What Is IDO And How To Participate In It?

The offer of new, cheap and promising tokens on DEX exchanges, firstly, attracts buyers and helps the newly minted project raise money for development, and secondly, it allows speculative investors to get a good income (but this is not for certain).

What is an Initial Decentralized Offering (IDO)?

The initial decentralized offering is the process of early sale of tokens on decentralized exchanges (DEX). Small blockchain startups use the services of DEX to sell their tokens. IDO is a popular way to attract investments to a crypto project, the concept is similar to IPO — issuing shares on the stock market.

  1. Launch of trading. After creation, tokens are placed in the liquidity pool.

How does IDO work?

With the help of decentralized exchanges (DEX), the implementation of tokens becomes quite simple. The project team issues its tokens on the selected platform, and then the exchange is selling and transferring tokens. Users buy them, which helps financing the project. The main advantage of this promotion method for the developer lies in the automatization of the process. On DEX exchanges everything works on smart contracts, so there is no need to deal with every transaction.

  • To purchase IDOs tokens, users need to be on the list of verified investors (White paper). Verification requires a crypto wallet address or the completion of tasks specified by the project.
  • The income from the sale of tokens is distributed to the project team, minus fees for the liquidity pool.
  • After the purchase, the tokens can be exchanged when they are unlocked. Coins might be freezed for several months, or maybe for years — it depends on the project.

Pros and cons of IDO

This method of attracting investments for the crypto project has a number of advantages:

  • Liquidity. The pools block part of the raised funds in order to provide a liquid market for trading tokens after the sale.
  • No personal data. To complete a transaction, you do not need to provide personal data, an active crypto wallet is enough. Any user can enter the project.
  • Simplicity. Even little-known projects can attract investors through IDOs.
  • Small risks. IDOs allow you to buy a limited number of tokens, so more users can invest in the project. This minimizes the risks.
  • Lack of verification. Through initial decentralized offerings, it is easier to distribute poorly rated tokens.


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Mister Right

✅Freelance writer | 👍Trader&Investor |✅Web developper | 👍Entrepreneur | ✅Content Writer | 👍Blogger