Strategies For Investing In Ido Crypto: A Beginner's Guide

Investing in IDOs (Initial DEX Offerings) is a risky but potentially rewarding way to get involved in the crypto space. IDOs are a new way to raise funds for blockchain projects, succeeding the ICO (Initial Coin Offering) and IEO (Initial Exchange Offering) models. They are hosted on a decentralised exchange (DEX) and enable tokens to be sold directly to the public.

IDOs are faster and cheaper to launch than ICOs and IEOs, and they provide instant liquidity. They also tend to raise smaller amounts of money, giving smaller projects access to retail investors.

However, IDOs are not without their drawbacks. The decentralised nature of IDOs means there is a lack of control, and it can be hard to get involved. There is also a greater onus on investors to do their due diligence, as there is less vetting of projects.

If you want to get involved in an IDO, you'll need a digital wallet like MetaMask, and some crypto to pay transaction fees. It's important to do your research on the project and only invest what you can afford to lose.

What is an IDO?

An IDO, or Initial DEX Offering, is a fundraising approach for blockchain projects that enables tokens to be sold directly to the public. The key difference between an IDO and other fundraising methods is that the tokens being sold are hosted on a decentralised exchange, or DEX.

IDOs are the newest model for crypto projects looking to raise funds from investors. They were created to address the shortcomings of the "traditional" ICO (Initial Coin Offering) crypto crowdfunding model.

IDOs are cheaper and simpler for projects to distribute their tokens. They also offer immediate liquidity, as the tokens sold start trading on the host DEX immediately. This is in contrast to ICOs, where there is an initial waiting period for liquidity and trading.

However, IDOs also have their limitations. For example, they are less scalable than ICOs, and the decentralised nature of IDOs means that they are less vetted and harder to get involved in.

Advantages and disadvantages of IDOs

Initial DEX Offerings (IDOs) are a new way of raising funds for cryptocurrency projects. They are an alternative to ICOs and IEOs, and they have several advantages and disadvantages.

Advantages of IDOs

• Immediate token liquidity: Tokens are immediately available for trading on decentralized exchanges, providing instant liquidity.
• Lower costs: IDOs are cheaper to host than ICOs and IEOs, making them suitable for small crypto projects.
• No high fees: IDOs are decentralized and do not require high fees to be paid to intermediaries.
• Accessibility: IDOs have fewer restrictions, allowing a broader range of investors to participate.
• Fairness: IDOs are considered fairer in giving token access to investors. There are no lockup periods, and tokens are instantly tradable.
• Speed: Investors don't have to wait long periods for their desired tokens to be listed on an exchange. The listing typically occurs immediately upon completion of the IDO.
• Suitability for new projects: Due to their lower costs and accessibility, IDOs are suitable for new small projects and startups.

Disadvantages of IDOs

• Limited exposure: IDOs on decentralized exchanges may have limited exposure compared to ICOs conducted on established platforms, potentially reducing investor participation.
• Price volatility: The immediate listing of tokens on decentralized exchanges can result in price volatility, potentially affecting investor confidence.
• Less control: Project teams conducting IDOs have less control over token pricing and allocation due to the decentralized nature of the process.
• Scalability: DEXs are less scalable than centralized exchanges, and it is uncommon for IDOs to raise more than $1 billion.
• Technical exploits: DEXs remain vulnerable to technical exploits, such as hackers running away with investor funds.
• Lack of due process: The lack of a rigorous approval process has resulted in the launch of many poor-quality projects and scams.
• Learning curve: DeFi platforms and DEXs come with a steep learning curve, which may act as a barrier to entry for the average crypto trader.

How to enter an IDO

Initial DEX Offerings (IDOs) are a way of raising funds for a blockchain project by selling tokens directly to the public. IDOs are hosted on a decentralised exchange, or DEX, and are a successor to initial coin offerings (ICOs) and initial exchange offerings (IEOs).

IDOs are popular with decentralised finance (DeFi) and privacy-focused projects, as well as non-fungible token (NFT) projects. They also tend to raise smaller amounts of money, giving smaller investors access to projects sooner.

Get Whitelisted on a Launchpad

To enter an IDO, you will first need to get whitelisted on a launchpad for decentralised exchange offerings. Popular launchpads include Polkastarter, Plasma.Finance, and Uniswap. Since IDOs tend to raise small amounts, they limit the number of buyers and the amount of tokens each can buy. To get whitelisted, you will usually need to hold a minimum number of the launchpad's native token. The more tokens you hold, the more entries you will have in the whitelist lottery.

Complete KYC Checks and Connect Your Crypto Wallet

Whitelisting usually includes Know Your Customer (KYC) checks, and you will need a Web 3.0 wallet like Metamask. Most IDOs do not permit investors from certain countries, including the US, Iran, Iraq, Cuba, North Korea, and Venezuela.

Review Project Information

Once you have been whitelisted, review all the information about the project. This includes the website, whitepaper, tokenomics, and social media links. It is important to do your own research and analysis before investing in any crypto project.

Invest in the IDO

When the IDO goes live, enter the amount you would like to invest and click "Buy". Sign the transaction, and once it is confirmed, the tokens are sold and you have completed your first IDO participation!

