In this article, we will provide a complete guide that outlines how an IDO Launchpad works, and its potential for launching successful cryptocurrency businesses.
We’ll also cover topics such as why investing in an IDO could be beneficial for both backers and entrepreneurs, key considerations when creating your Launchpad token offering, and best practices that should be considered before proceeding with your project.
By the end of this post, you’ll have all the information needed to confidently launch your crypto startup via an IDO!
What is an IDO?
IDO, or Initial DEX Offering, is a crowdfunding method within the cryptocurrency space. IDOs dispense with more traditional modes of fundraising and offer crypto founders access to liquidity pools and an initial user base that can generate early demand. This process has proven attractive to forward-thinking investors who aim to make the most of up-and-coming projects while they remain accessible.
A token offering is financing in which a project or firm sells a new coin. Some investors buy coins for utility, while others buy them for speculation. You may use the coin for farming, staking in a governance system, or paying transaction fees, for example.
Methods of crowdfunding might vary, such as employing a centralized crypto exchange platform to administer the process (IEO), collaborating with a local financial regulator (STO), or simply doing it alone (ICO).
An initial DEX Offering (IDO) is the quickest way to get a crypto startup to take off. IDOs permit startups to list their tokens on decentralized exchanges, giving investors access to popular products and services, while startups benefit from the capital influx and token liquidity.
IDOs Vs ICOs Vs IEOs
Initial Coin Offerings(ICOs), Initial Exchange Offerings(IEOs) and IDOs have the same goal: to raise capital for crypto projects. However, they differ in the way they are executed. Here’s how.
|Smart contracts||Individual projects create and execute smart contracts for token sale||Centralized Exchanges create and run smart contracts for token sale||Decentralized Exchanges create and execute smart contracts|
|Fundraising||Investors’ funds are with the particular project||CEX handles investors’ funds||DEX handles investors’ funds|
|Vetting process||No vetting process as they are launched by projects themselves||CEX verifies the project||DEX vets the project|
|Token listing||Project need to find an exchange to list on||Tokens listed on the Exchange||Liquidity Pools on the DEX list the token|
How do IDOs work?
IDOs use a DEX for the token sale. Crypto projects allot their tokens to the DEX, and users deposit their funds through the platform. DEX completes the final distribution and transfer. The process automatically occurs via smart contracts.
The rules of an IDO are usually determined by the DEX, although there are a few popular approaches:
- A project can run an IDO on a DEX after a verification procedure. They provide a fixed number of tokens at a set price, and investors deposit their funds in exchange for these tokens. Later, tokens are allotted to investors at the token generation event (TGE).
- An investor whitelist is usually present. To join the list, you may be required to perform marketing tasks or provide your wallet address.
- A part of the funds is used to create a liquidity pool using the project’s token. The remainder of the funds is given to the team. Investors will be allowed to trade the token after the TGE. The supplied liquidity is often locked in for a specific time.
- The tokens are transferred to the user at the TGE, and the LP is made available for trade.
Advantages of an IDO
Initial Dex Offerings offer various advantages that make them more appealing to crypto investors. Let’s take a look at some of these advantages.
- You don’t have to engage with a project directly. Instead, you can rely on the verification and authentication process of the IDO’s smart contract. A dependable IDO platform will have multiple successful sales in the past. Since the smart contracts are the same, you can have some faith in the offering.
- IDOs offer immediate post-sale liquidity. There is no pump and dump system. IDOs will put part of the funds raised into liquidity pools to create a liquid market following the token sale. Slippage and volatility are reduced as a result.
- There is no need to register. You simply need a wallet and money to participate in the transaction, and no personal information is necessary. As a result, it is accessible to a wide range of people. However, the absence of KYC or AML requirements might be viewed as a disadvantage.
- IDOs are inexpensive and easily available for projects. It is frequently easier and less expensive for a small, unknown project to issue its token through a DEX than a large, controlled exchange.
- IDOs frequently have anti-whale safeguards, meaning no single investor may purchase many tokens.
What are the drawbacks of an IDO?
Some of the IDO’s strengths are also some of its faults. These issues originate mostly from an IDO’s decentralized and anonymous nature.
1. There is no KYC or AML. When necessary inspections are conducted, investors and projects are safeguarded. These safeguards aim to prevent the laundering of unlawful funds and the circumvention of economic sanctions. Certain nations, for example, may be unable to lawfully participate in an IDO if the token is classified as a security.
2. Less project due diligence. An untrustworthy project may distribute its token far more easily through an IDO than through an IEO with a big, regulated exchange.
What is an IDO Launchpad?
The initial DEX offering (IDO) concept is the cornerstone of the IDO launchpad solution. IDO Launchpad is a platform to launch cryptocurrencies through a Decentralized Exchange. An IDO launchpad, in essence, acts as a pool of investors who can fund crypto projects after investigating and purchasing tokens from the cryptocurrency business idea that most interests them.
