What is an IDO? 6 Main steps to follow when launching a successful crowdsale through IDO

IDO, initial dex offering, tokenminds

If you’re wondering how to finance your blockchain project, you might ask yourself: what is an IDO? IDO stands for initial DEX offering, a crowdsale technique that pools investment money from small-scale investors. IDOs came to counteract the weakness that ICOs (initial coin offerings) had. If you’ve been struggling to understand ‘what is an IDO,’ you’ve come to the right place. Here, we explore ido crypto meaning and explain the critical steps of launching this fundraising model.

What is an IDO?

An IDO is a digital currency offering running on a Decentralized Exchange (DEX). In this fundraising model, Liquidity Pools (LP) have a significant role as they develop liquidity post-sale. A classical IDO allows investors to lock up their money in exchange for new tokens during a token launch.

How Crypto IDO works

Now that you know ‘what is an IDO,’ the next step is to understand how the fundraising model works. An IDO uses a decentralized exchange (DEX) to expedite the token sale process. Crypto project owners offer their projects to the exchange, and the platform finishes the distribution and transfer of the tokens. These procedures are automated and happen on the decentralized ledger, thanks to digital contracts.

Each DEX has its regulations when running an ico ido crypto. However, there are standard practices, including:

  • After a verification procedure, a project is approved to conduct an IDO on a decentralized exchange. They provide a specific amount of tokens for a particular rate. Investors bolt their finances in exchange for these tokens.
  • There is a whitelist where an investor completes promotion tasks before joining it. An investor can also provide their wallet address only.
  • Some finances raised through this method are used to develop a liquidity pool. The remaining amount is handed over to the project’s team. After the token generation event is over, investors can exchange their tokens for money. Usually, the LP is bolted for a specific time.

What are the advantages of an IDO?

Here are the main advantages of using an IDO model:

Use of smart contracts

Without smart contracts, the question ‘What is an IDO’ cannot be fully answered. Smart contracts are computer codes carrying the preconditions parties must meet. Through digital contracts, you avoid dealing directly with project owners. A trustworthy IDO platform has multiple successful sales. So, if the digital agreements are similar, you can trust the products.

Provision of instant liquidity post-sale

IDOs bolt some finances collected in liquidity pools. This forms a liquid market post-sale, helping to minimize slippages and swings.

No sign-ups are needed.

Users only need a wallet and funds to participate in the sale. In this model, a participant’s personal information isn’t necessary. Does not require KYC/AML.

An IDO is an affordable fundraising technique.

For start-ups and small projects, it’s important to understand ‘What is an IDO’ and how to raise funds through it. IDOs are the best fundraising method as they use affordable DEXs.

IDOs have anti-whale rules.

This bars large investors from amassing vast amounts of tokens.

How to launch an IDO

Once you understand ‘what is an IDO’ and how the model works, you might be interested in how to launch one. Here are the main steps to follow when launching a crypto ido:

Create a business plan

It’s vital to plan for IDO by developing a strategy that will guide you. Your design should capture the problems the project intends to resolve, finance distribution, the decentralized ledger the project plans to use, and general promotion via the ido crypto list. You should also explain how to maintain post-IDO momentum.

Develop a promotion collateral

What is an IDO without a marketing strategy? Messaging is an integral aspect of the success of your ico ido crypto project. The main ingredients of promotion collateral include a website and a whitepaper.

Thus, creating an easy-to-navigate website with helpful content can foster investors’ confidence. Also, the website you make should be visually appealing. Without a website, you’ll struggle to create a brand image.

A whitepaper captures the critical aspects of your project. Some of the essential contents of a whitepaper include the problem you intend to resolve and the technology you intend to use. Also, the whitepaper explains the tokens you want to use and how to distribute them. When writing the whitepaper, you should use stats, diagrams, and tables to elaborate your points.

Develop your Token and Tokenomics

Besides the question ‘What is an IDO,’ many people struggle with the question of how to develop a token. Creating a token is pretty simple-you develop an asset to signify your project on the decentralized ledger you’ve selected.

Currently, many people prefer the Ethereum network because of its multiple tools for token development. With Ethereum, an experienced developer can create an ERC-20 token within a few minutes. Other blockchain networks to develop tokens include EOS, Binance Smart Chain, Solana, Cardano, and Polkadot.

Before you develop your token, it’s essential to determine your tokenomics. The structure should suit your target crowd, offer sufficient forecasts and high profits to appeal to newcomers. So, it would help if you determined the optimal supply, the amount you intend to raise, and how much to allocate to project owners. It would also help decide how many tokens you dedicate for marketing and how much to commit to your initial liquidity and staking pools.

Identify your target crowd.

You will fail to provide an answer to the question ‘What is an IDO’ if you don’t identify your target audience. So, once you’re through with your token economics, the next step is to identify your target audience. You need to think about the kind of investors you need for your project. Here you’ve got three options: retailers, newbies, and experienced investors who grasp ido meaning in crypto.

Proper targeting for your IDO helps attract individuals who have faith in your project. Such individuals will help market your crypto ido and hold the token for a long time.

Audience identification also helps you to determine specific technical aspects of your project. For instance, if your target is Bitcoin holders, creating an IDO on an Ethereum network makes no sense.

Choose a blockchain network.

There are multiple blockchains where you can develop your IDO, such as Polkadot, Solana, and Ethereum. Many prefer Ethereum because it has various resources to support developers. Before picking a network, it’s vital to evaluate its pros and cons.

Remember, you can issue your token on a different network from the one you launched the IDO. For example, launching the IDO on Ethereum and issuing the tokens on Polkadot. So, it’s crucial to establish whether the blockchain you select supports interoperability.

Evaluate your chosen IDO Launchpad

Once you’ve chosen your network and determined the audience, your next step is to vet your hosting platform. You can either select established ones or newcomers.

Conclusion

An IDO is one of the fundraising models that blockchain-based projects can use. However, many people don’t understand what this model entails. Here, we’ve delved into answering the question ‘What is an IDO’ by exploring multiple elements of an IDO. We’ve also provided ido meaning in crypto and the procedure of launching the fundraising model.

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