What Is an Initial DEX Offering (IDO) and Why Do We Need Them?

What Is an Initial DEX Offering (IDO)?

An initial DEX offering, or IDO, is a new and exciting type of decentralized and permissionless crowdfunding platform, which is opening up a new way of fundraising in the crypto space.

If a project is launching an IDO, it means the project is launching a coin or token via a decentralized liquidity exchange. This is a type of crypto asset exchange that depends on liquidity pools where traders can swap tokens, including crypto coins and stablecoins. For instance, USDT/ETH is a liquidity pair.

On CoinMarketCap’s ICO calendar, there is a list of upcoming, live and past projects that are fundraising. The projects are categorized based on the various stages of its fundraising – IDO, IEO, private sale, public sale and crowdloan. As of August 2021, the past few months of projects fundraising are IDOs, perhaps signalling its popularity as a fundraising method.

IDO – a Better Crypto Fundraising Model?

IDOs are the successor of other crypto fundraising models, including initial coin offerings (ICOs), security token offerings (STOs) and initial exchange offerings (IEOs). Offering better and immediate liquidity at every price level due to its mechanics, IDOs are an excellent choice for new projects and startups keen to launch a token and access immediate funds.

Unlike the aforementioned fundraising methods, IDOs are generally considered a fair way to launch a new cryptocurrency project by avoiding pre-mines, which is an issuance system that favors project founders over community members.

The first ICO was the Mastercoin ICO in July 2013. In 2014, Ethereum raised money with a token sale, raising 3,700 BTC in its first 12 hours, roughly equivalent to $2.3 million at the time.

The first IEO took place on April 17, 2019, launching on the Idax, BitForex, Bit-Z and Bit-M exchanges. Whereas, in June 2019, Raven Protocol announced that it was introducing the first-ever IDO, which would be listed on Binance DEX.

What Are Some Successful Projects Launched From IDOs?

Despite being the first, and even claiming in their blog that they didn’t know what an IDO was as it hadn’t been done at the time, Raven Protocol is considered a successful project.

Raven Protocol IDO

This is a decentralized and distributed deep-learning training protocol of deep neural networks. The Raven Protocol is working at providing cost-efficient and fast solutions that use the blockchain to transform the AI and machine learning industries, which are currently dominated by major corporations. With the aid of the native RAVEN token, contributors receive rewards by sharing their computer resources while the utility token is used for AI training.

Universal Market Access Protocol IDO

Another successful IDO project launch, even though its IDO had initial issues, is the Universal Market Access (UMA) protocol. This enables DeFi developers to build synthetic assets on Ethereum, which are collateral-backed tokens whose value changes. Last April, it launched its token sale via decentralized exchange Uniswap with a starting price of $0.26 per token. In order to get that price, UMA had to place $535,000 in Ethereum into a newly created liquidity pool.

Notably, though, because token pricing on Uniswap works with a bonding curve rather than order books, the UMA token price quickly ramped up as investors lined up to purchase the token. As a result, traders attempted to get ahead of others by paying higher gas costs, which, ultimately, led to UMA’s token price jumping more than $2 minutes after the launch. It eventually stabilized at just over $1, with some buyers complaining that they bought at a higher price than pre-sale investors. This, however, highlights the issue with Uniswap rather than UMA.

Despite this initial setback, UMA currently has a market capitalization worth over $1.5 billion, with one token costing more than $25.

SushiSwap IDO

Another similar example is that of SushiSwap, a decentralized crypto exchange built on Ethereum, which is attempting to take the place of Uniswap as the most popular Ethereum-based decentralized exchange. Last September, SushiSwap users reportedly migrated over $1.14 billion of Uniswap’s locked crypto assets to the SushiSwap platform.

Interestingly, rather than issuing an ICO for SushiSwap, the platform rewarded liquidity providers (LP) on Uniswap by staking their LP tokens on SushiSwap. For this, users were rewarded in SUSHI tokens. During SushiSwap’s first two weeks, 1,000 SUSHI tokens were issued every Ethereum block, roughly every 12 seconds, to users who staked their Uniswap LP tokens on SushiSwap’s initial protocol.

Why Do We Need IDOs?

