• About Us
  • Careers
  • Contact
No Result
View All Result
Wednesday, October 22, 2025
DeFi Planet
  • News
    • People
    • Business
    • Crime
    • Regulation
    • Crypto
    • CBDC
  • Markets
    • Bitcoin
    • Ethereum
    • Stablecoins
    • Altcoins
    • Crypto ETFs
    • Memecoins
  • Policy
  • Articles
    • Press Releases
    • Opinion
    • Explainers
    • Guest Post
    • Sponsored
  • Directory
    • Companies
    • People
    • Products
    • Wallets
  • Multimedia
    • Videos
    • Podcasts
  • Learn
    • DeFi Basics
    • Tutorials
    • Reviews
    • Blockchain Fundamentals
  • Research
    • Case Studies
  • Explore
    • DeFi
    • Crypto Gaming
    • NFT
    • DAO
    • Metaverse
    • Glossary
  • Jobs
  • Markets Pro
    • DeFi Planet Pro
    • Spend Crypto
    • Swap Crypto
    • Coin Prices
    • Crypto Exchanges
    • Crypto Analyzer
  • News
    • People
    • Business
    • Crime
    • Regulation
    • Crypto
    • CBDC
  • Markets
    • Bitcoin
    • Ethereum
    • Stablecoins
    • Altcoins
    • Crypto ETFs
    • Memecoins
  • Policy
  • Articles
    • Press Releases
    • Opinion
    • Explainers
    • Guest Post
    • Sponsored
  • Directory
    • Companies
    • People
    • Products
    • Wallets
  • Multimedia
    • Videos
    • Podcasts
  • Learn
    • DeFi Basics
    • Tutorials
    • Reviews
    • Blockchain Fundamentals
  • Research
    • Case Studies
  • Explore
    • DeFi
    • Crypto Gaming
    • NFT
    • DAO
    • Metaverse
    • Glossary
  • Jobs
  • Markets Pro
    • DeFi Planet Pro
    • Spend Crypto
    • Swap Crypto
    • Coin Prices
    • Crypto Exchanges
    • Crypto Analyzer
No Result
View All Result
DeFi Planet
No Result
View All Result
Home Learn Blockchain Fundamentals

Overview of IDOs

17 March 2022
in Blockchain Fundamentals, Learn
Reading Time: 6 mins read
117 3

Last updated on September 25th, 2023 at 06:13 pm

Crypto projects employ numerous methods to raise funding for the development of their architecture. Typically, a project offers investors its native token in exchange for funding. This article examines the definition of an IDO and what to expect throughout the Initial DEX Offering process.

What are IDOs? 

Initial DEX Offering or IDO is a token offering organized by a decentralized exchange. With the permissionless nature of this type of exchange, liquidity pools are necessary for the operation of IDOs. Initial DEX Offerings, Initial Coin Offerings (ICOs), and Initial Exchange Offerings (IEOs) are all examples of token offerings. 

Any of the abovementioned may be used by a new crypto project to accomplish different goals. IDOs are often used because they allow startups to build a community of users who are interested in the product while also funding its development.

Projects use IDOs to receive financing from investors while offering them the native token of the platform in return. Businesses opt for IDOs over other types of token offering systems such as IEOs and ICOs because of some inherent benefits. 

• Immediate liquidity

Many IDOs require potential investors to supply liquidity in a Liquidity Pool (LP) before they can access the native token of the platform. Decentralized exchanges offer immediate liquidity allowing users to trade the project token instantly. With the structure of this token offering, early adopters can sell their tokens to others for a higher value. Typically, traders tend to look for projects that organize IDOs to purchase the project tokens at a lesser price and probably resell once the price increases. 

• Fast Listing Period

With the permissionless nature of decentralized exchanges, projects that organize IDOs tend to be listed on the trading platform immediately the process comes to an end. Investors do not have to spend their time waiting for the token to be listed because it is done instantly, allowing them to make profits earlier than what is obtainable in ICOs. 

• Lower Cost of Listing

Listing on a centralized exchange is usually expensive. Before crypto projects can utilize the features of a centralized exchange’s launchpad, they are required to pay exorbitant fees, which may not be available on the standard platform. The fees charged to organize IDOs are usually cheaper compared to alternatives. 

• Lesser Restrictions

The organization of an IEO on a centralized exchange has constraints. It is tough to go through the stages of several centralized launchpads. Most of the time, average crypto startups can’t scale through due to insufficient funding. 

Some custodial trading platforms require that the new platform not publish its token on competitors’ platforms for a specified period. A centralized exchange may request that a project provide them with a significant amount of native tokens to access the exchange’s services.

Using a custodial exchange imposes extra constraints. For example, the project has little to no control over the criteria that govern token sales.

