Irrespective of the source, every business needs a stable source of capital to strive against market complications. In the cryptocurrency world, Token Offering offers a remarkable privilege for investors to bank on. During the emerging days of the industry and before the emergence of Initial DEX Offering, Initial Coin Offering (ICO) is one of the best sources of capital for start-ups. The reason is that it offers a rewarding opportunity for both the developer team and investors.
Notably, the ICO proved to be a turnaround for many investors and projects. Many earned their marks in the industry and they went on to acquire fortunes for themselves. Meanwhile, while it worked for some, many fell to the wrong side of the ICO and lose their life savings. Since the method of sourcing capital in the crypto industry is unregulated, many start-ups scammed investors and went away with their investment.
Furthermore, the incessant fraud cases that come with the ICO birthed the emergence of the Initial DEX offering (IDO). Remarkably, this introduction proved to be a life-changer by offering solutions to the deficiencies of ICO. As a result, the ICO gradually went into extinction while IDO continue to grow in strength and popularity.
How Initial DEX Offering works
Accordingly, Initial DEX Offering is an emerging and decentralized way of raising capital for crypto start-ups. This implies the inauguration of a token with the aid of a decentralized liquidity exchange. A decentralized liquidity exchange employs liquidity pools to permit the exchange of tokens. Therefore, the IDO allows start-ups to make their tokens available on Decentralized exchange to allow fundraising from investors. The exchange platform serves as an intermediary between the two parties.
After drafting a Whitepaper for the coin, the coin then reflects on the DEX becoming available at a cheap price. Subsequently, investors then pump money into the project and get the coin in return. Meanwhile, funds acquired during the process move to a liquidity pool, which becomes available when the project flies. One of the benefits of investing in an IDO is the opportunity to become early traders once the token launches. Also, the more the project grows, the higher the returns of the investment for investors.
However, an IDO can come in different dimensions which are determined by the DEX and smart contract involved. We must come to understand that startups launch their various project on numerous blockchians. This will help provide more utility for the token an emerging possibility for more project to follow. For instance, a start-up might execute one IDO on an Ethereum-based platform and another (or several others) on platforms based on Binance Smart Chain, Polygon, Solana, or other networks.
Types, benefits, and emerging opportunities
Irrespective of the systems it follows, almost all IDO has many things in common. Firstly, one of the few similarities between all IDOs is the existence of a whitepaper. The whitepaper serves as an introduction to the project with details about the problem it aims to solve. It’s a comprehensive detail that sells and convinces investors about the project. Another feature of IDO is the provision of a certain portion of the token with a price attached to it. Investors then send in their investment and get the tokens base on the price in return.
For investors, it provides varieties of options and opportunities like the elimination of permission and high fees. Through the IDO, investors, and set-ups don’t need the heavy documentation to out in their investment. Also, it doesn’t require a high fee before they venture into it. For transparency and accountability, funds are directed immediately into the liquidity pool. Every project raising funds through the IDO is quite affordable for investors because they cater to small investments too.
The Initial DEX Offering has effectively bridge the majority of the shortcomings that battles its earlier version, the ICO. It is growing to establish itself as the best method to market your coin, NFT, or even cryptocurrency-related ideas. Lastly, the cryptocurrency sphere has witnessed the regular presence of IDOs as a regular source of capital for many startups. It’s convenient to partake in a sale through a Decentralized Liquidity Exchange. Through this, it has earned the attention of startups thus, gaining their trust for adoption.
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