One of the creative methods of crowdfunding through blockchain technology is Initial DEX Offering (IDO). An Initial dex offering is a fundraising technique that gathers investment finances from retail investors. The IDO offering happens on a decentralized exchange (DEX).
As a fundraising technique, IDO initial dex offering emerged to counteract the shortcomings of ICOs. The primary weaknesses of ICOs included a lack of regulations and investment safeguards. Without any rules, ICO projects were not subject to thorough vetting.
‘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.’
How does Initial Dex Offering function?
An Initial dex offering uses a DEX to expedite the token sale. Once a project offers its coins to the platform, investors commit their money via the launchpad. The platform accomplishes the final token dispersal and allocation. All these procedures happen automatically via digital contracts on the decentralized ledger. Here are the standard techniques for operating an upcoming initial dex offering:
Vetting: once the verification process is over, the IDO project provides its tokens for a specific rate. Investors lock their finances in exchange for these tokens. Later, investors will get their coins during a token generation event (TGE).
Whitelist: eligible investors enter the initial dex offering list after accomplishing specific promotion tasks. Such investors should provide their wallet addresses.
Liquidity Pools: Some money generated can be used to develop a liquidity pool with the business’ token. The remaining finances are handed over to the token issuer. Once the TGE is over, investors can start exchanging their tokens.
TGE: at this point, users get their tokens, and the liquidity pool starts trading.
Steps of launching an Initial DEX offering
Here are step-by-step details on how to launch an IDO offering:
Develop your token and craft a token economics structure
The first step is to create an IDO crypto representing your project on the decentralized ledger you’ve selected. Some blockchains to make your IDO crypto token include Ethereum, EOS, and Binance.
Before developing an IDO token, you need to determine your business’s token economy architecture. The structure should meet the needs of you and your target customers. Furthermore, your token design should be attractive to pull more crowds. Here are the key considerations when determining your Initial dex offering structure:
Decide the total token supply
The amount to keep for your project’s development
Airdrops amount
How much to commit to liquidity pools
Identify your audience
Once you’ve your tokens ready, it’s critical to identify the right investors to buy them. While some projects target retail investors, some target experts, and visionary blockchain newbies. Some investors are comfortable attracting experienced investors for their upcoming initial dex offering.
Targeting the right audience helps you create a community that strongly believes in your idea. And this helps to create buzz around your project, pulling more investors to your IDO initial dex offering. Remember, people who have faith in your project will keep the tokens for long and avoid dumping them for quick bucks.
The grounds mentioned above are not the only ones why projects should target the right crowds. For instance, if you’re looking for Bitcoin investors only, it makes no sense to develop an Initial dex offering on Ethereum without thinking of wrapped BTC coins, like pBTC.
Project owners should also think about the experience of the investors they want to include in their initial dex offering list. For example, if you’re hunting for DeFi energy farmers, your target crowd should be premier initial dex offering platforms. Project owners looking for institutional hedge funds should target well-organized initial dex offering media with helpful portfolio tools.
Pick your blockchain network.
Multiple decentralized ledgers support an Initial dex offering—for example, Binance Smart Chain and Ethereum. Before choosing a specific blockchain for your token sale, it’s essential to study its pros and cons.
One can also launch their Initial dex offering on a blockchain like Ethereum and issue their tokens on another chain. But remember that while Ethereum has substantial network effects, its transaction costs are high.
Scrutinize your IDO host
Once you determine your target crowd and preferred decentralized ledger, the next thing is to evaluate different IDO token launchpads that meet your benchmarks. While some projects may like choosing established platforms (launched in 2019), some are suitable for newer IDO hosts.
Vetting launchpads helps you to discover those with a soiled track record and weed them out. It would help if you also drilled into their operation history to discover their strengths and weaknesses. The sentiments of previous customers can also inform you about the launchpad’s quality of service.
You should check other critical aspects of the launchpad, including its fee structure and whether the platform offers promotion support services.
Develop a promotion collateral
When launching your Initial dex offering, marketing collaterals, such as a website and a whitepaper, will help you explain what your project entails and the benefits of choosing it. A professional website is attractive and boosts the confidence of potential investors. Multiple projects find it hard to create a brand identity if they operate without a website.
On the other hand, a whitepaper has facts and figures that empower your potential investors with knowledge. And this transposes such an investor closer down the sales funnel.
Test your safety and documentation
After you’ve finished preparing the foundation of your Initial dex offering, the final phase is to test your IDO. Here, you need to ensure that your digital agreements, documentation, and coding undergo examination for bugs. Remember, DeFi and crypto investors conduct their due diligence before considering a project to invest in.
It’s advisable to hire a third-party company to provide an objective assessment and test your project.
To thoroughly examine your project, it’s vital to make its code open source and welcome developers and mock exploiters to test it.
Final Thoughts
Conducting an IDO can be a daunting task for many project owners. This crowdfunding approach has become famous for projects that want to raise funds through decentralized exchanges. We’ve explored the critical steps you should apply to conduct a successful IDO offering.
