What Are IDOs?

in BDCommunitylast year


Initial Dex Offering, IDOs refers to how creators raise money for startups projects by receiving financial assistance from individual investors all over the world and launching this project /cryptocurrency on a Decentralized Exchange (DEX).One could liken it to fundraising a Crypto project in exchange for a token or other benefits related to this project, hence it is decentralized crowdfunding platform for startups. Unlike Initial Coin offerings (ICO) , STOs ir IEOs, it offers better and immediate liquidity and allows the project launch it's token /coin via a decentralized liquidity exchange. These IDOs can be created in any form the creators wishes and are not restricted to cryptocurrencies alone.

Many creators prefer IDOs to Initial Exchange Offerings(IEOs) because of the stricter and more expensive processes IEOs have to go through. Unlike IDOs, IEOs are launched through Centralized Exchanges which prevent the projects from listing in competing exchanges and some might even require offering a huge portion of this token to these Centralized Exchanges. These Centralized Exchanges limit so many efforts of these IEOs even to the point of controlling it's token sales parameters. When compared to ICOs and IEOs, IDOs offer lower listing cost , immediate liquidity and trading with no slippage which benefits both it's creators and it's individual investors.

There are many other benefits of IDOs which makes it better and it's safe to say IDOs were created to sold problems of ICOs and IEOs which include vulnerability, third party discrimination , lack of privacy and offcourse centralization. IDOs are able to bypass all these and even create new possibilities in the crypto space for example wallet and private keys provide a more secured platform thereby protecting from hacker actions. Third party influence and discrimination is also eliminated because it is decentralized and so the need to seek permission or appease the Gods of centralization is removed. This ultimately puts real power in the hands of the crowdfunding members giving them the ability to determine how the fundraising and other activities related to the IDOs are carried out.

DEXs which offer these IDo service include Polkastarter, Uniswap and Binance Dex. By studying recent projects in the crypto space it is obvious that IDOs are gaining increasing popularity and used for crypto fundraising than ICOs , IEOs or other models. One of the most successful is Raven Protocol IDO which was listed on Binance Dex in June 2019. Providing fast and cost efficient solutions while using Blockchain to change the AI and machine learning industries. Another interesting example is Sushi Swap IDO. Built on Ethereum, this decentralized crypto exchange during the first two weeks rewarded 1000 sushi tokens every ethereum block to users who staked Uniswap Lol tokens in it's exchange. With increasing adoption it is currently on its way to becoming the most popular Ethereum based decentralized exchange.