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Beginners guide to project IDO launch

21 Mar 2024 updated
11 min

Table of content

The crypto world has been booming in the past few years, giving project owners and investors immense enrichment opportunities. New cryptocurrencies and tokens are entering the global crypto market every day in various ways. Thus, an ability to distinguish coins with strong potential from a scam is at the heart of successful investing. 

For some time, Initial Coin Offerings (ICOs) were immensely popular in this area, but a lack of transparency eroded trust in ICO investment. Initial DEX offerings (IDOs) emerged to resolve this tension and give investors more investment value. Here is a detailed guide about DEX blockchain principles explaining what is an IDO in crypto and giving you a step-by-step guide to launching your own token via an IDO.

What is an IDO – Initial DEX Offering?

So, what is an IDO? The acronym stands for the “initial DEX offering,” which is a model of a new token launch via DEX platforms. 

If we dig deeper into the IDO crypto meaning, we’ll see that it’s just another model of a token’s launch to the market, in which the IDO launchpad takes responsibility for the project’s marketing and initial distribution. The IDO platforms offer the benefit in the form of a large and loyal audience to participating projects. IDO projects, in their turn, share a part of their revenue or allocate some tokens to the IDO platform. 

IDOs have emerged as a solution to market participants’ dissatisfaction with the lack of transparency and project quality overview associated with ICOs. While ICOs were conducted by the companies owning the project, a reputable decentralized exchange is responsible for an IDO. As a rule, DEXs perform initial project screening against specific quality and reliability parameters so that IDOs presented on their platforms are not scams. Thus, IDOs have become a popular choice among DeFi projects targeting the decentralized crypto market and wishing to raise money more fairly and transparently. 

Differences between IDO, IEO, and ICO

In its essence, an IDO is just another form of launching a new cryptocurrency or token to the crypto market, making it available for purchase and trading among retail investors. This is the feature an IDO share with ICOs and IEOs. Still, there are some fundamental differences between these three methods of new crypto launches, which we present below.

IEOICOIDO
Approach to raising funds A new token's release on a centralized exchange (CEX)Crowdfunding of a new blockchain project before its release to an exchange A token's launch on a decentralized exchange (DEX)
Marketing The CEX handles all marketing effortsThe project's owners market it individually Project owners and DEX market the project
Trust Trust is high due to KYC/AML verificationTrust issues may arise because of misleading and manipulative marketing information about the projectTrust issues arise because of the absence of transaction oversight and no KYC requirements
Legalities Rigorous control by a centralized exchange Regulation is project-specific No regulation
Commissions The CEX charges fees for trading and token launchICOs are bought from project owners directly at zero fees. Fees are paid on the exchange when the token starts being traded there. DEXs typically charge no fees, with users paying only blockchain-specific gas fees
Security guaranteesThe CEX guarantees security, but the risk of identity breaches and fraud is high.Security risks are high because of the direct purchase of tokens from the project's website.No identity breaches are possible due to anonymity, making transactions securer.

How do crypto IDOs work?

So, what does IDO mean in crypto, and how does the mechanism of an IDO launch take place? Here is a brief intro to the process for newbies.

  • The first step for a crypto project to conduct an IDO is to contact a DEX of their interest and provide their tokens to it. The DEX undertakes all the final distribution and transfer processes on the IDO it accepts. Everything occurs automatically due to the self-executing nature of smart contract logic.  
  • The IDO candidate goes through a vetting process during which the DEX platform determines its compliance with quality and safety criteria. Once the vetting step is successfully covered, the project gets approved for the upcoming IDO. 
  • At this initial stage, the IDO provider needs to supply the tokens to the DEX at a fixed preliminary sale price, which acts as an additional incentive for investors to buy the tokens early with a discount. The DEX freezes the funds paid for IDO tokens for a predetermined period, and the token release takes place during the Token Generation Event (TGE). 
  • Investors interested in the IDO project should submit their applications and wait for the DEX’s selection results. Some DEXs select investors randomly to the whitelist, while others allocate IDO tokens based on the tier system. Interested buyers are also frequently encouraged to complete marketing tasks (e.g., sharing Twitter or Discord posts, joining the project’s social media, tagging the project in their posts, etc.) to get higher allocation chances. 
  • Investors get access to their tokens upon TGE and can immediately trade them on the DEX.

How to launch successful IDO

How to make successful IDO

With a proper understanding of what is IDO process, you are better positioned to create and release your own project. Look through the following steps to see what is required on your part and what you can delegate to a reputable blockchain company. 

Devise a business strategy

To make people interested in your project, you need to create a distinct business idea. Like with any other business project you would want to monetize, you need to communicate this new IDO’s goal, mission, and vision. Explain to people what your project will do, how it will address their challenges, and what development paths you plan for it. Besides, potential investors should understand the tokenomics behind your project. Explain the fund allocation mechanism, the blockchain specifics, and the overall roadmap of the project after the IDO. 

Create marketing collateral

The marketing strategy for your project adds meat to the bones of the business strategy. First, you need an informative and inspiring whitepaper for your IDO, listing the basic principles of functioning, the values of your project, and its core features, facts, and figures. Second, you need to invest time and effort in a modern, good-looking website that can present your project in the best light. Visitors of the website should get excited about your brainchild, hasting to invest money into it at its early stages.

Visit a DEX launchpad

The next point is to choose a DEX launchpad among the variety of available options. You need to compare the terms and algorithms of IDO launch to understand what is a IDO process on each of them. Some conditions may suit your business strategy better, while others may be irrelevant to you. Make sure to check the consensus and whitelisting terms on each DEX you’re considering to see whether it fits your IDO expectations. Apply for the IDO and wait for the project to be accepted.

