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Crypto Terms:  Letter I
Jun 19, 2023 |
updated Apr 02, 2024

What is Initial Dex Offering (IDO)?

Initial Dex Offering (IDO) Meaning:
Initial Dex Offering (IDO) - a crowdfunding technique that allows cryptocurrency projects to be launched through decentralized exchanges (DEXs).
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Let's find out Initial Dex Offering (IDO) meaning, definition in crypto, what is Initial Dex Offering (IDO), and all other detailed facts.

When a crypto project is launched via a decentralized exchange (DEX), it’s called an Initial Dex Offering (IDO). During an IDO, a coin or a token is introduced on a decentralized liquidity exchange in order to raise funds from retail investors.

Cryptocurrencies aren’t the only assets that can benefit from this. IDOs can be applied to virtually anything. Many businesses find this type of crowdfunding appealing since it promotes the goods or services of the company while allowing its customers to make their own decisions regarding their assets.

Raven Protocol was the first crypto project that put an IDO into practice. The tokens were offered up on Binance DEX in June 2019. 

Cryptocurrency projects who implement IDOs receive individual investments, just like startups when they receive venture capital from investors. However, IDO investors do not hold any equity in the cryptocurrency project, whereas initial public offering (IPO) investors do.

Overall, initial dex offerings are a good alternative to initial coin offerings (ICOs) or initial exchange offerings (IEOs). Although IDOs and IEOs are similar since both of these solutions allow to raise funds and trade at the same time.  

Either way, IDOs are considered a good alternative mostly due to their immediate liquidity, extremely fast trading, and low listing costs. Additionally, IDO listings have an upper hand over ICOs since IDOs make sure that the token issuer has no control over the fundraising rounds. 

Both IEOs and IDOs allow instant trading during the debut of a token and fundraising on centralized exchanges (CEXs). Though note that CEXs enforce much stricter regulations than DEXs. Some examples include:

  • Spending large sums of money or a part of the tokens to the exchange; 
  • Banning crypto projects from offering their token on competing exchanges; 
  • Possessing little control of a project’s token sale parameters. 

Meanwhile, IDOs are more flexible when it comes to token sales and listing. Some benefits of IDOs include low listing costs, immediate trading, and fast liquidity with barely any slippage via the available DEX liquidity pools.