Understanding where, when and how new cryptocurrency is released for sale can be a critical aspect of deciding what new coins or tokens to purchase. Three of the primary methods of releasing new crypto are the IDO, or Initial DEX Offering, the ICO, or Initial Coin Offering, and the IPO, or Initial Public Offering. Each has advantages and disadvantages to both the investor and the seller. However, which is best in terms important to an investor? This article examines the three crypto release mechanisms and hopefully helps you to decide.
An Initial DEX Offering, or IDO for short, is a new crowdfunding technique that enables cryptocurrency projects to introduce their native token or coin through decentralized exchanges (DEXs). IDO, the infamous Initial Coin Offering (ICO successor), is a foolproof method for projects to bootstrap themselves or raise money for growth and development.
What is an IDO (Initial DEX Offering)?
The Initial DEX Offering, or IDO, is a crypto coin (or token) offering that takes place on a decentralized exchange (DEX). In contrast to an ICO, where tokens are sold prior to exchange listing, tokens in an IDO are immediately listed on the DEX via which they are launched. This means that project developers are no longer required to gather assets for pools; instead, the pool is formed on a DEX after the IDO is completed via its own or a third-party launchpad.
The IDO model has grown in popularity since crypto projects can raise money without using intermediaries, and investors may benefit from instant token trading, resulting in a win-win scenario for everyone.
A Look Back at the Origins of IDOs
The IDO model is the successor to the IPO, ICO, and IEO models. Let’s look more closely at each of these models:
What is an IPO?
For a long time, businesses failed to raise funds to meet their lofty objectives. Angel investors, venture capitalists, and, eventually, an initial public offering (IPO), in which a portion of the company’s total shares are sold to the public, were some of the most common methods for a business to raise funds.
What is an ICO?
When the crypto industry became mainstream in 2017, projects imitated this strategy by selling a portion of their overall crypto token supply to the public in ICOs. ICOs quickly became a hit in the crypto space, with investors flocking to the opportunity, trying to raise an approximate $4.9 billion by the end of 2017. However, the upsurge in scam projects and Ponzi schemes has resulted in a precipitous decline in the popularity of ICOs. But with companies like LCX who are offering complete legal protection for ICO under their umbrella, it makes it popular, worthwhile, and valuable. From the token sale management tool, high-grade compliance, to post-token sale listing, everything is done in one place, and that is LCX.
What is an IEO ?
An IEO (Initial Exchange Offering) was similar to an ICO in that it was launched on a centralized exchange and promised that the token would indeed be listed on an exchange and that investors would not be duped. Furthermore, in IEOs, crypto projects were carefully scrutinized, and the roadblock for projects participating in an IEO was relatively high. As a result, there is a sense of trust between investors and the larger crypto community. IEOs gave birth to some of today’s most popular blockchain projects, such as Polygon and Elrond.
The Origin of Initial DEX Offering (IDO)
However, when DEXs entered the scene in 2019, numerous crypto projects were drawn to the decentralized nature of these exchanges. Accordingly, they are a better option for launching tokens and raising funds without the complications of centralized exchanges.
As a result, the concept of IDOs was born, with the Raven protocol being the first-ever project to launch an IDO. Then there were the IDO launchpads, which provided services uniquely tailored for new projects conducting IDOs. This increased the popularity of IDOs as a method of fundraising in the crypto space.
IDO vs. ICO vs. IEO: A Full Comparison
|Definition||A portion of the total token supply is sold to the public on its own.||A portion of the total token supply is sold to the general public via a centralized exchange (CEX).||A portion of the total token supply is made available to the public via a decentralized exchange launchpad.|
|Who conducts the fundraising||The project that is launching the ICO||The centralized exchange||A decentralized exchange or a launchpad for IDOs|
|Token listing after crowd sale||The project seeks token listing on various exchanges.||The CEX automatically lists the token.||The CEX automatically lists the token.|
|Vetting process||The projects have not been vetted, and anyone can launch an ICO.||Before a project is listed, it goes through a rigorous vetting process.||Projects are vetted and must adhere to the launchpad’s standards.|
|Token availability||Tokens are not available immediately, so investors must wait for a listing on an exchange.||Tokens will not be available for trading right away.||Tokens are either made available immediately or have a vesting period.|
|Smart contract management||Managed by the project that is issuing the ICO.||The crypto exchange is in charge of this.||Launchpad and the project issuing the IDO manage it collectively.|
|Marketing||The project that is launching the ICO must spend a substantial amount of money promoting it.||The cryptocurrency exchange promotes and markets the IEO.||The launchpad and the project both market themselves.|
Given the growth of DeFi and DEXs in recent years, it is safe to say that IDOs have a bright future, and DeFi projects are better placed to benefit from IDOs than ICOs or IEOs.