Initial Dex Offerings or IDOs are a way for projects to raise funds. They give the typical investor a chance to invest in a project that might be typically closed off to only venture capitals or private banks.
IDOs allow projects to engage their users in building their community, and project teams can set restrictions and require certain commitments from their community in order to get whitelisted to invest in them.
In this article, we dive in to the world of IDOs and why you should consider investing in them.
What are IDOs
IDOs occur when a project decides to launch their token on a Decentralised Exchange (DEX), which assists in the fundraising process.
IDOs provide three benefits to the projects compared to an Initial Coin Offering (ICOs) and Initial Exchange Offerings (IEOs):
- Better and immediate liquidity: Allows tokens to openly trade almost immediately and better liquidity that allows for lower price fluctuations
- Fairer launch: IDOs allow almost anyone to invest, which makes the project to seem appealing not just to the VCs, but to the normal investors as well
- Lower fees and simple solutions: Some DEXs offer projects the services to launch IDOs to projects in short span of time and at lower cost compared to IEOs
This allows projects to focus more about on the development of their projects and not to worry so much about the fundraising portions.
Some DEXs also help projects engage their investors by restricting the initial launch to a select few whitelisted wallets. To get whitelisted, projects can create quizzes, or require one to share their post on social media.
This engages the investors to educate themselves about the project and in turn ensures that the investors know what they are investing in.
Why invest in IDOs?
Being decentralised, investing into IDOs are a way for investors to invest in new projects that are trying to innovate in the crypto space. Should the projects turn out to be promising and successful, you may be investing into the next big thing.
On top of that, IDOs bring the following benefits to investors:
- Immediate trading: As tokens are immediately listed, investors can trade their investment with minimal lockup period.
- Fairer launch: With IEOs and ICOs, projects typically give a certain allocation to private investors. But IDOs allow almost anyone to invest on the platform.
How to participate in an IDO
There are many IDO platforms out there and each of them have a different method of participating with them, but here’s rough guide to a popular platform — Polkastarter!
There are generally two routes into participating in a Polkastarter Project. The Polkastarter Token Route or The Project Community Route.
The Polkastarter Token Route generally revolves around its native token $POLS.
In order to get whitelisted through this route, investors have to gather points call “POLS Power” through certain blockchain activities:
- Hold POLS in your wallet for a minimum of seven days
- Hold POLS liquidity provider tokens on Uniswap or PancakeSwap for a minimum of seven days. You can read more about providing Liquidity here.
- Stake POLS on their dashboard. Granting instant access to whitelist eligibility, but locks your tokens for seven days.
Completing these activities will allow you to join Polkastarter’s whitelist lucky draw, and if your wallet address is chosen, you will be allowed to participate in the project IDO.
For the Project Community Route, projects typically engage their community through their own means to select their most dedicated followers to whitelist. This route differs from project to project, and when the project announces its listing on Polkastarter, the whitelist usually will be closed.
Once you have your whitelist, you will have to go through the Know-Your-Customer (KYC) process to ensure that no bots were registered in the process and compliance to regulations.
All thats left is to then invest in the project during the IDO launch!
List of IDO platforms
Here’s a list of popular IDO platforms to check out:
- GameFi: An IDO platform which focuses on bockchain games
- DAO Pad: Another popular IDO platform by DAO Maker, with projects being vetted strictly before listing
- bscpad: An IDO platform on the Binance Smart Chain
The above list is not exhaustive as there are many IDOs platforms out there.
It is important to do your due diligence about the platform and the project you are investing in. An easy way to join their community on Telegram or Discord get a sense of whether the platform is trustable.
You can also join our community on Telegram where we discuss about the latest news and happenings in crypto!
[Editor’s Note: This article does not represent financial advice. Please do your own research before investing.]
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Also Read: DYOR: How To Do Your Own Due Diligence On Crypto Projects Before Investing