What is an initial DEX offering or IDO in crypto?

The crypto industry is renowned for its fundraising prowess, with $10.7 billion expected to be raised from venture capitalists in 2023, three times as much as the previous year.

Of course, you don’t have to be a venture capitalist to invest in crypto. There are a number of different crowdfunding methods in crypto, and one of the most common forms is the initial dex offering, or IDO.

What is the initial DEX offering?

Initial DEX offerings are a method used by crypto projects to raise funds through decentralized exchanges, or DEXs. These are crypto exchanges where users can buy and sell crypto, but unlike a traditional exchange, there is no central authority or team in charge of the project.

Crypto transactions are performed automatically using smart contracts, and a DEX community provides the necessary liquidity by staking their own funds for rewards. An IDO allows crypto projects to list their project tokens on one of these DEXs, with the proceeds from the sales going to fund the project. Users often buy these tokens in the hope that their value will increase as the project grows.

Of course, the practice of purchasing an asset in the hope that the underlying project will increase in value and therefore pay dividends to the investor falls into murky regulatory territory, as the US SEC generally views IDO tokens as securities.

However, IDOs are a popular fundraising tool. A recently launched IDO launch platform called Enjinstarter has seen significant ROI for its users, highlighting the use case for IDOs in crypto.

How does IDO work?

IDOs work by selling tokens on a decentralized exchange to raise funds for cryptocurrency projects.

Here is a step-by-step breakdown:

The project lists a token on a decentralized exchange and announces a sale. Users can find the sale on an IDO launch platform or by simply visiting a decentralized exchange. Users purchase the token directly from the launch platform or DEX by connecting their crypto wallet to the platform. The proceeds of the token sale are then added to the project funds. In some cases, users may receive rewards such as an airdrop reward in the future for purchasing the token. IDOs also help increase the circulation and popularity of a crypto token.

An added benefit for the project team is that it is often cheaper to list a token on a DEX rather than a centralized exchange that charges fees. It is worth noting that IDO tokens sold outside of launch pads are typically sold after the main IDO has taken place and may offer less favorable prices for investors.

For this reason, the most frequently used ones are IDO launch ramps.

An initial DEX offering can be a great way to raise funds if regulatory issues are not encountered, but this is not always the case.

Are IDOs legal?

Whether an IDO is legal or not depends on the project and regulators in each jurisdiction where the tokens are sold. Regulators tend to view IDOs on a case-by-case basis. If a project can prove that a token has a benefit beyond simply generating project revenue and potentially enriching investors as the project grows, the token will not be classified as a security.

Otherwise, regulators may think the project team is selling securities, and if they are not registered to do so, this may be illegal and criminal action may be taken against the team and potentially investors.

What are the best IDO platforms?

Here is a list of the most popular IDO platforms and launch points where people can join IDOs.

Ox bull

Oxbull is currently the top-ranked IDO platform with $29.54M in 24-hour volume and a total ROI of 5.78x at the time of writing. Oxbull is a tech incubator that offers a range of services including hosting IDOs.

Fjord Foundry

Fjord Foundry is the second most popular IDO launch platform with a 1.35x ROI to date. The company connects investors to prospective crypto projects to facilitate initial DEX offerings.

DAO Producer

Designed as a launchpad for cryptocurrency founders, the project currently has an ROI of 0.77x and a 24-hour volume of $197 million.

Monkey Terminal

Ape Terminal is another one of the best IDO crypto platforms. This launchpad for IDO projects has a 3.38x ROI at the time of writing.

Polka start

Polkastarter is an IDO blockchain launch platform focused on raising funds for projects within the Polkadot network ecosystem.

How to find new IDOs in crypto

Checking out any of the launch locations mentioned above is a great way to find IDOs that you might be interested in. From there, you can purchase IDO crypto tokens and build your portfolio.

It’s a good idea to check the regulatory and legal status of any project you’re interested in before taking action, as investors could be held liable for purchasing unlicensed securities if a regulator rules against the crypto project.

You can also find new IDO crypto projects in online communities on Telegram, Reddit, and Discord. As always, be extra careful when talking about or hearing about crypto projects on social media, as online scams are always present in the industry.

On any IDO crypto listing you can find many projects that you might be interested in. Savvy investors usually read the whitepaper of any project, including IDO projects, before investing and also evaluate the reputation and viability of the project online.

What are the advantages of fundraising at İDO?

IDOs are often cheaper for crypto projects due to the lower fees paid on decentralized exchanges. In most cases, there are no fees, whereas listing a token on a centralized exchange can be very expensive. End users do not necessarily have an advantage in going for an IDO compared to any other type of cryptocurrency raising.

IDO vs ICO: What is the difference between ICO and IDO in the cryptocurrency world?

An ICO is an initial coin offering. This method, or perhaps just the term itself, has fallen out of fashion due to the many scams that occurred during the height of ICO fundraising in 2018. The US SEC determined at one point that two-thirds of ICO projects did not have a working product and were likely scams. The only difference between an IDO and an ICO is that IDOs list their tokens on decentralized exchanges.

Disclosure: This article does not provide investment advice. The content and materials contained on this page are for educational purposes only.