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What is Initial DEX Offering? How to Raise Money Through IDO in 2024

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Offering an IDO is one of the best ways to raise money for your crypto project. An initial DEX offering is a preferred alternative to launching an ICO, allowing you to pull funds faster from small-scale investors. When done right, an IDO can help get your project off the ground while you work on getting VC funding to scale.

So, what is the initial DEX offering, and how do you launch a successful campaign? 

Stick with us as this article answers the question: What is an IDO? We’ll also explain how to use this crowdfunding technique to raise money for your project.

What Is the Meaning of IDO in Crypto?

An Initial DEX Offering, or IDO, is a crowd fundraising method crypto projects use on decentralized exchanges, or “DEX.” This is the opposite of the popular Initial Coin Offering, or ICO, which involves selling tokens directly to investors.

In the case of an IDO, the tokens are readily listed on a DEX, allowing traders and investors to start trading the token immediately. It’s basically a new and more transparent way for new projects to introduce their tokens to potential buyers in the market.

How Does Crypto IDO Work?

Now that we’ve explained what an IDO is let’s give you a hypothetical example of how it works. 

Imagine a project named "CryptoX" that aims to revolutionize digital payments. To fund their vision and development, CryptoX decides to launch an IDO. They mint a total of 1 million "CXT" tokens and choose to list them on the popular DEX "DecentraTrade." 

On the day of the IDO, they make 100,000 CXT tokens available for purchase at a starting price of 0.01 ETH each. As soon as the IDO goes live on DecentraTrade, investors can buy, sell, or trade CXT tokens. 

The demand and supply dynamics on the DEX determine the token's price, allowing for immediate market-driven price discovery.

Check out our comparison between IDO, ICOs, and IEOs

What Is an Example of an Initial DEX Offering?

An example of an Initial DEX Offering (IDO) is the Raven Protocol. The Raven Protocol was the very first IDO and was initially characterized as an idea by Binance.

This IDO was listed on the Binance DEX and maintained for a period of 24 hours on June 17, 2019. During this offering, 3% of the total token supply was made available, setting each Raven token's value at 0.00005 BNB.

What are the Benefits of an IDO?

Before we get into the intricacies of raising money through IDO, let’s look at the potential benefits of launching one.

IDOs help you build trust with investors

After the bad rep ICOs have received, the best way to build trust with investors is to take the IDO route. The main reason is that your investors can track the movement and distribution of funds since everything will be available on the blockchain. 

Faster and more affordable way to unlock funding

If you’re a startup or small project, you can use an IDO to crowdfund and get your initial project capital. There are no hefty listing fees that come with centralized exchanges, lowering the barrier for you and, in turn, your potential investors.

 All you have to do is create a budget for your IDO marketing—after all, you’ll need to direct eyes to your project if you hope to sell out your token and onboard new users.

No sign-ups are needed

Compared to other traditional fundraising techniques, you don’t need a rigorous KYC process to participate in an IDO. What this means for your project is that anyone with a crypto wallet can participate and provide liquidity. So more people can join your initial DEX offering with ease.

Pros and Cons of Launching an IDO

Pros of IDO Cons of IDO
Tokens are instantly tradable, providing immediate liquidity. While IDOs don’t necessarily fall under the SEC's purview, you should be mindful of changing regulations.
Founders have autonomy in deciding token pricing, amount, and sale duration. Setting up an IDO may require advanced blockchain and technical expertise.
Direct engagement with the community fosters trust and gathers feedback. The rising popularity of IDOs means increased competition for attention. Aggressive marketing is needed to stand out.
Bypassing centralized exchanges reduces costs and avoids rigorous processes.  
Fair token distribution reduces the risk of large investors and whales monopolizing sales.  

How to raise money through IDO

Now that you understand the question, “What is an initial DEX offering?” let’s go into the details of raising money using this crowdfunding technique.

Step 1: Create a business strategy and whitepaper

Every successful crypto project starts with identifying a problem and developing a solution. To help people understand your unique angle to solve this problem, you’ll need to come up with your business strategy and whitepaper. 

Your business strategy and whitepaper should be able to convince potential investors about why your project will succeed. It’ll also include information like how finances will be distributed, which blockchain you’ll be using, their potential revenue for investors, and how you plan to promote your crypto IDO. 

It’s also important to cover your plans after the IDO stage. This is the part where you get to explain the long-term sustainability of your project, as it’ll help you build trust with investors who are in for the long haul.

Step 2: Identify your target audience

Now, you’ll want to figure out who's most likely to invest in your vision. Who are those people you feel may most likely put their hard-earned money into seeing your project come to life?

Most IDO investors fall into three categories: experienced Web3 investors who understand IDO's meaning in crypto, retailers, and newbies.

The most ideal category would be experienced Web3 investors. They’re more likely to participate in an initial DEX offering compared to newbies who haven’t understood crypto IDO meaning. 

Another benefit to identifying your target audience earlier on is being able to plan your promotions better. This will help you know which marketing channels to use. 

For instance, Blockchain-Ads works best if you want to reach real Web3 investors faster.

See how DeFi projects are using our platform.

Step 3: Develop Your Token and Tokenomics

Creating a token is an essential step in your IDO process. A token is what your project represents on the selected blockchain network. This will be what your investors buy during your IDO. 

Most founders choose to build on the Ethereum network because of its scalability and its vast set of tools for token development. However, other chains like Binance Smart Chain, Solana, Cardano, or Polkadot could also prove ideal, depending on your project's objectives.

Before doing that, though, you’ll need to develop a tokenomic system. This is a detailed breakdown of how your tokens will be distributed.

It should contain parameters such as:

  • total supply
  • allocation for the IDO
  • portion allocated to the project team
  • portions dedicated to marketing 
  • staking pools allocation

Step 4: Create marketing collateral

To successfully launch an IDO, you must have an effective marketing plan. Key elements of this strategy include:

  • developing an intuitive website
  • choosing a marketing partner

The website should be user-friendly while giving essential information about the upcoming IDO and the project in general.

Once you have this all setup, the next step is getting the word out there. You’ll need to run giveaways, write press releases, and push ads. You can either do this in-house, which can take much time and effort, or outsource the entire campaign to Blockchain-Ads. 

Further Reading: Blockchain-Ads Review: How to Target Crypto Users through Ads

Step 5: Vet your chosen DEX launchpad

After figuring out your audience and creating your marketing plan, the next step is to evaluate the decentralized exchange launchpad you chose. You should use trustworthy launchpads because it will help your credibility. Some options to consider include:

  • DAO Maker
  • Polkastarter
  • Seedify
  • PAID Network
  • BSCPad
Read our guide on the best IDO launchpads of 2024

Step 6: Launch the token and start raising funds immediately

As soon as all the necessary steps have been taken, it's time to launch your token and start your IDO campaign. This is where you double down on marketing and get those investors to buy your tokens and fund your project. You can use Blockchain-Ads’ performance-based target to find your investors faster and make your IDO more successful. Book a meeting with the team to see how it works.

Conclusion

IDOs are the best way to raise money for your project in 2023. It helps you close the bridge between you and your potential investors, allowing you to build a stronger community. But it’s not just enough to launch an IDO. You’ll also need the right eyeballs on your project. So, ensure you work with the right crypto promotion channels that can help you sell your tokens faster.

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Ekokotu Emmanuel Eguono

Mass growth with Blockchain Ads.

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CEO - Social Kick Marketing Agency