What is IDO? Benefits and Risk WHAT IS IDO? SHOULD YOU BUY LAUNCHPAD TOKENS?
What is an IDO?
The initial decentralized offer is the process of selling tokens early on decentralized exchanges for new crypto projects (DEX). "IDO" - Initial Dex Offering. Decentralized intermediary exchanges help new blockchain companies sell their tokens. IDO is a common way to get people to invest in a crypto project. It works in a way that is similar to an IPO, which is when shares are sold on the stock market.
IDO takes place in two steps:
Tokens can only be used by a small group of people. On average, one participant gets a "allocation" of $100 to $1,000, but it depends on the project and could be more. Start of business. After being made, tokens are put in a pool where they can be sold. At this point, they can already be traded.
How IDO works?
With the help of decentralized exchanges (DEX), putting tokens into action is much easier. The project team issues its tokens on the chosen platform, and the exchange is already selling and transferring tokens. People buy them, which helps pay for the project. The main benefit of this method of promotion for the developer is that the process is automated. On DEX exchanges, everything is automated using smart contracts, so the developer doesn't have to deal with each sale and purchase.
Here are some basic rules about how IDO works:
From the start, the project is tested on the chosen DEX, and only after that can it be used for IDO. If the "exam" doesn't go well, they won't be able to enter IDO. Then, they sell a certain number of tokens for a set price. Buyers block their money, and the amount of assets they bought is given to them. After tokens are made, they are given to people (TGE). To buy, you have to be on the list of investors who have been checked out (White paper). For verification, you need either an address for a crypto wallet or the completion of tasks set by the project. The project team gets the money from the sale of digital assets, minus the money that goes into the liquidity pool. When the tokens are unlocked, they can be traded after the purchase. Coins can be locked for a few months or even a few years, depending on the project. During the attraction of investments in the project, the tokens are not liquid.
Participation in IDO
To join IDO, you'll need the following:
- Metamask or another active cryptocurrency wallet;
- Enough money in the right stablecoin to buy tokens and pay for exchange fees;
- Set up the connection to the DApps.
Make sure you have enough money in your account to cover the cost of transactions before you buy tokens. After connecting the DApp, you need to follow the instructions, which may be slightly different on each exchange. When a user buys tokens, he or she gets to keep them. When the generation period is over, the money is moved to the crypto wallet. Please keep in mind that the terms of the exchange say that assets may be locked for a while or used to stake. Before agreeing to the project's terms, you should carefully read the instructions.
IDO's Safety Measures
There are risks involved in any activity that has to do with buying assets. This is especially true when real money is used to buy virtual tokens in the crypto ecosystem. You have to do exactly what is said.
A few rules to follow in IDO to stay safe:
- Check out the link to sign up. Scammers can offer a fake link when they want to send money to a project. If you use it, the money will go to the attackers and not to the platform. This means you can forget about tokens. Look for strange redirects.
- Think about what you want to say. Project ideas are usually posted on well-known, popular exchanges, but not always there.
- Don't put money in until you've looked into the project. All of the information about the founder and his team needs to be carefully looked at. Most of the time, projects that make money are made by professionals who have done it before.
- Pay close attention to the terms. Based on the rules of the exchange, tokens could be blocked for a long time. You need to know what to expect ahead of time.
- Mentally say goodbye to the invested amount. The most important rule of investing is that you should only invest money that you don't mind losing if something goes wrong. IDO is not a way to make money where you have to put in money. Not because it was a scam, but because it took so long to pay back.
What will happen to IDO?
The rules for initial public offerings that are decentralized are always changing. There are new ways to trade coming up. The IDO (Initial Farm Offer) scheme is as popular as the IFO (Initial Farm Offer) scheme. The biggest problem with IDO is that assets have to be frozen before they can be released into the pool. So, you can only make money with tokens after a while. How many people take part in the trade determines how many digital coins the investor will get in the end. To attract big investors, basic and unlimited sale are added as new functions. IDO is one of the most popular ways to get money for a project right now, so they will become even more popular and better in the future.
IDO's +
- Using this method to get investments has a number of benefits:
- Investors and developers don't work directly with each other. Instead, they work through an exchange, so the investor doesn't have to trust the smart contracts of the project.
- Part of the money raised is put into the pools so that there will be a market for trading tokens after the sale.
- To make a transaction, you don't need to give any personal information; all you need is an active crypto wallet. The project can be used by anyone.
- At first, little-known tokens can attract investors, but it would be hard for them to do so through large, centralized exchanges.
- IDOs let you buy a limited number of tokens, so that more people can put money into the project. This cuts down on the risks.
IDO's -
- Among the things that are bad about the IDO scheme, the following stand out:
- Not enough good protection. The project is open to everyone. There is no guarantee that someone won't use IDO to launder money or do other illegal things.
- There is no proof. Through initial decentralized offerings, it is easier to spread tokens that don't have very high ratings.
Launchpads and IDO (launch pads). Should you buy launchpad tokens?
Launchpad is a place where people can invest in new crypto projects. Money can be raised so that tokens can be released, developed, and improved. The most important thing that platforms do is bring together investors and blockchain developers into one crypto community. When people invest in digital assets, they want to get virtual currency at a good price. Before the project is published, it must be checked out to protect investors from fraud. The more popular and larger the launchpad, the higher the requirements are for crypto projects. At the same time, most online IDOs are just scams, and the number of these projects is growing all the time. To pick a good IDO, you have to look at a lot of information. The best way to avoid a scam is to do your own research (DYOR). After careful analysis, the choice should be based on objective criteria. he launch of a project on two top platforms at the same time is a good sign. In this case, it doesn't matter which launchpad to use.
Investors. Be sure to research the investors and only trust those on the so-called "white list" if that is at all possible.
Terms. Paying enough attention to the project's tokenomics is important. For example, some proposals say that you can get assets in a few years. Long-term investments in small projects are risky in a world where things change quickly. You should always think about whether the game is worth your time.
If the project isn't shown on trusted platforms and investors from the Whitelist aren't involved, it's not a good idea for a beginner to take them on. You can try to learn about tokenomics by looking at the best projects. After you've mastered the details, you can try more risky launches, but only after you've done a thorough objective analysis.
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✅Disclaimer: Please be aware of the risks involved in trading. This idea was made for educational purposes only not for financial Investment Purposes.
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