What is IDO? Initial DEX Offering for Beginner

As we work on a few crypto projects. We see that in the last few months ago, more and more projects are engaging with IDOs. If you want to know more on Initial DEX Offering. Then, keep reading this article! 

IDOs indicate an increasing interest in the decentralized token listing because of higher cost efficiency and no restrictions on who, when, and where to buy tokens on DEXs. 

So, what is IDO? What is the advantages of IDO? And where are IDOs headed in the future? An IDO is a fundraising method in which the IDO coin is issued via decentralized liquidity exchange. A decentralized liquidity exchange is a type of crypto asset exchange that relies on liquidity pools which traders can swap tokens. 

Liquidity pools are pairs of crypto assets and stable coins. For example, USDT/ETH is a liquidity pair. Traders can swap them between different crypto assets and stable coins based on market conditions. As the volatility of stable coins is negligible. It offers a safe option for traders to manage the high volatility of crypto tokens and assets by swapping them with each other. 

As the result, decentralized liquidity exchanges enable companies to launch a token and access immediate liquidity. 

In an IDO, the IDO coin is issued via decentralized liquidity exchanges, such as Uniswap, Pancake Swap or 1 Inch Liquidity. IDO is decentralized and offers courses for DeFi (Decentralized Finance). There are 5 advantages of IDO: 

1. Open and Fair Fundraising 

Fundraisers using the IDO model do not rely on traditional private investment to kick-start their operations. Instead, once the token goes public, investors buy at a lower price, and anybody can organize or participate in IDO.

2. Immediate Liquidity 

The liquidity pool promises liquidity at every price level with no slippage. In addition, many altcoins are only accessible through DEX, where transactions can occur without high trading volumes. Thus, IDO provides more opportunities for the distribution of project tokens and increases financial inclusion. 

3. Instant Trading 

Investor can start trading since the project launches its token. Traders try to buy a new token as early as possible and later sell it at a higher price during the IDO. 

4. Lower Cost 

DEX functions based on self-executing smart contracts. There is no intermediary for the project uses DEX. The GAS fee is only for deploying a new smart contract that controls the liquidity pool and the asset’s token. Furthermore, DEX charges a low fee, around 0.3% for exchanges like Uniswap. 

5. Reliable Transactions 

With smart contracts, DEX executes trades and records them to the blockchain, and enabling reliable transactions. Moreover, since DEX does not hold your funds. They are less likely to be targeted by hackers. With the DEX model, where there is no need for permission to organize the fundraising event, it does raise funds. As of now, only DeFi projects have raised money through IDO. 

However, there's no reason why projects from other areas of the crypto ecosystem couldn't raise funding this way. That said, these project will have to attract existing DeFi users to invest in the project's tokens. 

Reference: https://youtu.be/1Po4QLRYb9A   

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