Initial DEX Offerings (IDOs) are one of the hottest topics in the cryptocurrency market. Here’s a complete guide outlining their specifics and differences compared to ICOs and IEOs.
The cryptocurrency community has been particularly creative when it comes to finding new ways to bootstrap projects and raise funds.
In late 2017 and 2018, we saw the appearance of initial coin offerings (ICOs), where teams would raise money by selling a part of their total token supply to the public. This created an absolute euphoria as these freshly minted coins would multiply in value once they were listed on an exchange and open for trading.
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ICOs were mainly deployed through Ethereum’s ERC-20 protocol standard, and they quickly became the leading use case for ETH-based tokens. The first ICOs in 2016 raised just a few million, but a year after that, the average sum was between $20 and $30 million. Soon after that, bigger projects like Bancor raised over $150 million.
The hype was so strong back then that some projects managed to raise whopping sums. The best example of the peak is perhaps EOS – the project received more than $4 billion in funding throughout its long-lasting token sale.
Like everything that becomes too hyped too fast, the ICO bubble burst in 2018, but it didn’t take long for us to see a new model with a few key differences. Towards the end of the first quarter of 2019, initial exchange offerings (IEOs) made their grand entrance.
Largely spearheaded by the Binance Launchpad, these IEOs followed the crowdfunding model of ICOs, but the projects were vetted a lot more carefully. Since they were launched on popular exchanges such as Binance, KuCoin, Huobi, OKEx, and so forth, the exchange teams did extensive due diligence, hence why IEOs aren’t so plentiful as ICOs – there is a higher barrier to entry. Aside from the fundraising, IEOs also benefited from getting listed on the exchange, which managed their token sale. One of the biggest pains of ICOs investors back in 2018 was whether or not exchanges would agree to list their tokens.
Some of the more popular projects that are currently multi-million and even multi-billion dollar enterprises started off as IEOs. These include Elrond, Matic Network (now Polygon), Celer Network, WazirX, and more.
In light of the listing concerns, together with the growing popularity of decentralized exchanges such as Uniswap (Ethereum) and PancakeSwap (BNB Chain), anyone can list a new token and start providing liquidity to it. So, it was just a matter of time until token sales would take advantage of this.
So, in 2021, a new kid on the block rendered the above rather obsolete. Initial DEX offerings (IDOs) have taken center stage, so let’s have an in-depth look at what they are and everything you should know about them.