What Is an IDO and How Can You Join One?

Blockchain is a technology that impacts every industry we know, and finance is not the exception. In fact, it was one of the earliest industries to make a profit and take advantage of blockchain technology.

Within the Web3 space, we find decentralized finance (DeFi), which mirrors traditional finance but with a blockchain spin. 

In the DeFi world, we find startups looking for funding, and they can take different routes to do so. They can run it by themselves through ICOs, they can go to a well-known but very expensive place such as IEOs, or they can look for something that offers a better point of entry for crypto investors while giving them higher funding without losing so much to legality issues or expenses, and that is an IDO.

An IDO, or Initial DEX Offering, happens when project founders in the crypto space look for funding through a decentralized exchange, using mechanisms such as liquidity pools and automated market makers to set prices and enable instant trading.

This guide focuses on how these presales work in decentralized finance, with IDOs as the main example, and what you need to do to participate safely.

What Is An IDO (Initial DEX Offering)?

An IDO, or Initial DEX Offering, is a way in which project founders raise funds in the Web3 space. They do this by partnering with a decentralized exchange in order to offer their tokens to crypto investors. Once the project has raised its funds, the tokens get listed on the decentralized exchange automatically through an automated market maker (AMM).

This way of partnering with a decentralized exchange gives project founders more control over their marketing, how they connect with their community, and their tokenomics; including how they distribute their tokens. At the same time, it gives investors the opportunity to access early-stage tokens at a better price compared to centralized exchanges.

Why IDOs Matter In Today’s Crypto Ecosystem

IDOs represent an evolution of what happened during the ICO boom back in 2017. At that time, many project founders were looking to raise funds, but unfortunately, a lot of scams and rug pulls happened. This created negative mainstream attention and gave the impression that crypto was associated with scams.

A lot has changed since then. By raising funds through a decentralized exchange, project founders can still achieve their fundraising goals while giving investors more safety. The platform acts as a safeguard and provides security measures to protect participants. In the case of CoinTerminal, we offer refundable sales, so you can feel at ease knowing that you can get your money back, no questions asked.

How Is An IDO Different From ICOs And IEOs?

All three (ICOs, IEOs, and IDOs) are tools for project founders to raise funds in the crypto space. However, they differ in reach, credibility, and how project founders access them.

• ICO: The project takes care of everything themselves. They put the sale on their own website, use their own marketing resources, and hope for the best. While this gives them complete control, it also represents a higher risk for investors.
  
• IEO: An Initial Exchange Offering is when projects raise funds through a centralized exchange. These platforms have mainstream attention but require prior funding rounds, as the process is very expensive. In the crypto space, this is often seen as a later step in the funding process.
  
• IDO: Initial DEX Offerings give project founders the same control they would have in an ICO, but with added safety measures for investors. Tokens are listed automatically through AMMs, ensuring instant liquidity. While centralized exchanges also provide investor protections, IDOs offer a more accessible and decentralized path to fundraising.

How To Find And Join A Promising IDO

IDOs represent a great opportunity to participate in early-stage crypto projects. To know which ones are worth your time and how to find a legitimate IDO launchpad, check our blog on it. Besides that, here are some quick tips you can follow.

First, you need a reliable source of curated information for the Web3 space. We recommend following pages such as CoinMarketCap, CoinGecko, and CryptoRank. On these websites, you can check launchpads and upcoming IDOs. You will also find information such as launchpad details, project details, sale dates, and even tokenomics.

Some known launchpads in the space include Polkastarter, DAO Maker, and of course, CoinTerminal. 

Once you know the launchpads you like and the projects that interest you, follow their communities to see if they have any airdrops, whitelist opportunities, or announcements about when and where they will offer their tokens.

What You Need Before Participating In An IDO

Before joining any IDO, make sure you follow these simple steps:

1. Get a Web3 wallet that is multi-chain: popular options include MetaMask, Trust Wallet, and Phantom.
2. Fund your wallet with the right token: depending on the IDO, you may need Ethereum, Binance Smart Chain (BNB), or a stablecoin.
3. Complete KYC on your chosen platform: many launchpads use Blockpass for verification. Once you complete it, you usually do not need to do it again for other sales on that platform.

That’s it, once you have your wallet, funds, and KYC ready, you’re set to participate.

Smart Tips For Navigating Your First IDO

First of all, you need a strategy. Decide what projects you want to support, why you are supporting them, and which platform you will use. Have your wallet ready before the sale starts.

As a rule of thumb, start small and only risk what you can afford to lose. Always do your own research.

Some fundamentals to check before joining:

• Tokenomics: Understand the project’s token supply, distribution, and how value will be sustained over time.
• Security: Be aware of scams and impersonator links.
• Red Flags: For a deeper look at warning signs in crypto projects, check our blog on what red flags to watch for.

Final Thoughts

IDOs represent an opportunity for crypto investors to support projects in their early stages. Most of the time, this can mean a better return on investment, as tokens are often acquired at a discounted price.

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If you want to participate in some of the best IDOs on the market with all the security that Web3 can offer, check our active sales. At CoinTerminal, we are the first and only open-access launchpad. We offer refundable sales, no token gating, and no token staking. Complete KYC once and you’re ready to go.

When you contribute 250 USDT or more, you’re automatically entered into our $5,000 monthly lottery. Who knows, you might be the next winner.

Don’t wait. Check our active sales now.