Risks to Watch Out for on IDO Launchpads

IDO launchpads can open real doors: early access, community-backed projects and global reach. But let’s be honest. It’s not all upside. If you’re not paying attention, it’s easy to get burned. 

In this blog, we’re breaking down what makes IDO launchpads powerful and what risks you need to watch out for before getting involved.

What Are IDO Launchpads and Why Are They Popular?

IDO launchpads have become the go-to fundraising model for early-stage blockchain projects. They’re fast, decentralized, and open to anyone with a wallet. You don’t need to be a whale or part of a private group chat; you just need to show up and participate.

For investors, it’s a way to get in early. For founders, it’s a way to raise funds without giving up equity or waiting for centralized approval. That combination of speed, access, and decentralization is what makes the IDO model so attractive right now.

What Is an IDO Launchpad?

An IDO launchpad is a platform that helps crypto projects raise money by selling their tokens directly to the public through a decentralized process. IDO stands for “Initial DEX Offering.”

Projects list their token, set the sale terms, and allow users to buy in using stablecoins or other crypto. Smart contracts handle the distribution and timing, removing the need for a middleman. At platforms like CoinTerminal, it’s even simpler: you just connect your wallet and invest directly without needing to hold or stake another token.

Why Do Startups Prefer IDO Launchpads?

Because launchpads remove friction, startups can bypass the need to deal with venture capitalists or pay for expensive listings on centralized exchanges, and instead go directly to the community. That means faster access to capital and a direct line to the people who are actually interested in using or supporting the project.

IDO launchpads also offer more flexibility. Founders can decide how they want to structure the sale, how tokens will vest, and what kind of exposure they want. And because many platforms now come with built-in communities, the launch becomes a marketing moment too, not just a funding event.

What Are the Risks Of Using an IDO Launchpad?

For every strong project that launches on a legit platform, there are others that never go anywhere. Or worse, ones that were never real to begin with.

The risks include:

• Fake or low-effort projects
• Lack of smart contract audits
• Overpromising without clear utility
• No real roadmap or delivery plan
• Poor tokenomics that create immediate dumping pressure
• No refunds or user protection once the token launches

And that’s before we even get into regulatory uncertainty. You have to know what you’re getting into and what the launchpad is doing to protect you.

Are All IDO Launchpads Safe to Use?

No, unfortunately. Some launchpads are highly selective, with vetting processes, smart contract audits, and refund mechanisms. Others will list anything that pays the listing fee. And from the outside, they might look the same.

That’s why you have to dig. Look at past launches. Were they successful? Are the teams behind those projects still active? Can you verify the smart contracts and refund terms? Are you buying a token, or just paying to be part of a hype cycle?

At CoinTerminal, every project must meet clear criteria before launching. We consider user base, narrative fit, liquidity strategy, and marketing plans, because we’re not here to run short-term pump-and-dump schemes. We’re here to support real projects.

How Can You Spot a Scam Project on an IDO Launchpad?

It’s not always obvious, but there are signs:

• The team is anonymous or impossible to verify
• The website looks rushed or copied
• There’s no product, no MVP, just promises
• Tokenomics are vague or suspicious (e.g., huge allocations to insiders)
• The community is filled with bots or giveaway-only followers
• There’s no real explanation of how the project works

Scam projects thrive in fast-moving environments where people act on hype. If a project’s main selling point is “you’re early,” but they can’t explain the tech or the plan, step back.

Are Regulatory Uncertainties a Concern for IDO Participants?

Yes, and this is the part most people ignore. Depending on where you live, participating in token sales may come with legal risk. Some countries have strict rules around what counts as security. Others require KYC or limit access to citizens altogether. And while many IDO launchpads operate globally, that doesn’t mean they’re compliant everywhere.

There’s also the risk of regulatory action after the project launches. If a government decides that a token was sold illegally, that could affect the price, the team, or even your ability to trade it.

That’s why choosing a platform that prioritizes compliance, like CoinTerminal, where we enforce KYC once you win an allocation and publish everything on-chain, is a smart move.

Final Thoughts

IDO launchpads have opened up a world of opportunity in Web3, but that doesn’t mean you should jump in blind.

If you’re investing in early-stage tokens, you have to do your homework. Not just on the project, but on the platform itself. What are they doing to protect users? How do they choose what gets listed? What happens if things go wrong?

This space moves fast. Take your time and choose the right platform to support real innovation while protecting your own path.

Want to see how we do it at CoinTerminal? Check our active sales or reach out to our team on Telegram; we’ll be happy to walk you through it.