When ICOs and token sales became popular in 2017, raising an estimated $4.9 billion by the end of the year, many projects were attempting to solve problems using the blockchain. While many have gone on to succeed, with far more failing, it’s hard to avoid the fact that there are several issues with ICOs: they’re centralized and vulnerable. Other notable weaknesses of ICOs include third-party discrimination, vulnerability to theft and human error and a lack of privacy.

With the decentralized nature of IDOs, this new fundraising model is attempting to solve the issues of ICOs while adding new possibilities to the crypto market. By crowdfunding with IDOs, entrepreneurs can release a blockchain product that goes beyond malicious third-party influencers, while eliminating any issues regarding hackers and human error. Not only that, but token buyers and holders’ coins are instantly secured on their wallet and private keys.

Advantages of an IDO

An initial DEX offering has many clear advantages compared to initial exchange offerings (IEO) and initial coin offerings (ICO).

Let’s list a few of those here.

When raising funds for a project through an IEO or ICO, projects are first required to pay exchange fees and wait for a project to receive approval by the exchange before it’s listed. With IDOs, projects don’t have to pay high fees and don’t require anyone’s permission as it’s a completely decentralized offering.

Additionally, instead of waiting for an exchange to approve a project, vocal community members are the ones who vet projects and tokens, which opens the door for small projects and massive collaborations.

Compared to IEOs and ICOs, which involve an initial waiting period, IDOs provide immediate access to liquidity and trading. Added to that, IDOs help streamline users by delivering a secure wallet and trading platform support that’s built into one interface. It’s also possible for IDOs to support several types of wallets, thus simplifying the user’s experience.

Where Are IDOs Headed in the Future?

IDOs are the newest way for crypto projects to get their tokens out to the public, but just with ICOs, IEOs and STOs, improvements are still needed. This is evidenced by UMA’s IDO. With IDOs, though, a decentralized exchange means there is a lack of control mechanism. When it comes to fundraising, it’s important to have some form of control to remove token price changes or have KYC regulations, which are noted in ICOs, IEOs, and STOs.

Another improvement that should be focused on is scalability. Right now, only decentralized finance (DeFi) projects have raised money through IDOs; however, that’s not to say other projects within the crypto space can’t use this form of crowdfunding. Of course, for these projects to take off, they’ll need some interest from existing DeFi users to invest in a project’s token.

Why? Simply because using DeFi platforms is a learning curve, which may be a barrier to the average crypto trader. Another improvement would be to boost awareness and education of DeFi as this industry grows.

The concept behind crypto is to open the doors of finance by making it decentralized. IDOs are one step to making this happen, but who’s to say if a new project is the next best thing or a rug pull waiting to happen? Consequently, it’s difficult to say if a particular coin is worth X amount.

Another factor to consider is that despite the rising interest in IDOs, centralised exchanges such as Binance or Coinbase still have control over the market. Investors aren’t asking when the next IDO listing is taking place. Right now, they’re interested in when Coinbase is going to list a specific coin. Of course, this will most likely change as awareness grows around decentralized exchanges (DEXs) and DeFi in general.

The future of IDOs could be bright, but more awareness is needed. Not only that, but DeFi users are only a small fraction of the overall crypto market that is still a relatively niche field, but exponentially growing in size. That being said, as of August 2021, based on CoinMarketCap ICO calendar, the past few months of projects fundraising are largely IDOs.

September 14, 2021September 14, 2021

Advantages of using ICO as a option for crowdfunding

Bitcoin irrevocably altered the financial landscape. As the popularity of Bitcoin increased, so did the notion of blockchain and alternative currency. With this expansion came the understanding that cryptocurrencies might be used to raise funds by initial coin offering, often known as an ICO. Businesses may raise funds by creating cryptocurrency coins.

An ICO in the cryptocurrency industry is similar to an IPO in the stock market. Companies can raise cash through ICOs, token sales, and crowd sales events. They accomplish this by distributing bitcoin in the form of a new crypto token to interested parties.

Many different features are available in initial coin offerings. The first and most important consideration is usefulness. Many ICO experts believe that a coin offering should be more than just an asset that can be purchased and sold on exchanges. This utility distinguishes between successful ICOs (such as ones listed below) and unsuccessful ventures, of which there are many. Introductory coin offers pose a substantial risk of fraud. There have been recorded cases of ICOs being utilised to prey on uninformed investors. As a consequence, companies that get independent audits convey trust to potential investors.

