What Is an Initial Dex Offering?
Initial dex offerings, or IDOs, are tokens that represent any type of asset hosted on a decentralized exchange (DEX): An IDO is when a project launches a token through a decentralized liquidity exchange. IDOs can be created for anything from cryptocurrencies to a music album to aether-powered battleships. IDOs offer companies a tool to engage their communities in an economy that enriches their products and services and enables them to make smart business decisions regarding their assets.
In the same way that traditional startups receive venture capital before they launch, projects that issue initial DEX offerings receive funding from individual investors. Unlike an initial public offering, investors in dex initial offerings never own shares in the project.
IDOs have some benefits that can make them more attractive than ICOs and IEOs: immediate liquidity, immediate trading, and lower listing costs.
- An initial DEX or IDO offering refers to the launch of a cryptocurrency on a decentralized exchange (DEX). In an IDO, a blockchain project makes the first public debut of a coin on a DEX to raise funds from retail investors. IDOs bear similarities to initial exchange offerings (IEOs), where crypto projects launch their tokens and raise funds through a centralized exchange, as both allow immediate trading in addition to raising funds. However, centralized exchanges impose strict ground rules that include:
- Paying a large sum or offering a portion of the tokens for exchange;
- Prohibit the project from listing its token on competing exchanges;
- Have very little wiggle room to control the parameters of a project’s token sale.
IDOs, on the other hand, can offer a much more profitable token listing and sale model. First of all, an IDO provides fast liquidity with little or no slippage through the liquidity pools available on a DEX. It has relatively cheaper listing costs. And just like IEOs, it allows for instant trading.
Examples of DEXs that offer IDO services include Binance DEX, Polkastarter, and Uniswap. Most merchants also prefer IDOs to ICOs as IDO listings prevent the issuer of the tokens from controlling how the fundraising round will unfold. One of the first IDOs launched in the space was RAVEN, which was listed on Binance DEX in June 2019.