO), and Initial Exchange Offering (IEO), this strategy is one of the crypto fundraising efforts frequently witnessed today.
IDO is an excellent option for new DEX projects and startups wishing to release tokens and raise money more quickly.
In addition, IDO provides superior and more direct liquidity at all price levels due to the sheer strategy’s mechanics.
Difference between IDO and ICO, IPO and IEO
The investing industry has a place for all four forms of fundraising, but there are essential disparities among them. Exactly, what are the differences?
An ICO is comparable to an Initial Public Offering (IPO) in that the issuer is responsible for all of the obligations. In contrast, in IEO, the responsibility is carried out by a centralized exchange host.
IDO can be considered a mixture of an initial coin offering (ICO) and an initial exchange offering (IEO). However, The only difference is that IDO does not use a centralized exchange (CEX) but uses a decentralized exchange (DEX).
For the Security Token Offering (STO), the investment contracts are backed by security tokens, and it deals with assets that offer monetary gain. Additionally, STO adheres to federal restrictions. This is an aspect where IDO has yet to implement any kind of formal policy.
However, it is believed that IDO is a new form of Initial Exchange Offering (IEO), whereas they share lots of commonalities. Project owners can directly exchange crypto coins with investors or traders in both cases. However, IDO differs from IEO in that there is no exchange cost to be paid.
In addition, IEO-related issues can be tackled via IDO. Such is when issuers are not permitted to offer tokens on rival exchange platforms. Also, to list the token on an exchange, the issuer must pay a significant fee as well.
Benefits of IDO
There are several benefits gained through the initial dex offering (IDO), including the following:
Easier to Get Funding
The way IDO can robust IEO vetting procedures has given many crypto-based projects more access to crowdsourced capital, which, in theory, benefits the wider industry.
Higher Level of Flexibility
With IDO, there is no waiting period for tokens to be published on the exchange. After the IDO is done, investors can pay out their funds more quickly than with an ICO by having an immediate registration procedure.
Instant Liquidity
When tokens begin trading on the DEX, most projects lock up most crowd-sourced funds as liquidity. Users will be able to earn interest in holding these tokens via staking programs that the projects offer.
Transparency
Because everything happens on-chain, users can track their activities with simplicity and ease. In addition, everyone can also verify the token contract in advance.
How to Invest in IDO?
To participate in IDO, you must go through a series of steps that vary based on the project stages.
Here are the requirements and stages that IDO of most projects tends to follow.
KYC/AML
Complying with regulations in most countries, most IDOs require their investors to perform KYC/AML procedures before allowing them to participate.
This is done to avoid any possible legislative issues that may arise in the future. As a result of this requirement, US residents are seldom permitted to participate in IDOs.
Whitelisting Stage
Apart from the KYC check, the user must enter the whitelist activities. They will be required to engage in various tasks such as following certain pages on Twitter, retweeting certain posts, and joining certain Telegram groups.
Prepare Your Wallet
To participate in IDO, users must interact with the launchpad platform to make investments as well as to receive their tokens.
IDO participants can choose a variety of crypto wallets to engage in the platform. Make sure the wallet you pick fulfills your requirements and provides the level of security you want before obtaining it.
Learn How to Use Decentralized Exchange
The IDO activity heavily relies on the decentralized exchange. To begin trading on DEX, you must first ensure that you have correctly received and allocated your tokens.