Assume you run a Silicon Valley firm with a brilliant new idea for a cryptocurrency system. Perhaps you want to improve the efficiency and security of hotel payment procedures. In the next example, we’ll refer to this idea as LodgingCoin.

Your team members create a white paper, which is a document that explains how your concept will operate.

Marketing plan efforts begin with a trustworthy website and social presence, as well as a concise proof of concept.

Then make a fundraising request, usually in Bitcoin or Ether , although you may also take conventional payments.

By exchange for financing, you give customers some LodgingCoin.

The aim is that your company concept will get a lot of attention, buy-in, and use. Currency values rise as a result of the increased circulation. As a result, people’s initial investments rise, just like a stock does after its first public offering.

This highlights a key contrast between ICOs and initial public offerings (IPOs). Launching an ICO, unlike an initial public offering, does not result in ownership holdings.

For company owners wanting to establish or develop possibilities, initial coin offerings have several advantages. There are considerable entrance hurdles to IPOs and other forms of fundraising.

The following are some of the numerous benefits of initial coin offerings.

Tokens can be purchased by anybody.

Token sales differ from stock sales in a large-scale initial public offering. The Securities Exchange Act of 1934 imposes stringent rules on first public offerings. A token issuance is analogous to the selling of digital keys.

Participation in an IPO is generally restricted to accredited investors with a net worth of at least $1 million.

Tokens sold in an initial coin offering (ICO), on the other hand, can be sold to anybody, as most purchases are anonymous.

This is significant since just around 3% of the adult population in the United States has a net worth of $1 million. This means that just 3% of people are eligible to invest in an IPO.

Tokens have a global market.

An initial coin offering (ICO) allows worldwide investors to invest in new currencies. In many situations, digital money transfers into project coin offers are a worldwide endeavour. If an IPO account received hundreds of wire transactions in minutes, the assets would most certainly be frozen. Token sales paid for using digital cryptocurrency, on the other hand, are always available.

Premium for Token Economy Liquidity

When a token is sold in an ICO, it gains value. This value floats freely on a global, 24-hour market.

Less prohibitions for entry.

This is very different from the equity in an IPO. In certain circumstances, it might take a decade for investments in IPOs to become exit-capable. Tokens, on the other hand, may be spent in minutes.

It makes no difference whether you use or sell the tokens you bought in an IPO. The difference between a decade and 10 minutes, on the other hand, is 500,000-fold. Granted, the prospective profits from an IPO will be considerably greater in most situations over a ten-year period.

With the same amount of cash, “shareholders” can participate in future ICOs thanks to the token economy liquidity premium. As a result, there is faster growth and considerably more liquidity of money.

Reduced Entry Barrier

Companies come to Silicon Valley for many technology-driven IPOs. For competitive financial offers, Wall Street is “the place to be.” However, because token launches may take place anywhere in the globe, this requirement is substantially reduced.

Successful companies may raise cash using ICOs from whomever and wherever they choose, no matter where they are based. This eliminates the entrance hurdles that formerly limited success to certain geographic locations. In reality, Ethereum, one of the most successful ICOs of all time, has no physical presence anywhere.

The Business Model That Outperforms the Term “Free”

Large online corporations like Facebook and Google provide really valuable, free products. Regardless, they are frequently chastised for making billions while providing free services to early adopters.

The ICO launch concept, on the other hand, provides a considerably more practical option. Technology firms and open source initiatives can distribute their riches through a currency offering. This method also aids in the alignment of user bases that stand to benefit from the company’s success.

For investors, the holy grail of opportunity is a business strategy that outperforms “free.” Users profiting from being in the early phases of adoption is a great incentive for ICO investment.

Buy-In Immediately

There have been no intermediaries or barriers between cryptocurrency buyers and sellers. Once a cryptocurrency is produced and launched, it may be sold on the crypto market right away.

The benefit of this is that it is a quick and efficient procedure for both businesses and people who invest in them. Purchasing shares in an initial public offering can only be described as a labor-intensive procedure. Purchasing an ICO, on the other hand, is as easy as getting the appropriate purchasing currency and waiting for the launch.

