Cryptocurrency investors have a lot of options when it comes to where they put their money. Initial Coin Offerings (ICOs) and Initial DEX Offerings (IDOs) are two of the most popular investment options. But what are the differences between these two types of investments? And which one is right for you?
In this blog post, we’ll compare and contrast ICOs and IDXOs, so you can decide where to invest your money. Stay tuned!
What is an ICO?
The ICO, or initial coin offering, has quickly become a popular fundraising method in the cryptocurrency industry. Essentially functioning as the equivalent of an initial public offering, a company seeking to raise money for a new coin, app, or service can launch an ICO.
Interested investors can then purchase tokens issued by the company, essentially providing funding for their project. While ICOs can provide a unique opportunity for startups and established companies alike to raise funds, it is essential to approach them cautiously.
What are IDOs?
The IDO model has become increasingly popular among crypto projects to raise funds without the need for intermediaries. By launching on a decentralized exchange, tokens are immediately listed, and investors have the opportunity for instant trading.
This creates advantages for project developers and investors, as they can raise funds through liquidity pools without the involvement of third parties, and investors can benefit from immediate token trading.
A History of IDO in Crypto
The IDO model is the successor to the IPO and ICO models.
When the crypto sector became widespread in 2017, projects imitated IPOs by selling a portion of their entire crypto token supply to the public through Initial Coin Offerings (ICO).
ICOs quickly became a hit in the cryptocurrency world, with investors flocking to the chance, generating an estimated $4.9 billion by the end of 2017. However, the growth in scam enterprises and Ponzi schemes has resulted in a decline in the popularity of ICOs.
However, when DEXs entered the scene in 2019, many crypto projects were lured to the decentralized nature of these exchanges. As a result, they are a superior option for launching tokens and raising funding without the difficulties of centralized exchanges.
As a result, the notion of IDOs was born. Then, IDO launchpads such as AdLunam provided services customized exclusively for new projects wishing to perform IDOs. This increased the appeal of IDOs as a way of fundraising in the crypto sector.
Challenges in IDO
While IDOs offer some clear advantages, such as decentralization and immediate token liquidity, they also present some challenges.
One issue is the potential for pump-and-dump schemes, in which a group of investors hoard a large number of tokens leading to an increase in price, and then sell them off for a considerable profit. This can lead to significant token price fluctuations and harm the project’s long-term stability.
Additionally, with high levels of token swapping often happening immediately after the IDO launch, it can be difficult for new investors to purchase tokens at the initial listing price.
ICOs Vs IDOs: A comparison
A portion of the total token supply is sold to the public on its own.
A portion of the total token supply is made available to the public via a decentralized exchange launchpad.
Who conducts the fundraising
The project that is launching the ICO
An IDO launchpad or a decentralized exchange
Token listing after crowdsale
The initiative seeks token placement on several exchanges.
The CEX automatically lists the token.
The projects have not been reviewed, and anybody may launch an ICO.
Projects are reviewed and must adhere to the launchpad’s requirements.
Tokens are not instantly available, thus investors must wait for a listing on an exchange.
Tokens are either made available instantly or have a vesting time.
Smart Contract management
Managed by the project that is launching the ICO.
Launchpad and the project issuing the IDO manage it together.
The ICO project must spend a considerable amount of money publicizing the ICO.
The launchpad and the project both market themselves.
Examples of ICOs and IDOs
The ICO of Ethereum in 2014 is an early and well-known example of an initial coin offering. Over 42 days, the Ethereum ICO raised $18 million.
Regarding IDO launchpads, AdLunam stands out as a unique and innovative option. The platform offers the traditional IDO launchpad service and includes a seed pad and an Engage to Earn “Proof of Attention” model. Users receive allocation depending on their Attention Rank. AdLunam’s integration with NFT technology sets it apart from other IDO launchpads, providing users with access to transaction flow during seed and private rounds.
AdLunam is paving the way for a new kind of IDO launchpad experience that rewards attention and involvement in addition to investment potential. If you’re looking for an IDO launchpad with some added benefits, AdLunam is worth checking out.
Overall, IDOs were created to be an improved version of ICOs with several advantages. With IDOs, teams can give investors more opportunities to get involved with their favorite projects. Additionally, the lower barrier to entry and the perceived fairness of IDOs make them appealing to small teams with innovative ideas who want to launch their projects and gain exposure.
If you’re interested in getting involved in an IDO, keep an eye on AdLunam and other IDO Launchpads, where you may find your next gem.