What is Initial DEX offering (IDO)? Here are top IDO launchpads of 2022

Highlights

• IDO is an alternative fund-raising approach created by the crypto industry after initial coin offering (ICO) generated a lot of ill will in 2017.
• IDO is a token offering on a Decentralised Exchange.
• One of the positive aspects of an IDO is that investors don’t have to wait for a long time for listing of the token.

Initial DEX offering (IDO) is one of the innovative approaches followed by the crypto industry to raise funds. This is an alternative fund-raising approach created by the industry after initial coin offering (ICO) generated a lot of ill will in 2017. ICO is an unregulated approach to raise funds from retail investors. Although IOCs turned many early investors into overnight millionaires with their impressive gains, many retail investors also lost money as multiple ICO projects turned out to be outright scams/quick money grabs.

New investors were discouraged to invest in the crypto space because of the negative impression created by ICO projects. Decentralised finance (DeFi) tried to address this issue by creating alternative fundraising models and the DEX (Decentralised Exchange) model is one such approach.

What is an IDO?

An IDO is the latest fund-raising approach adopted by crypto projects to raise funds from investors. It is a token offering on a DEX. Liquidity pools (LP) play a critical role in IDOs as they create liquidity post-sale. IDOs allow users to lock funds in the DEX for generating new tokens. Some of the funds raised through IDOs are added with the new token to a liquidity pool before being returned to the project.

Also Read: Why is Dock (DOCK) crypto making a splash today?

These liquidity pools are one of the key reasons behind the success of IDOs. Liquidity allows DEXs to operate smoothly. This is why liquidity providers are rewarded by DEXs.

Early investors in a crypto project can sell their project tokens at a higher price once IDO of that project goes live. Early investors have the advantage of buying large amount of tokens at discounted price and they can sell these tokens later at higher price after first sale takes place.

Another positive aspect of an IDO is that investors don’t have to wait for a long time for listing of the token. Here, the listing occurs immediately after completion of the IDO. So, investors can liquidate their investment more quickly compared to ICOs.

IDOs are a cost-effective and simple way for projects to distribute their tokens. However, IDOs also have certain limitations. DEXs are not scalable. While projects have raised over US$1 billion through ICOs, they may not be able to raise such lofty amounts through IDOs. This is primarily because of the lack of knowledge about DeFi platforms, which stops new crypto traders to invest in IDOs. Also, DEXs are vulnerable to hacking. In the past, there have been news about hackers siphoning off investor funds from DEXs.

Also Read: Want to become a SHIB millionaire? CoinJar has a gift for you as it turns 9

Top IDO Launchpads of 2022

Here are three top IDO launchpads of 2022

Binance Launchpad

Binance, which is one of the most prominent crypto exchanges globally, has its own IDO launchpad known as Binance Launchpad. On this platform, participants who will be able to invest in the upcoming IDO are selected using a lottery system. This is built on the Binance Smart Chain (BSC) and users can stake their Binance coins to get a lottery ticket to participate in the IDO. As per the information available on Binance Launchpad website, so far it has launched 64 projects and has helped them raise US$130 million. Over 3.5 million unique users have participated in these IDOs.

OKEx Launchpad

OKEx is a prominent crypto launchpad project, which has helped launch successful IOCs like Perlin, Beam and Harmony. OKEx has its own token launch platform called as OKEx Launchpad. It allows crypto projects to raise funds as well as to connect with a global community of crypto enthusiasts. OKEx Launchpad lists projects for limited time. In this time frame, OKEx users can stake OKB (native coin of OKEx) and receive the tokens issued by these crypto projects. The more OKB coins users stake, the more tokens they can receive.

Also Read: Decentraland (MANA) vs The Sandbox (SAND): How do they stack up?

KuCoin Spotlight

KuCoin is a top cryptocurrency exchange in China with a global customer base of over 10 million. KuCoin Spotlight is its own token launch platform. The unique thing about Kucoin Spotlight is that it allows users to earn rewards for trading certain digital assets. KuCoin Spotlight has so far launched 20 projects with the highest ROI on these projects exceeding 924x, as per data available on the exchange.

Risk Disclosure: Trading in cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory, or political events. The laws that apply to crypto products (and how a particular crypto product is regulated) may change. Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading in the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed. Kalkine Media cannot and does not represent or guarantee that any of the information/data available here is accurate, reliable, current, complete or appropriate for your needs. Kalkine Media will not accept liability for any loss or damage as a result of your trading or your reliance on the information shared on this website.