What exactly is an IDO? How can newbies mine for potential projects in 2024?

IDO is actually the crowdfunding of the crypto world.

In simple terms, IDO (Initial DEX Offering) is when a project directly sells tokens to retail investors on a decentralized exchange for financing. This method emerged in 2019 from Binance DEX, coming later than ICO and IEO, but it learned from the lessons of its predecessors, being more transparent and fair.

Why is there a need for IDO?

To Investors: Low-priced potential projects, with the opportunity to enjoy hundredfold or thousandfold returns (there is also the risk of losing money).

To project parties: Eliminate various fees and audits of centralized exchanges, directly engage with community users, and gain exposure.

For DEX: Increase trading volume and user stickiness, establish ecosystem.

IDO vs ICO vs IEO, what is the difference?

These three are all financing methods, and the core difference is that the selling places are different:

• ICO: Sell on the project website (the most original)
• IEO: Sold on centralized exchanges like Binance and OKX (with endorsement)
• IDO: Sell on decentralized exchanges like Uniswap and Polkastarter (most自由)

The Pitfalls and Opportunities of IDO

Benefits:

• Projects do not need to pay fees to exchanges, reducing costs.
• Small projects can also go live, democratic voting system
• Transactions are fast and smooth, participate with your own wallet.

Pit：

• Winning rate is too low: Limited spots, fierce competition
• Insider information about the whitelist: Many people use bots to cheat their way onto the whitelist, leaving little opportunity for regular retail investors.
• Double Risk: You need to hold platform coins (like Polkastarter's POLS) to participate. If the coin price drops, you incur losses, and the IDO tokens you participate in may also crash.

What are the successful cases of IDO?

Raven Protocol: An AI + blockchain project that successfully raised funds through IDO, allowing users to contribute computing power to earn rewards.

UMA: A DeFi synthetic asset protocol that conducted its IDO via Uniswap in April 2020, with an initial price of $0.26, later rising to $2, and currently priced at $12.85 (Note: historical data, can be checked in real time).

These project descriptions indicate that IDOs can yield good projects, but the prerequisite is that you can choose.

How to filter reliable IDO projects?

Four perspectives:

1. Is the token mechanism transparent?

   • Is there a clear distribution plan and roadmap?
   • Is the token sale information public and transparent?

2. Is the community recognition high?

   • How is the discussion heat on Reddit, Discord, and Twitter?
   • Has it been endorsed by any influential figures or invested in by well-known institutions?

3. Is the team reliable?

   • Have the specific team information and advisor list been made public?
   • Do you have any past successful project experience?

4. Does the white paper have substance?

   • Does the project solve a real demand?
   • Is the technical solution feasible?
   • Who are the competitors and what are their advantages?
   • Is the development timeline realistic?

Risk Warning for Participating in IDO

• Register using the official link: There are many phishing websites, and if you're not careful, your money will be gone.
• Choose well-known DEX platforms: Reliable platforms like Uniswap and Polkastarter have lower risks.
• In-depth Research Projects: No matter how popular the project is, you must do your own homework, ask about the purpose of the funding, the team's background, and the technical feasibility.
• Act within your means: IDO carries high risks, only invest amounts you can afford.

Frequently Asked Questions Quick Answers

Q: Who can initiate an IDO? A: As long as there are tokens and ideas, anyone can issue them. This is also why the risk is high - no one is reviewing.

Q: Is KYC required? A: Look at the project party. Some need it, some do not.

Q: How is the token price determined? A: The project team has the final say, and investors can only accept or give up.

Q: Who approves the IDO? A: No one approves. On the DEX, whether to list a project is usually decided by a community vote, but that's also why you need to keep your eyes wide open.

What does the future of IDO look like?

IDO started late but evolved quickly. Currently, it is mainly used for DeFi projects, but Web3 and AI projects are also testing the waters. However, since centralized exchanges like Binance and Coinbase still hold the power, it is unlikely that IDO will completely replace IEO in the short term. But as the concept of decentralization becomes more ingrained, the importance of DEX will continue to rise.

In simple terms: IDO is the future, but we have to wait. Playing IDO now is like betting on the future; if you win, you can double your money, but if you lose, you have to accept liquidation.