A token can’t sit on top of the value chain when introduced on an exchange. Certainly, it would go through stages of development, but then, it would cost a fortune for developers to independently promote this growth.
Hence, the birth of a crowdfunding technique. A technique that allows for the introduction of cryptocurrency projects to showcase their native tokens and coins via an exchange. IDO (Initial Dex Offering) meaning in crypto simply borders on leveraging crowdfunding as a means to promote and grow newly introduced tokens.
In crypto, the concept of IDO borders on having decentralized exchange users lock up their funds as a form of providing liquidity for newer tokens in exchange for gaining project tokens as incentives. So, how does one become a part of this? Firstly, you must understand how the IDO process is formed and the pathway it takes before you should become a part of one.
From IDO To Crypto; What Exchange To Use
Most people get good returns from IDO and decide to step into crypto trading with a weak technical know-how on how different crypto exchanges function. The truth still remains that some exchanges are better off suitable for trading activities while others are better suited for crypto-to-fiat conversion. A fine example is Binance and Dart Africa, while the former features many trading features, the latter is best for converting crypto to fiat through a seamless and fast process.
Dart Africa only takes you through signing up by accessing its official sign-up page and imputing your username, email, country of origin, phone number, and creating a password. Thereafter, you confirm the email ownership from the mail that’d be sent therein.
Participating In An IDO; How To Get Involved
Before participating in an IDO, know that the credibility of the decentralized exchange you use matters too. You must investigate IDO’s mechanics and have a complete grasp of its tokenomics. Ensure that you do your due diligence and only invest an asset sum that wouldn’t wreck your financial wall in the event that it is lost.
To participate in an IDO, all you need to do is subscribe by locking up some funds, then pay for transaction charges with the use of a digital wallet. MetaMask and Binance chain wallet is good wallet choices for this cause, this is because they can easily connect to DApps. An IDO is done before a new coin or token is listed on an exchange. This is contrary to ICO (Initial Coin Offering) where new coins and tokens are sold prior to their listing on decentralized exchanges.
How Does An IDO Begin?
An IDO begins with two bodies; the token developer and an exchange. Firstly, the developers must give detailed information about the token and present a white pepper.
The developers must provide answers to certain questions about the decentralized exchange such as; how will this token benefit the community of potential investors, and more importantly, the decentralized exchange on which the token is supposed to be listed? What is the target audience of this token? Are there tokenomic instructions for this project? If yes, what are they? What is the expected capital needed to promote this project? Has any work been done on this project so far? If yes, then how far is it?
When the provided answers to all of these questions are thoroughly analyzed and found to be good enough, the token request for listing can then be accepted on the decentralized exchange. The token listing is then published employing different strategies such as making it public on social media platforms and other forms of advertisement. At this stage, investors who find the project worthy enough can then begin to make investment moves.
What Are The Advantages Of IDO?
1. Immediate liquidity
- The term liquidity is characterized by the ease with which a coin, token, and other digital assets are transacted in the market. IDO contributes to the seamlessness with which a token is accepted by the market as a store of value, hence a good liquidity level. Thus even helps in boosting a token’s future price.
2. Instant trading and profit maximization
- Upon the completion of an IDO and the listing of tokens on decentralized exchanges, investors are at an advantage of being the first to buy tokens (because they are present at the launching time) and sell at higher prices much later.
3. No compulsory bootstrapping
- IDO offers new developers and startups the chance to begin a project without necessarily being subjected to bootstrapping. Besides, the fundraising is open and fair enough. This gives as many people a chance to become a part of the project.
What Are The Disadvantages Of IDO?
1. Scam susceptibility
- One of the biggest disadvantages of IDO is that scammers create tokens with dubious profiles and promise attractive incentives to investors just to take advantage of the funds raised during the project.
2. Loss to a failed project
- Not every launched token ends up becoming a success. Investors can lose funds and investments when there is a negative turnout of events in a token project.
The concept of IDO is quite interesting as it is multifaceted. However, it’s advised not to jump on the bandwagon without proper due diligence. Although I DO is evolving, and so far, there are emerging techniques that help in loss minimization. In all, only funds that can be lost without taking a toll on the financial life of an investor should be invested in any token sponsored by an IDO.