What is IDO? Distinguish IDO, ICO, and IEO in the Crypto market.
Sep 08, 2022
IDO, ICO, and IEO are important terms that you need to understand when participating in the crypto market because they have different characteristics. Hence, the way investors trade, invest as well as hold, are also largely affected by this factor. So let’s learn about IDO and how to distinguish these terms.
What is IDO? A simple explanation of IDO.
What is IDO?
IDO (Initial DEX Offering), is a token that is traded on a decentralized platform (DEX). In contrast to ICO, tokens are sold prior to exchange listing, they are immediately listed on the DEX. This means that project developers (DEVs) don’t need to list assets. Instead, the liquidity pair will be added to the DEX by 3rd parties (launchpad) or the project itself.
The mechanism of IDO became extremely popular because it brought the opportunity for early investors to multiply assets when open for sale. In addition, the deposit and withdrawal do not require an intermediary, bringing benefits to both the investor and the project developer.
About ICO, IEO.
IDO is the successor of IPO, ICO, and IEO models. Let’s take a closer look at each of them.
What are ICOs?
What are ICOs?
When the crypto industry went mainstream in 2017, projects mimicked this strategy by selling a portion of their overall crypto token offering to the public during an ICO.
ICOs quickly became a wave in the crypto space, attracting around $4.9 billion by the end of 2017. However, the rise in scam projects and Ponzi schemes have led to a rapid decline in the popularity of ICOs. But companies like LCX, who are providing complete legal protection for ICOs, are making token listings popular, worthwhile, and valuable. From the token sale management tool to the post-sale listing, everything is done in one place and that is LCX.
What is IEO?
IEO (Initial Exchange Offering)
IEO (Initial Exchange Offering) is a Token listing model similar to ICO, that launches on a centralized exchange and ensures real tokens will be listed and exchanged in a reputable manner. Moreover, with the form of IEO, cryptocurrency projects have been scrutinized. As a result, there is a sense of trust among investors and the larger crypto community. IEOs have spawned some of the most popular blockchain projects today, such as Polygon and Elrond.
Origin of IDO.
When DEXs entered the scene in 2019, many crypto projects were attracted by the decentralized nature of this model. They are a better option to launch tokens and raise funds without the intervention of centralized exchanges.
Thus, the concept of IDO was born, with Raven Protocol being the first project to launch IDO. Then there are IDO Launchpads, which offer tailored services for new projects that conduct IDO. This increases the popularity of IDO as a method of fundraising in the crypto space.
Compare IDO, ICO, and IEO
| Terms | ICO (Initial Coin Offering) | IEO (Initial Exchange Offering) | IDO (Initial DEX Offering) |
| Definition | A form of token issuance that is first sold on the market | A form of token issuance for the first time on centralized exchanges | The first form of token issuance on a decentralized exchange. |
| Description | Projects will self-issue tokens on Crypto social networks, and communities to raise capital by selling a certain amount of tokens in Token Sales rounds | Projects issue their tokens on a centralized exchange – CEX These CEX exchanges will be responsible for calling for investment capital for the project and as a partner to ensure the credibility of the project. CEX will collect listing fees and Percentage of tokens sold in IEO | Projects that issue tokens on a decentralized exchange – DEX These DEX exchanges will list/list that token on their exchange to jointly expand and develop the ecosystem CEX exchange will provide, allowing new projects to use new technological advancements on their platform |
| Legal Requirements | The project is freely developed | CEX exchanges will be authorized to take responsibility through smart contracts | DEX exchanges and self-responsible projects |
Summary
The above is a summary of the pros and cons of 3 forms of token issuance for the first time in the market. We hope they have helped you by providing an overview of this risky yet potential market.
DeFi has been and will become the future development trend of the decentralized financial market. So DYOR (Do Your Own Research) and invest wisely.