An IDO (Initial DEX Offering), is a method of raising money where a new coin or token is received through a decentralized exchange (DEX). The difference with a central exchange, such as CoinBase or Binance, is that you always manage your crypto coins yourself thanks to a software wallet such as MetaMask.
With the arrival and development of DeFi, IDOs have become popular way of launching tokens, in addition to the Initial Coin Offering (ICO), Initial Exchange Offering (IEO). As part of DeFi and peer-to-peer transactions, liquidity pools are primarily to facilitate existing trading, as transactions with these new tokens.
Fundraising #
Each new protocol seeks sufficient funding to be able to further develop itself. Often predefined with a minimum and a maximum number of purchasable tokens, investors can express their confidence to the protocol to invest in an IDO as an early investor. In a favorable scenario, early investors are able maximize their return-on-investment (ROI).
Binance DEX #
With the popularity of DeFi and the associated automated market makers (AMMs) such as PancakeSwap and UniSwap, investors often forget that Binance also has its own DEX. With the rise of DeFi, Binance decided to launch its own DEX, hoping to compete with competing DEXs and the latest developments from DeFi.
Difference Between IDO and IEO #
Both an Initial DEX Offering (IDO), and an Initial Exchange Offering (IEO) have the common goal of raising as much money as possible to realize a new project. By doing so, trading has been made possible thanks to the funds raised. During an IEO, early investors can join a private sale and purchase tokens from the project. After the private sale, the tokens become available on the open market (public sale). During an IDO, the public and private sale take place at the same time. Perhaps the main difference between the two is that an IDO does not require verification of KYC procedure, as it is in a decentralized environment.
