What is IDO?
Initial DEX Offering is one of the effective mechanisms for attracting investor funds, for which the exchange platform is used.
The crypto asset market is constantly updated with new tokens, coins or financial projects related to virtual money. Organizers rarely use their own funds. Investments are attracted thanks to a financial instrument - the sale of project coins issued with a preliminary issue. This method of raising funds is called a token sale.
This method of raising funds is called a token sale. Since mid-2019, IDO cryptocurrencies, the initial decentralized offering, have become very popular. Let us take a look at what is IDO crypto.
What is crypto IDO
Initial DEX Offering is one of the effective mechanisms for attracting investor funds, for which the exchange platform is used. For the first time, such a funding model was implemented on June 17, 2019. Within one day, 3% of the total number of issued Raven Protocol tokens were sold on the Binance DEX exchange. The altcoin price during the token sale remained unchanged at 0.00005 BNB.
Thanks to the high authority of Binance, the global crypto community has drawn attention to a new algorithm for obtaining financial assets from investors. Many projects have chosen to raise funds for product development through an initial decentralized offering. As of June 2021, this type of token sale accounted for 60% of the total number of options, according to CoinMarletCap.
Difference between IDO, ICO, IEO and STO
During the time that the cryptocurrency exists, several schemes for attracting financial resources have been developed. Among the most common are ICO, IEO, IDO and STO.
Initially, the organizers developed an initial coin offering model to attract money. ICO was launched in 2013, for 4 years this method has been gradually gaining popularity, since for people this approach to investment was new.
The peak of ICO popularity came in 2017, when more than $5.5 billion was raised with it. However, at the end of 2018, due to the large number of fake versions (more than half of registered offers in the last quarter), trust in this method of raising funds was undermined.
The second attempt to create an optimal protocol for the initial offer of digital coins was Security Tokens. As conceived by the developers, they were supposed to protect investors' investments, as well as give the right to the ST holder to own a share in the proposed business.
If during the audit traces of fraud, obvious technical errors in the code, or facts indicating the “dampness” of the startup are found, then it is rejected. Exchanges care about their reputation and try not to get involved with outright scams.
Many experts from the world of cryptocurrencies have stated that this method is most suitable for all parties to the agreement. But there are also some awkward moments. IEO implies mandatory verification (KYS) for investors, and companies launching a new altcoin are required to pay a lot of money to exchanges for listing.
IDO in crypto is the latest model of a tool for raising funds. When developing it, they tried to combine everything positive from ICO, IEO and STO and avoid their shortcomings.