An IDO, or Initial DEX Offering, is a type of crowdfunding event that takes place on a decentralized exchange (DEX). It is similar to an initial coin offering (ICO), but instead of being held on a centralized platform, it is held on a decentralized exchange.
IDOs have become increasingly popular in recent years as a way for new projects to get funding and for investors to get in on the ground floor of exciting new ventures. However, like ICOs, IDOs are risky and have been known to involve scams, so it’s important for investors to do their due diligence before participating in one.
In 2016, ICOs (Initial Coin Offerings) made an appearance in the crypto space. Teams would sell a part of their total token to the public to raise money; these coins would then multiply in value once listed on an exchange. They were mainly deployed through the ERC-20 protocol standard, and projects were able to raise millions through the ICOs. It was later succeeded by IEOs.
In 2019, a new model with a few key differences known as IEOs (Initial Exchange Offerings) made their grand entrance. Although IEOs followed the crowd-funding model of ICOs, they had more advanced features and projects were more carefully vetted.
In 2021, IDOs (Initial DEX Offerings) took the center stage. IDO is a successor to ICOs and IEO, but unlike the two where tokens are sold before they get listed, with Initial DEX Offerings, tokens are listed immediately on a decentralized exchange (DEX). Some of the benefits IDOs offer are fast trading, open and fair fundraising, and immediate liquidity.
How to Identify a Trustworthy IDO platform?
As the number of Launchpads increases and the space gets crowded, identifying and selecting a trustworthy Crypto Launchpad becomes challenging. These are essential features to consider while assessing a Launchpad:
- The safety of investors should be the top priority of a crypto Launchpad. Therefore, a trustworthy Launchpad must have an excellent vetting process that prevents rug pulls or projects without intrinsic value.
- A reliable Launchpad must have passed a standard security audit.
- It must be certain to have lottery-based access that prevents projects from favoring “the whales” that hold a large share and control the market and allows average retail investors to engage in trading.
- To identify a trustworthy Crypto Launchpad, the level of trust it has earned should be considered. Partnerships and backing from top-tier VCs are good indications of the industry insiders’ trust earned by the Launchpad.
- A good Launchpad must have a wide range of coverage, supporting projects on different networks.
- Community support is an essential determinant of how trustworthy a Crypto Launchpad is. Therefore, a widely accepted, a trustworthy platform must have strong community support.