The rise of cryptocurrency and blockchain technology can be compared to the digital gold rush of the last decade. Every other day, there is a new project, solution, or concept centered on these two entities. The introduction of bitcoin heralded a new era of decentralized finance, removing the need for government-regulated currencies with the help of blockchain technology, a distributed ledger technology.
In the early days of cryptocurrency and blockchain technology’s mainstream adoption, new startups mimicked traditional finance’s raising of funds through ICOs and VCs. This resulted in a slew of scams, particularly in 2017 and early 2018, with infamous ICO scams such as Bitconnect, Pincoin, and IFan springing to mind, leading to skepticism about cryptocurrency projects and decentralized finance in general. To address these issues, the concept of IDOs arose as a more decentralized and secure way of investing in projects. In this article, we will look at the significance of IDOs and why they are a far superior fundraising model to ICOs in the blockchain space.
What Is An IDO
An IDO has three key characteristics that differentiate it from other blockchain fundraising models: immediate liquidity, immediate asset trading, and lower listing costs.
An initial DEX offering, or IDO, is when a project launches its tokens through a decentralized liquidity exchange. Before launching their project, blockchain projects in an IDO seek funding from individual investors rather than the traditional funding method from Venture Capitalists.
In the blockchain space, IDOs was introduced as a much better fundraising method. The Initial DEX Offering (IDO) is an entirely self-organized, decentralized model for raising funds for blockchain projects.
Benefits of an IDO
With the introduction of IDOs, the blockchain space is now open to fair and honest fundraising. Retail investors have a high chance of participating in IDOs of blockchain projects because IDOs are typically decentralized and permissionless, unlike ICOs.
Furthermore, IDO tokens can be traded almost immediately after launch. This allows for quick profits because you can participate when the token is listed for a low price and resell when it rises before the end of the IDO launch. In contrast to other fundraising models, IDOs provide projects with immediate liquidity, which influences the price of the project tokens upon launch.
Important Details to Consider When Choosing A Platform For Your IDO
There are numerous platforms on which to conduct your IDOs; these platforms, known as IDO launchpads, are platforms for launching new crypto projects and raising liquidity following the decentralized nature of blockchain technology. IDO launchpads were created in 2019 and have helped accelerate the launch of cryptocurrency projects.
To avoid scams and rug pulls, IDO launchpads have a rigorous screening and vetting process in place. The support provided before and during the launch of an IDO is an important consideration when selecting a platform to host an IDO. Some IDO launchpads only offer support during the launch and nothing else after that. Other IDO launchpads, such as SkyLaunch, provide both Pre and Post IDO support to projects that use their launchpad as the hosting platform, providing these projects with an easier path to success by providing the necessary tools and resources throughout the IDO process.
Another consideration is the ecosystem of the IDO launchpad where you intend to host your IDO. In such cases, a multichain launchpad protocol is typically an excellent option because it is distributed across multiple chains and can attract deep liquidity for IDOs conducted on such platforms. When selecting a platform for your IDO, it is also critical to consider transparency, visibility, and convenience.
The Future Of Fundraising For Blockchain Startups
A decentralized fundraising model is critical in the blockchain space. It would propel the next generation of DeFi projects while protecting investors from the scams prevalent in the early days of cryptocurrency and the DeFi industry.
