IDO (Initial DEX Offering) is the initial offer of tokens on a decentralized exchange (DEX) and, at the same time, is currently the most popular method of crypto crowdfunding. This method is beneficial to both startups and investors. Unlike ICO (Initial Coin Offering) and IEO (Initial Exchange Offering), the requirements for investors and developers are minimal, and the token is listed on the DEX immediately after token minting, IDO, and creation of the liquidity pool.
Typical IDO procedure goes as follows:
1. Preparation – working on the website, white paper, yellow paper, and social networking to create a community.
2. Presale – the advance sale of the project tokens at a lower rate to investors and sponsors on your whitelist. This is how you generate your initial liquidity.
3. Token listing on DEXes – an issuer generates their liquidity pool on one or several DEXes that use automated market making (AMM). The pool contains the issuer’s token and funds that they acquired at the presale. This is how the secondary liquidity market for the token is formed.
4. Whitelisting – receiving approval from a decentralized community of an exchange (for example, DAO) or from a DEX launchpad.
Since the entire process takes place on a DEX, the listing procedure for the project is fast and inexpensive or free, and investor access is free and anonymous. Traders who want to participate in an IDO just have to create a crypto wallet, connect to a decentralized exchange platform (for example, STON.fi) and become participants of any popular launchpad platform (for example, Tonstarter). They then receive an allocation (i.e. a limit on token purchases at the minimum price during the presale stage). Later, we’ll talk about how traders can participate in IDOs to get the benefit and pleasure of financing new DeFi projects.