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What is an IDO?

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What-is-an-IDO?

A term commonly used in the blockchain space, Initial DEX Offering or IDO, is a token offering where a crypto project raises funds in a decentralized exchange in return for their crypto. Investors purchase tokens of new blockchain platforms that they feel have high-profit potential, while the startup receives funds to develop their innovations. 

IDO is a type of token offering method used by crypto startups. Others are ICO, IEO, and STO. For an Initial Coin Offering (ICO, the platform organizes the crowdfunding process. Initial Exchange Offering (IEO) involves the crypto startup using a centralized exchange for fundraising activities. As for the Security Token Offering (STO), the crypto startup launches a security token, which the government regulates. This type of fundraising activity is different from others because of its higher level of restriction from the government.  

How does Initial DEX Offering work?

A crypto startup that wants to organize an IDO has to submit its request to a DEX. Typically, to prevent hijacking by a fraudulent project, a DEX may vet the project to reduce the risks of the process. This process is quite simple. After that, they provide their coins to the decentralized exchange, which looks into the distribution and transfer of tokens. Usually, everything is automated and monitored by smart contracts on the blockchain.

How to participate in an IDO?

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Crypto investors seek crypto startups to get involved in at an earlier stage because of the potential profits and benefits that they can enjoy. In some cases, the tokens bought at an IDO could perform an x10 or even x100 in the market. Usually, investors seek gems and research on the project before becoming involved. 

Participating in an IDO using comes with eligibility criteria. For example, some DEXs require that potential investors stake the native coin of the decentralized exchange before they are allowed to buy the tokens of any crypto startup doing its IDO in the platform. Please look up the necessary conditions attached to an IDO from the DEX itself because the rules vary from platform to platform.

Rose Nnamdi is a crypto content writer that loves drafting content on cryptocurrencies and innovative platforms building on blockchain technology.

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