Steps for Launching An IDO
- Create a business plan: Prepare the IDO. By developing a plan, you should consider the issue the project seeks to answer, financial allocation, which blockchain the project will operate on, the general marketing approach, and how to keep post-IDO momentum.
- Develop project literature: A website and a white paper are the least required marketing assets for an IDO launch. A visually appealing, well-branded website may do wonders for investor confidence.
- Evaluate your chosen IDO Launchpad: Once you’ve chosen your network and determined the audience, your next step is to verify your hosting platform or the Launchpad. Depending on your target audience, you can select established or upcoming ones. When choosing IDO platform, AdLunam stands out as an innovative option.
Along with the regular IDO launchpad service, the platform comprises a seed pad, and an Engage to Earn “Proof of Attention” model. AdLunam allocates tokens to investors based on their Attention Rank. The Launchpad also allows upcoming projects to raise capital for their seed and private rounds. Hence, if you’re looking for an IDO launchpad with some added benefits, AdLunam is worth considering.
- Launch the token to raise funds: A token pool is created by the project team. A token pool is where investors pay in advance for their tokens. The investors will receive their tokens following the TGE, which will be held shortly after the IDO.
How to participate in an IDO
To participate in an IDO, you will need a cryptocurrency wallet that can connect to DApps such as MetaMask.
- Add some cryptocurrency to pay for the tokens and transaction fees.
- Use the connect button to connect to the IDO DApp.
- Receive advice on securing your assets ahead of the token release event.
In most situations, the tokens will be sent to your wallet once the subscription term has expired. However, some sales may lock or stake your new tokens for a set period. Before engaging in an IDO, make sure to read the fine print.
Top 5 IDO platforms of 2023 to find the next big crypto project
Launchpads make possibilities available to normal investors that were previously exclusively available to venture capitalists and other large-scale investors.
The BSCPad platform enables cryptocurrency projects to distribute tokens and raise funds. It is a decentralized network for fair launches. It allows token holders to invest in the best upcoming projects on the Binance Chain.
It is difficult for existing launchpads to obtain enough tokens to participate in the ecosystem. BSCPad aims to be the next generation of blockchain launchpads to solve the staking issues.
In the above light, the BSCPad is unique with its two-round system that ensures each tier level receives an allocation. BSCPad works with organizations of all levels, including small and medium businesses, large enterprises, freelancers, non-profits, and the government.
Ad Lunam is an NFT-integrated crowdfunding platform for upcoming crypto projects.
What distinguishes Ad Lunam from the competition is that, while most IDOs offer tokens after the launch, Ad Lunam allows users to invest early in a project and gain a head start. It also allows early investors to profit handsomely if the project takes off.
The platform is a community-focused IDO that rewards its participants through a novel Proof of Attention model. Users are rewarded with a Proof of Attention score for how much they participate on the platform and how actively they promote the project. The word gets around, and each participant is rewarded based on their score.
As a result, marketing funds are distributed within the community rather than going to a third party. In addition, Ad Lunam emphasizes loyalty. Community members are encouraged to stay with the project by staking rather than dumping LUNAM tokens for short-term use.
Ad Lunam is nurturing a “plug-and-play” community for the projects launched on the platform. New projects launched on Ad Lunam IDO will have access to seed funding and a ready-made community that will assist new platforms in gaining traction.
As the first IMO (Initial Metaverse Offering) launchpad, FireStarter works on the Polygon network. The platform supports DeFi, GameFi, NFT, and Social Token projects. With a vision of “Own The Future” (the trademark phrase), this platform offers a unique opportunity for users to invest in Metaverse-integrated projects in their early stages.
FireStarter is popular among crypto projects for two main reasons. Firstly, this allows a new project to gain traction. Secondly, it enables the project to get funded quickly, sometimes in record time.
Investors can buy $FLAME, FireStarter’s native token, and have pre-sale access to funding rounds and early participation options. This fosters community-driven projects bringing more people to the Metaverse.
GameFi is an e-sports platform that incorporates fantasy gaming, PVP games, betting, lottery, and a marketplace for NFTs. GameFi aspires to be a worldwide platform where gamers from all over the world can engage and play games. The only game-specific launchpad that is chain-independent.
GameFi intends to address this issue by tokenizing the platform. Blockchains enable faster transactions and more accurate execution.
TrustPad is a decentralized multi-chain secure fundraising platform. The Binance Chain serves as the foundation for the platform.
TrustPad works with medium and small businesses, enterprises, and free users. The objective is to remove the friction associated with existing platforms in order to give consumers a fully integrated limit order experience.
IDOs have become a typical fundraising mechanism for many new crypto ventures due to their ease of use, cost, and accessibility.
As with any investment, there are simple, practical steps you can take for a secure IDO experience:
1. Subscribe to the IDO using the right URL.
2. Make use of a reputable DEX Launchpad.
3. Conduct research on the project in which you are investing.
4. Examine the IDO’s terms and conditions.
5. Only invest what you can afford to lose.