Claim Your Tokens

The tokens you buy may be locked and vested for a certain period. You can claim unlocked tokens at any time from the IDO page or portfolio.

Remember that investing in cryptocurrencies and tokens is highly risky and may lead to a total loss of investment. It is important to do your own due diligence on any project before investing.

Tips to stay safe when investing in an IDO

Initial DEX Offerings (IDOs) are a way of raising funds for blockchain projects by selling tokens directly to the public. They are hosted on a decentralised exchange (DEX) and are the successor to the initial coin offerings (ICO) that were popular in 2017 and 2018.

IDOs are proving popular, but they come with risks. Here are some tips to help you stay safe when investing in an IDO:

• Do your research: Read the project's white paper, visit the official website, and get to know the team behind it. Understand the tokenomics and security of the project.
• Find a trustworthy launchpad: Look for launchpad platforms that provide anti-scam vetting and Know Your Customer (KYC) checks. Top launchpads like Polkastarter and DuckDAO perform due diligence on the projects they accept.
• Be aware of scams: The decentralised nature of IDOs means there is a lack of control, and some projects may turn out to be scams. Be cautious of projects that promise impressive gains, as this was a common issue with ICOs.
• Evaluate the risks: All investments carry some degree of risk. Understand that you could lose some or all of your money. Consider your risk tolerance and financial goals before investing.
• Diversify your investments: Don't put all your eggs in one basket. Diversifying your investments can help limit your losses and reduce the fluctuations of investment returns.
• Be cautious of high fees: Crypto exchanges may charge substantial fees to list projects on their exchange. IDOs that attract severe fees may not be worth the investment.
• Consider the liquidity: IDOs provide instant liquidity, which means tokens can be traded immediately on the host DEX. However, smaller IDOs may struggle to provide sufficient liquidity.
• Be aware of oversubscription: Popular IDOs may be vastly oversubscribed, making it difficult to participate. Launchpads may limit the number of participants, so be prepared to act quickly.
• Check for regulatory compliance: Ensure that the project is compliant with relevant regulations and that it is not based in a banned country. For example, most IDOs do not permit investors from the US, Iran, Iraq, Cuba, North Korea, or Venezuela.
• Seek financial advice: Speak to a financial professional to get advice tailored to your personal financial situation and risk tolerance.

IDO launchpad platforms

Benefits of IDO Launchpad Platforms:

• Exposure and Marketing: Launchpads provide projects with exposure to large audiences of token buyers and investors worldwide, facilitating marketing and community outreach.
• Early Access: Token buyers and investors gain early access to token sales and curated projects, allowing them to invest in promising ventures at an early stage.
• Fairness and Investor Protection: IDO launchpads address the issues of centralised exchanges, such as high fees and barriers to entry. They also ensure investor fairness by limiting token allocation to prevent whales and bots from dominating sales.
• Instant Liquidity: Tokens sold on IDO launchpads start trading immediately on the host decentralised exchange (DEX), providing instant liquidity, which is a significant advantage over centralised exchanges.
• Lower Fees: IDOs do not attract the severe fees levied by centralised exchanges on ICOs and IEOs, making them a more cost-effective option for projects.
• Vetting and Credibility: Reputable IDO launchpads perform due diligence on projects, providing vetting and credibility to the ventures they choose to support. This enhances the trustworthiness of the projects and protects investors.
• Community and Buzz: The oversubscription nature of IDOs, combined with the limited number of participants, creates a buzz and fosters community building around the projects.

Examples of IDO Launchpad Platforms:

• Polkastarter: A decentralised protocol connecting early-stage crypto projects with community members. It has helped launch over 100 projects and raised over $49 million.
• DAO Maker: A decentralised finance (DeFi) platform with over 1 million users and a market cap of over $1 billion. It offers various services, including staking, voting, farming, vesting, and governance.
• Seedify: A blockchain gaming-focused incubator and launchpad, providing a platform for blockchain game projects to raise capital through Initial Game Offerings (IGOs).
• FireStarter: The first Initial Metaverse Offering (IMO) launchpad, supporting DeFi, NFT, GameFi, and Social Token projects. It offers investors the opportunity to get involved in Metaverse-integrated projects at an early stage.
• BSCPad: A decentralised IDO platform addressing the issues of staking and token distribution. It ensures fair launches, allowing traders of all sizes to invest in Binance Smart Chain projects.
• GameFi: An e-sports ecosystem aiming to become a global platform for users to interact and play games without restrictions. It offers a high dividend for stakes and uses Solana blockchain technology for secure and cost-efficient transactions.
• TrustPad: A decentralised multi-chain fundraising platform that assures early-stage investors of fund safety. It supports various blockchains, including Binance, Ethereum, Solana, and Polygon.

In conclusion, IDO launchpad platforms play a pivotal role in the crypto ecosystem by providing a launchpad for new projects, connecting investors with ventures, and offering a decentralised approach to fundraising. They offer benefits such as exposure, early access, investor protection, and instant liquidity, making them a vital component of the crypto industry.

Frequently asked questions