An Initial DEX Offering (IDO) refers to the launching of crypto tokens on a decentralized exchange. It is a crypto fundraising event where a blockchain technology company carries out token sales in exchange for funds from individual investors.
Similar to Initial Public Offerings (IPOs), where start-ups are able to raise funds via angel investors and venture capitalists in exchange for equities, IDOs present an opportunity for blockchain start-ups to crowdsource funds from private investors, except investors do not own a part of the company.
What is the difference between IDO and IEO?
IDOs are the latest crypto fundraising method, a supposed successor to Initial Coin Offerings (ICOs) and Initial Exchange Offerings (IEOs).
IEOs are usually executed via cryptocurrency exchanges like Binance and Coinbase. These platforms collect an exchange fee upfront or a portion of the tokens to be issued and usually involve an approval period as the exchange vets all digital assets before each event. In contrast, IDOs offer lower listing fees and provide initial liquidity since the tokens are launched on decentralized liquidity exchanges.
The ICO boom of 2017/2018 was rife with scams and theft of crypto assets, which ruined the reputation of crowdsourcing events in the crypto space. IEOs came into the picture as a measure to introduce regulations and restore credibility to fundraising events, hence requiring a vetting process by a centralized exchange. However, IDOs serve as an alternative to IEOs, which usually is geared towards rewarding the developers of the crypto project.
In summary, an IDO offers a secure and fair fundraising process via token sale, alongside benefits such as instant trading, listing on multiple DEX exchanges and a lower cost of execution. Popular DEX exchange platforms include Binance DEX, Uniswap, PancakeSwap among others.