What Are The Drawbacks of IDOs?

Though IDOs provide benefits that transform the way things are done in the crypto space, they also have certain drawbacks.

• Lack of Vetting Process

In an ICO or IEO, the platform hosting the exercise requires participants to submit their personal information before listing their project. The projects are thoroughly vetted, from the use cases to the founding team. The identities of individuals behind a project are known, which cannot be said for an IDO process. Most decentralized exchanges have minimal requirements for launching an IDO on their Launchpads. Sometimes the criteria may not include verifying the identities of the project’s crew.

• Scams and Frauds

Scams and fraudulent activities are prevalent in IDOs due to Decentralized Exchanges’ lax attitude towards vetting the identities of project teams. Sometimes the founding team may not keep their end of the bargain, defrauding investors and leaving them in the lurch. It may also be tough to track down the founding team due to their anonymity.

• Illegal Activities

Generally, centralized exchanges request that potential investors verify their identities before participating in IEO activities on their launchpads. Documents such as proof of identity and address are required at the sign-up stage, although this is not true for most decentralized exchanges. 

As a result of the anonymity provided by decentralized exchanges, users can invest in multiple new projects to launder money or engage in other criminal activities.

How does an IDO work?

The required steps to participate in an IDO differ for new projects and potential investors.

• As a Potential Investor

Potential investors are required to carry out some tasks before they can participate in the launchpad activities. Typically, the requirements vary from one exchange to the other. It utilizes a tier system that grants users in higher tiers access to guaranteed and larger token allocations.

To belong to a tier, the user is required to stake the native token of the platform hosting the IDO for the crypto project. Users with large amounts of staked tokens are awarded a spot in the higher tiers. The higher the tier, the larger the number of the crypto project’s tokens that the user can access.

Potential investors must stake their tokens at least a few days before the start of an IDO to be eligible for these launchpads. Those with larger staking pools have a first-mover advantage to purchase large amounts of tokens.

Before they can purchase tokens, some projects require investors to participate in marketing activities to promote the project. After completing the tasks, they are allowed to submit their wallet addresses in the hopes of joining a whitelist. 

Immediately after the Token Generation Event (TGE), investors have access to their tokens, which they can trade or hold in their wallets.

• As a Project

To protect their users, some Decentralized Exchanges (DEXs) assess new projects before allowing them to use their launchpads. The steps differ depending on the launchpad.

Vetting

Some DEXs require that the project’s founding team undergo a verification process. Their identities, as well as other vital information about them, must be disclosed. Although, this is not always the case as some DEXs are more permissive.

Token Offering

Investors lock their funds with the team with the hope of getting tokens when the Token Generation Event (TGE) occurs.  

Creation of Liquidity Pool

A portion of the funds raised will be used to create a liquidity pool for the crypto project’s token. The remaining funds are in the team’s custody.

How to Be Safe In An IDO?

IDOs are a means of accessing new tokens. However, potential investors must take steps to remain safe. 

• Check the Authenticity of the Launchpad

There are numerous DEX Launchpads that host IDOs for projects. It is important to opt for those that have built credibility over time in the crypto space. This reduces the chance of being fleeced of tokens at the TGE. 

• Check the Validity of the Link

When an IDO of a project is about to happen, scammers tend to post fake links that direct users to phishing websites, to steal from them. Any crypto transferred to the scam address by the investor cannot be recovered.

• Due Diligence.

It does not matter if the launchpad has built a reputation for vetting the projects that use its services for IDOs. Potential investors must conduct due diligence by researching the team behind the project. They should also learn more about tokenomics, from the vesting period to the amount allocated to the team.

In Conclusion,

  • An Initial DEX Offering, or IDO, is organized on decentralized exchanges and has numerous advantages over ICOs and IEOs.
  • It has certain advantages but also has some drawbacks, such as being associated with scams and frauds.
  • There are precautions to take before participating in an IDO to reduce the chances of getting scammed.

 

If you would like to read more articles like this, follow DeFi Planet on Twitter, LinkedIn and Facebook. 

Share70Tweet44Share12
Rose Nnamdi

Rose Nnamdi

Related Posts

Synthetic Assets and How They Differ from Traditional Assets
Articles

Synthetic Assets and How They Differ from Traditional Assets

25 September 2025
Articles

Inflationary vs. Deflationary Tokens: Which Drives Long-Term Value Creation?

20 September 2025
Why Crypto Market Cycles Matter: Understanding Bull & Bear Phases
Articles

Why Crypto Market Cycles Matter: Understanding Bull & Bear Phases

20 September 2025
Can Web3 Drive the Next Evolution of Social Media Through SocialFi?
Articles

Can Web3 Drive the Next Evolution of Social Media Through SocialFi?

