What is IDO (Initial Dex Offering) is one of several ways to attract investment that Blockchain startups use. One of the growth factors for its demand was the development of the DeFi market.

What is IDO and what is it for?

The main difference between IDO and ICO is the participation of a decentralized intermediary exchange that conducts a crowdsale of tokens. To do this, there are liquidity pools on the site, thanks to which bidders get the opportunity to mine a digital coin.

To conduct an IDO or ICO (Initial coin offering), there are a minimum of requirements, and sometimes they are completely absent. This seriously distinguishes Initial Dex Offering from, for example, IEO (Initial exchange offering). As a result, the simplicity of the listing has led to the fact that this format has become popular among DeFi projects.

Stages of passing IDO

Training

Even before the start of Initial Dex Offering, a startup must conduct its own analysis and tell the user about itself. As a rule, this means launching a website with the necessary information. In addition, the authors of the startup organize White Paper and Yellow Paper.

Examination

The project is sent to the DEX site, where it undergoes a thorough selection by users and auditors. Only after that, the startup will get the opportunity to get on the launchpad. This stage is necessary in order to protect bidders from outright fraudulent or junk startups.

Presale

At this stage, the initial liquidity of a startup is replenished with the money of sponsors and venture investors. In return, they get the opportunity to purchase tokens at a lower price. To participate in the pre-sale, as a rule, it is necessary to register in the White List and fulfill a number of conditions. Most often they consist in subscribing to a group of developers and reposting their posts.

Public sale

It is carried out by decentralized exchanges. As a rule, with IDO, cryptocurrency pairs involving ETH and stablecoins, for example, USDT, act for capital replenishment.

Listing

As a result of passing the IDO, the token enters the exchanges that have an automatic market maker. Thanks to decentralization, the listing of new tokens does not involve any permissions or financial costs. The issuer simply creates a liquidity pool that uses its own digital assets. The actual outcome of this stage is the creation of a secondary market for the coin.

Positive aspects of IDO:

  • availability;
  • speed;
  • admission of any participants;
  • low costs.

Almost any project can raise capital with Initial Dex Offering. Avoiding lengthy procedures, such as STO, has allowed a wide range of startups to enter the market. As a result, the market has become more open to new products.

For listing, many exchanges require serious investments, which startups simply may not have. However, the use of decentralized platforms makes it possible to avoid such bureaucracy. This is possible due to the fact that on such platforms, decisions are made by smart contracts, and not by people.