Create the cryptocurrency

According to the IDO definition, crypto tokens are launched on the DEX platform using its infrastructure, but the project’s owner should create the token itself. So, before a successful launch takes place, you need to partner with a credible cryptocurrency developer to handle the token creation project. Give them all details about your project’s goals and strategy, share your vision, determine the right technology, and set the safety and functionality expectations for the partnering team. This process is the pivotal point in the IDO process, and its outcomes affect the results of your token release to a large degree.

Launch the token to start raising funds immediately

token’s launch doesn’t take place on a DEX all of a sudden. It would be best to do some preparatory work to make it technically possible. First, upon the announcement of IDO, the DEX collects money from interested investors and creates a token pool with those funds. Once the TGE occurs, investors can see their tokens on their balances and start trading them. Additional incentives may include a high APY for staking tokens in a liquidity pool, allowing the investors to receive passive income from their coins.

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The benefits of the IDO model

Benefits of IDO model

Open and fair fundraising

The IDO is a secure and more transparent model of fundraising for projects and investment for users because the DEX platform is a vital intermediary of the process. The DEX screens IDO candidates for safety and reliability, thus giving users access to the most promising projects. In this way, investors don’t need to risk their money by buying tokens directly from the project’s website. They get the tokens through a reputable DEX.

Immediate liquidity

The mechanism of IDO ensures the assets’ immediate liquidity on the DEX platform after the token is released. This outcome is achieved by locking up a portion of funds in the liquidity pools, thus reducing the slippage percentage and affecting the trading volatility positively. The investors receiving tokens before the TGE at a discounted price are often urged to block their tokens for a specific period; these tokens are used in the liquidity pool for smoother operations with the token after its IDO.

Instant trading

The major benefit of IDOs compared to ICOs is a more democratic approach to token staking without the ability to sell them immediately after the IDO. The problem that many users buying tokens at early presale rounds face is that the asset’s price rises exponentially in the first minutes after the IDO, then falling below the level of the IDO price. Thus, the investors limited in their ability to sell tokens can lose vital revenue from their investment. Luckily, many IDOs allow selling the tokens generated during TGE immediately after the IDOs, giving investors full control of their funds. 

Lower costs

The DeFi sector has done much to democratize retail users’ access to finance and investment. Thus, IDOs are a convenient option for people with small deposits interested in crypto investments at the early stages of project launches. Participation in IDOs often comes with lower fees, which gives more people access to them. Besides, the project owners find it much more affordable to launch their tokens via an IDO than to go through a more meticulous and risky process of ICO.

Reliable transactions

Each IDO launchpad has a strong ecosystem uniting liquidity providers, traders, investors, and new project developers. The better the DEX’s reputation is, the safer its transactions are regarded to be. Therefore, each interested investor can pick a DEX they like the most and access affordable and lucrative IDO projects with guaranteed allocation and promising revenue potential. Besides, the cross-DEX liquidity pools allow better transaction visibility and lower slippage risks.

How 4IRE can help you with Initial DEX Offering development

Now that you know what is IDO crypto, it’s time to launch your own project for monetizing your business ideas in the blockchain world. The 4IRE team of coders and blockchain engineers is ready to assist you in every step of this business venture. Our experienced blockchain project managers and visionaries will help you create a winning business strategy, shape appealing tokenomics, and choose the right technology for building the IDO token from scratch. We offer turnkey solutions from idea to IDO launch, giving you the upper hand in this quickly changing market.

Conclusion

As you can see, launching an IDO is a manageable task that can potentially increase your project’s outreach and give you a smooth start in the crypto market. Use our tips for the IDO launch and turn to our experts for consulting and assistance. We can guide you through the IDO token preparation and launch processes step by step to guarantee good publicity and monetize your crypto startup.

FAQ 

What is the best IDO platform?

It’s hard to name the best crypto DEX as each platform offers unique terms and benefits for its users, thus winning a loyal customer base. At present, the #1 choice among users worldwide is DAO Maker, which offers a tiered approach to IDO allocation and features many successful projects. Other popular choices are Polkastarter, BSCpad, GameFi, and TrustPad, among others. Read their terms for IDO participation, consider your budget, and pick the best platform fitting your needs. 

How do I participate in PolkaStarter IDO?

To gain benefits from IDO launches on platforms like PolkaStarter, you first need to get a good idea of what is an IDO crypto. Understanding all intricacies and involved risks is instrumental in securing your money and getting the most of IDO investments. The first step is to submit your project to the Polkastarter Council for review. Its analysts check the project’s quality, security, legitimacy, and decentralization. After the initial application, the due diligence stage, direct assessment, and council vote stages occur. If your project fits the platform, onboarding is allowed upon approval. 

What is the difference between an IDO and an ICO?

So, what is a crypto IDO, and how does it differ from an ICO? You can easily distinguish these two models of new token launches by the issuer of tokens and the platform for fundraising. ICOs are typically held by project owners on the project’s official website, with all interested investors registering on their platform and sending money directly to the project’s account. This fundraising model caused much concern because of many scams and the disappearance of the project altogether after a lucrative token sale. IDOs are different as they are held via reputable DEX platforms (launchpads), with rigorous quality control and fund allocation organized by their functionality. 

How do I launch IDO?

As soon as you understand the crypto IDO meaning and see that this method of token launch suits you, it’s time to plan the IDO launch campaign. It should include the planning stage at which the tokenomics and business strategy of the project is formulated. Next comes the choice of a blockchain platform on which the token will be created. After that, you need to conduct an attention-grabbing marketing campaign to attract your target audience to the project. At the same time, you need to submit the IDO project for approval to one of the available IDO launchpads, preparing the token for release after receiving its approval. 

 

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