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INITIAL DEX OFFERING (IDO)

Initial Decentralized Offering (IDO) is a new fundraising model that blockchain projects use to sell their tokens through a decentralized exchange (DEX). DEX allows projects to stake tokens without huge fees. These protocols are permissionless, making it easier buying tokens for anyone in the world A decentralized exchange relies on liquidity pools rather than order books through which traders can exchange tokens.

Instead of selling their tokens directly to investors, crypto projects lend their tokens to a DEX-driven smart contract. At the same time, investors invest through the platform in the same smart contract. The DEX then makes the final distribution and transfer of the funds. These processes are fully automated and run by smart contracts on the blockchain.

Most IDOs follow a similar procedure:

Examination

Before projects can run IDO on DEX, the DEX team performs due diligence.

Price fixing

Once the project is accepted, it determines the number of tokens that will be offered at a fixed price.

White list

Investors will have to register their wallet address, join the Discord community forum, or complete marketing tasks to be added to the list.

Investment

Whitelisted investors can then lock the funds they want to invest into a smart contract on the DEX. In return, they will receive project tokens upon release.

Liquidity pools and funds transfer

Part of the raised funds is placed in liquidity pools along with the project token on the DEX. This provides trading liquidity from day one. The remaining funds are allocated to the project. At the same time, the project tokens are transferred to the wallets of investors.

Start of trading

Once the funds have been exchanged between the parties, the liquidity pools are opened for trading and the price of the token is determined by the market. Depending on the project, some of the funds received by the project and the tokens transferred to investors may be locked up for a certain period, commonly referred to as the vesting period.

The methods used in ICO, IDO and IEO are completely different, although the results are basically the same. Here is a brief overview of the main differences:

IDOIEOICO

Verification process
DEX checks the projectCEX checks the projectNo verification process as the project handles the sale itself

Fundraising
DEX manages investor fundsCEX manages investor fundsThe project operates with investors’ funds

Smart contracts
DEX creates and runs smart contractsCEX creates and launches smart contractsThe project creates and launches smart contracts

Token listing
Liquidity pools open on DEXThe exchange lists the tokenThe project must find an exchange for storage

KYC/AML
NOYESNO

The main stages of the implementation of the IDO project

STAGE 1

Development of a business strategy

The strategy should include the problem the project aims to solve, the allocation of funds, the blockchain the project will run on, the overall marketing strategy, and how to lead the project after IDO and maintain that momentum.








STAGE 2

Creation of marketing materials

The marketing support for the IDO launch includes the development of a website and a white paper. The white paper contains statistical data, charts, tables, and so on. The white paper uses facts to convince the investor that the project is worth the investment.








STAGE 3

Creation of a cryptocurrency

The process of starting a cryptocurrency has become simple. The difficulty is not in generating tokens, but in convincing investors to invest their money in the project, evaluating the real value and usefulness. After the successful completion of the IDO and the generation of tokens, the DEX lists the token for trading. Listing occurs through an automated market maker.







STAGE 4

Launching a token to start fundraising

At this stage, the project team creates a pool of tokens. A token pool is a place where investors pay in advance for their tokens. Instead of setting a fixed price, the issuer can hold an auction, thereby reaching a price determined by supply and demand.

Advantages of IDO

In recent years, the methods of offering coins and tokens to the crypto community have improved significantly. IEO and IDO are safer, fairer, more transparent. As a result, they have almost completely replaced traditional ICOs. Due to their decentralized nature, IDOs have a number of distinct advantages.

Unlike IEO, IDO does not require an account to participate. This guarantees privacy and low entry barriers.

Some IDOs take action against whales. This ensures that no single entity can purchase the bulk of the supply of tokens and then sell them to the rest of the token holders.

Fast trading is a good reason to launch IDO. Other benefits of Dex’s initial offerings include:

  • immediate liquidity – the project token gets access to immediate liquidity, which can increase the price of the token.
  • low fees – project teams only need to pay for gas to deploy a new smart contract. This smart contract controls the liquidity pool and the asset token.
  • open and Fair Fundraising – The IDO model allows anyone to participate in fundraising.




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