An initial DEX offering -IDO is a fundraising approach that pools investment capital from retail investors. The IDO was created to compensate for the shortcomings of the “traditional” ICO crypto crowdfunding model. Because an IDO works with a DEX, as opposed to a centralized exchange, DEXs can be thought of as decentralized liquidity exchanges.
An initial DEX offering also known as IDO, is a new and exciting type of decentralized and permissionless crowdfunding platform, which is opening up a new way of fundraising in the crypto space.
If a project is launching an IDO, it means the project is launching a coin or token via a decentralized liquidity exchange. This is a type of crypto asset exchange that depends on liquidity pools where traders can swap tokens, including crypto coins and stablecoins
Difference between ICO, IEO and IDO
ICO – Initial Coin Offering
ICO’s are the crypto-fied version of an Initial Public Offering (IPO) or when a private company offers public stock to raise funds. Say you’re a landlord with a three-story building. You live in two stories, but rent is expensive, so you offer a third story, or “part” of your ownership, to make ends meet. An IPO is like that but on a significantly larger scale.
An ICO is simpler than IPOs, however, as they avoid regulatory pains associated with the traditional business world. Instead of selling company shares, crypto projects fundraise by selling coins. Depending on the project, coins may mean you have voting power or can stake in the network as it grows. For visionaries, this non-discriminatory approach is great! Anyone can hold an ICO without licenses and fund their wildest developments.
However, the unregulated space brings some risk. Most ICOs have private, early funding rounds which attract rich investors. They get in at a price, and once the offering goes public, they will sell and potentially crash the token price. Also, ICO can lack some transparency when it comes to token distribution. Therefore after the 2017 ICO craze many countries have put in place restrictive measures to limit such practice.
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