Before getting to know what an IDO is, it is important to know that in the world of crypto asset trading, there is such a thing as a DEX (decentralized exchange/decentralized broker), which is a new fundraising trend.
In this case, IDO continues the trend of ICO (Initial Coin Offering) and IEO (Initial Exchange Offering) that already existed as a term in the initial crypto asset token sale.
IDO itself is an acronym for Initial Dex Offering, while initial offering is a crowdfunding step, aka fundraising. To find out more about IDO, see the following review.
Overview of What is IDO
IDO platform is basically a new and interesting kind of decentralized and permissionless crowdfunding platform. This platform opens a new way of raising funds in the crypto space.
For information, if a project launches an IDO, it means that the project has launched a coin or token via a decentralized liquidity exchange. In addition, IDO also means a type of crypto asset exchange that relies on a pool of liquidity.
Here, traders can exchange their tokens, including crypto coins and stablecoins. Suppose USDT/ETH is a liquidity pair.
Project fundraising in recent months has also been carried out through IDO. This is also considered to have marked the increasing popularity of this platform as a fundraising method, especially since last August 2021.
What is IDO: A Better Crypto Fundraising Model
So, why is IDO platform often rated as a better crypto fundraising model? This is inseparable from its advantages, namely that IDO will offer better and direct liquidity at every price level because of its mechanism.
Apart from that, this platform is also an excellent choice for new projects and startups looking to launch tokens and access funds quickly.
Unlike its predecessors—ICO and/or IEO—fundraising methods, IDOs are basically seen as a fair attempt at launching new crypto asset projects by avoiding pre-mining or pre-mines. Pre-mines are a publishing system that benefits project founders rather than community members.
Successfully Launched Projects from IDO
Raven Protocol IDO
The decentralized and distributed deep-learning training protocol of this deep neural network works to provide a fast and cost-effective solution. Raven is known to use blockchain to transform the Artificial intelligence (AI) and machine learning industries, which are now dominated by big companies.
Universal Market Access (UMA) Protocol IDO
The UMA protocol is also considered the launch of another successful IDO project. Despite problems at the start of the IDO, it is here that DeFi developers are allowed to build synthetic assets on Ethereum—a collateral-backed token whose value changes.
Currently, UMA even has a market capitalization of more than $1.5 billion. The price of one token is more than $25.
This decentralized crypto exchange built on Ethereum as a replacement for Uniswap is also an example of the success of IDO. SushiSwap users are said to have migrated more than $1.14 billion of Uniswap’s locked crypto assets to the SushiSwap platform last September.
The Reason Behind the Importance of IDO
IDO, by its decentralized nature, makes it capable of solving ICO problems while adding new possibilities to the crypto market. Through crowdfunding through IDO, entrepreneurs will be able to release blockchain products that go beyond the influence of harmful third parties while eliminating any issues related to hackers and human error.
Not only that, token buyers and coin holders will be immediately secured in their wallets and private keys through crowdfunding at IDO.
Compared to IEOs or ICOs, the IDO platform has several advantages that are worth considering, including:
Through IDO, projects do not have to pay high fees. In addition, the project also does not require permission from anyone because IDO is a completely decentralized offering.
The next advantage is that the vocal community members here are the ones who will check the project and tokens. That would certainly pave the way for small projects and big collaborations instead of just waiting for an exchange to approve a project, as in IEOs or ICOs.
IDO also provides direct access to liquidity and trading. This is different from IEOs and ICOs, which are known to have an initial waiting period.
IDO is also known to help streamline users, by providing a secure wallet and trading platform support built into a single interface system. Not only that, IDO can also support several types of wallets, which makes it easier, user experience wise.
IDO Progress in the Future
Now, you already know what IDO is. However, the next question is what is the direction or progress of this platform in the future?
Although it is a new way for crypto projects to issue tokens to a wide audience, in fact, IDO still needs improvement in the future. In addition, this platform also needs improvement in terms of scalability. In this case, IDO requires interest from existing DeFi users to invest in project tokens.
Another improvement is in the form of increasing awareness and education of DeFi as this industry grows. Then, despite the growing interest in these platforms, centralized exchanges—such as Binance or Coinbase—still have control over the market.
The reason is, at this time, investors are more concerned about Coinbase making a list of certain coins than asking for the next IDO listing schedule. Likely, that will change as awareness begins to grow regarding DEX and DeFi in general.