20 September 2025

Editors Picks

Mining vs. Staking: Which Crypto Validation Method Will Shape the Future?

Mining vs. Staking: Which Crypto Validation Method Will Shape the Future?

byOlajumoke Oyaleke
15 July 2025
0

Where Are the Ethereum-Killers Now?

Where Are the Ethereum-Killers Now?

byOlayinka Sodiqand1 others
6 January 2025
0

source: investorplace.com

How to Find the Newest Cryptocurrencies Before They’re Listed

byOlayinka Sodiq
30 December 2024
0

Exploring the Role of AI in Enhancing DeFi Security

Exploring the Role of AI in Enhancing DeFi Security

byOlayinka Sodiq
1 October 2024
0

The Ultimate Guide to How NFT Royalties Work

The Ultimate Guide to How NFT Royalties Work

byAdedamola Ojedokun
17 April 2024
0

Read More

Chain of Thoughts

The Aesthetics of Web3: Why Vibe Matters in Decentralized Communities

The Aesthetics of Web3: Why Vibe Matters in Decentralized Communities

byOlu Omoyele
27 September 2025
0

...

Zero-Knowledge Everything: Trust, Privacy, and Verification in the Digital Age

Zero-Knowledge Everything: Trust, Privacy, and Verification in the Digital Age

byOlu Omoyele
30 August 2025
0

...

What Happens When AI Gets a Wallet?

What Happens When AI Gets a Wallet?

byOlu Omoyele
31 July 2025
0

...

The Game-changing Triumvirate: Blockchain, Data Science, and Artificial Intelligence

The Game-changing Triumvirate: Blockchain, Data Science, and Artificial Intelligence

byOlu Omoyele
30 June 2025
0

...

Markets Update

Crypto in Latin America: Adoption Booms as Media Visibility Falls, Outset PR Finds

18 hours ago

Your Weekend Crypto Roundup | October 2025 (Week 3)

5 days ago

Crypto in Latin America: Adoption Booms as Media Visibility Falls

1 week ago

Your Weekend Crypto Roundup | October 2025 (Week 2)

2 weeks ago

Your Weekend Crypto Roundup | October 2025 (Week 1)

3 weeks ago

What $1 Billion in Liquidations Means for Market Stability

3 weeks ago
Read More

Events

  • No events
  • Spotlight

    All about Ethereum
    All about Algorand
    All about Bitcoin
    All about Gora

    Press Releases

    Bombastic Casino Unveils New Design and Enhanced Features

    bychainwire
    21 October 2025
    0

    Crypto Market Recovers as Liquidity Returns — Pepeto Announces $700K Giveaway and 221% Staking Rewards

    bychainwire
    21 October 2025
    0

    Limitless Prediction Market Closes $10M Seed Round Ahead of LMTS Token Launch

    bychainwire
    20 October 2025
    0

    Whale.io Introduces Crock Dentist Game and Exclusive RWA NFT Collection

    bychainwire
    20 October 2025
    0

    Bybit Card Honored as “the Best Performing Crypto Card” by Mastercard at EDGE 2025

    bychainwire
    20 October 2025
    0

    Read More

    ADVERTISING

    ABOUT

    TEAM

    CAREERS

    CONTACT

    TERMS & CONDITIONS

    PRIVACY POLICY

    © Copyright 2025 DeFi Planet

    Welcome Back!

    Login to your account below

    Forgotten Password?

    Retrieve your password

    Please enter your username or email address to reset your password.

    Log In

    Add New Playlist

    No Result
    View All Result
    • News
      • People
      • Business
      • Crime
      • Regulation
      • Crypto
      • CBDC
    • Markets
      • Bitcoin
      • Ethereum
      • Stablecoins
      • Altcoins
      • Crypto ETFs
      • Memecoins
    • Policy
    • Articles
      • Press Releases
      • Opinion
      • Explainers
      • Guest Post
      • Sponsored
    • Directory
      • Companies
      • People
      • Products
      • Wallets
    • Multimedia
      • Videos
      • Podcasts
    • Learn
      • DeFi Basics
      • Tutorials
      • Reviews
      • Blockchain Fundamentals
    • Research
      • Case Studies
    • Explore
      • DeFi
      • Crypto Gaming
      • NFT
      • DAO
      • Metaverse
      • Glossary
    • Jobs
    • Markets Pro
      • DeFi Planet Pro
      • Spend Crypto
      • Swap Crypto
      • Coin Prices
      • Crypto Exchanges
      • Crypto Analyzer

    © Copyright 2024 DeFi Planet   |   Terms & Conditions   |   Privacy Policy

    -
    00:00
    00:00

    Queue

    Update Required Flash plugin
    -
    00:00
    00:00