.png "How do Crypto IDOs work?")
An IDO, also called an Initial DEX Offering, is a way for projects to sell their newly made crypto tokens to the community by using a decentralized exchange (DEX).
A typical IDO lets investors lock their money into a smart contract before a project's native token is released.
At the token generation event, when a project launches its token, investors get these new tokens in exchange for the locked funds they sent to the project.
IDOs give projects an easy and cheap way to distribute their tokens and raise money, while also giving investors more security than they would get from an ICO.
To join an IDO, investors require a cryptocurrency wallet like MetaMask. To join the IDO and pay transaction fees, you'll need to add more crypto to your wallet.
Be careful about putting money into any IDO. Always do a lot of your own research.
This means looking closely at a project's IDO mechanisms, token economics, vesting durations, and founding team, all of which may be different from one platform and project to the next.
And most importantly, make sure that any money you put into projects that start on DEXs is money you can trust.
How does an IDO work?
For token sales, IDOs employ a decentralized exchange (DEX). The DEX gets tokens from a cryptocurrency project.
The DEX handles the final transfer and distribution of the money that users send through the platform.
These things happen automatically because of smart contracts on the blockchain.
1. After a project has been checked out, it is given permission to run an IDO on a DEX. They sell a fixed number of tokens for a set price, and in exchange, users lock their funds.
Investors will get tokens at the token generation event (TGE), which will happen in the future.
2. A list of approved investors is usually called a "whitelist." It's possible that you'll need to do some marketing work or just give the address of your wallet to get on the list.
Some of the money raised is used to make a liquidity pool for the project's token. The rest of the money goes to the team.
Investors will be allowed to trade the token after the TGE. Most of the time, the money given is locked for a certain amount of time.
During the TGE, the user gets the tokens, and trading on the LP begins.
IDO: A Better Way to Get Money for Crypto?
After initial coin offerings (ICOs), security token offerings (STOs), and initial exchange offerings (IEOs), initial debt offerings (IDOs) are the next step (IEOs).
IDOs are a great option for new projects and startups that want to launch a token and get access to funds right away. This is because IDOs offer better and faster liquidity at every price level.
Most people think that IDOs are a fair way to start a new cryptocurrency project because they don't use pre-mines, which give coins to the project founders instead of the community.
The first ICO was the Mastercoin ICO, which happened in July 2013. In 2014, Ethereum sold tokens to make money. It raised 3,700 BTC, which was worth about $2.3 million at the time, in the first 12 hours.
The first Initial Coin Offering (ICO) happened on April 17, 2019, on the Index, BitForex, Bit-Z, and Bit-M exchanges. At the same time, Raven Protocol said in June 2019 that it was making the first IDO that would be listed on Binance DEX.
Why is it good to have an IDO?
Over time, most token sales have become fairer and safer for investors. IDOs have clear advantages that prove this:
1. You don't have to work directly with a project and trust its smart contracts.
On a good IDO platform, there will have been several successful sales. You can trust the offering if the smart contracts are the same.
2. Cash is available right away after the sale. IDOs will put some of their money into liquidity pools to make it easy to trade in the market after the sale. This helps lessen the amount of slippage and changes.
3. You don't have to sign up. To take part in the sale, you don't have to give any personal information.
You only need a wallet and some cash. This means that it can be used by anyone. But not having KYC or AML processes can also be seen as a bad thing (more on below).
IDOs are easy to get and don't cost much for projects. For a small, less-known project, it's often easier and cheaper to launch its token on a decentralized exchange than on a large, centralized exchange.
5. Most IDOs have ways to stop whales, which means that no one investor can buy a lot of tokens.
Conclusion:
IDOs have become a standard way for new crypto projects to raise money because they are easy to use, cheap, and easy to get.
Sales of tokens have become their own business. To sum up, it is usually safer to take part in a deal through a decentralized liquidity exchange than in a project.
Still, a big part of an IDO's success is picking the right project. For this, nothing beats good old-fashioned research in the crypto space.
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