Some of the most successful initial coin offerings (ICOs) have raised billions of dollars for their respective causes. While many successful ICOs are in the IT industry, there are several prospects for enterprises of all sizes. Ethereum , IOTA, Stratis,EOS,and NXT are some of the most successful token launches so far.

May 27, 2021May 27, 2021

Creating a Cryptocurrency Exchange similar to Binance

Since the creation of Blockchain Software Development in 2008, this technology has been successful in making a wide impact across the Internet. Since then till date, many companies across the world have been working towards incorporating blockchain into their business.

In 2008 the pseudonym was invented by an individual or group of individuals known by Satoshi Nakamoto, the blockchain was initially dedicated to bitcoin cryptocurrency. Since then, technology has seen many applications in other fields as well. In this article, we will explain how a cryptocurrency exchange is created, what are the main features of such a platform and what are the 5 stages of your future crypto exchange.

The Way Binance Works

Before deciding how to create a cryptocurrency exchange, it is worth considering how the most well-known crypto platform was built. Firstly, It is mainly important to mention that blockchain, by and large, has become a publicly available, worldwide database. This not only allows anyone in the world to add information to it, but it also makes it indestructible by spreading this information across the network. Data is not stored on a particular location or server, it is distributed everywhere which makes it immutable and more secure than the limitations of any technology that existed before the blockchain.

Further, it is open-source software, from which you can also create your own blockchain. The system is decentralized and cannot be controlled by any one party in the world. Also, editing previously submitted data is not impossible, at least not likely to happen. This has been achieved due to the fact that to optimize any information, extremely powerful computing power is required, and if bitcoin is compromised it will lose its value.

Blockchain for a common user, the use of blockchain in most areas of life does not make much difference. However, there is one area where this technology has gained the most popularity. Following the invention of blockchain as well as bitcoin in 2008, development of other cryptocurrencies began around the world. At the moment, there are about 700 digital currencies all over the net, although not all of them are super popular.

A lot of people started wondering how to start a bitcoin business or something like that (because bitcoin is illegal in some countries). Exchange resources for dealing with such a large number of currencies began to appear. While there are already dozens of exchanges available in the market, they differ by the number of currencies they allow to trade, their commissions, limits, etc. One of the biggest recent upsurges on the cryptocurrency exchange market was Binance.

Complete Information about Binance

Binance is an early Chinese-based company launched in the summer of 2017 by a group of highly experienced experts. It is now headed by its CEO Changpeng Zhao. He previously worked with Blockchain.info in Bloomberg as well as in the technical department and thus, was able to build a very strong team for Blockchain app development.

The company has launched ICOs and its own tokens to get things started with cryptocurrency trading software. Initially, it was easy to provide information via whitepaper before China issued a ban on token fundraising, they managed to reach their fundraising goal by mid-September. The funding round raised millions of dollars from venture capitalists.

The launched Binance Coin (BNB) was announced to be released with a limit of 200MM and to demonstrate the possibility of later use within the company for internal service purchases. Binance has also stated that they will eventually buy back half of the tokens issued and destroy them. Currently, ICO has nearly completed its course, exhibiting an impressive number of over 40,000 token holders.

Legend of Binance Take off

Binance is a fairly new player in the digital exchange market, but is already valued at around $ 2 billion. What was it about Binance that attracted so many people to start working with him? First, a clear and transparent idea generated by a highly skilled team with experience in exchange trading. Secondly, a large number of initial coin listings compared to other companies in the industry, as well as much lower trading fees. Each trade conducted from a user is charged only 0.01% and small fees are also charged for currency withdrawals.

Within 6 months, Binance managed to become a highly profitable company with around 3 million users globally and around 100 digital currencies in business. But that is not all that makes Binance different from other exchange companies. In addition to currency exchange, Binance has also created some unique services such as “Gifto ” and “Launchpad ” token sale programs for virtual gifting. They also provide support and guidance for new startups, including but not limited to listings and even cryptocurrency funding.

7 Useful Key Features in Creating a Cryptocurrency Exchange

The cryptocurrency exchange market has proved itself highly profitable if approached properly. The number of exchange platforms has increased but the quality of services of some resources may still be a question. Given that cryptocurrency exchange rates are not regulated, they have risen to unimaginably high levels, however, there is no guarantee of their staying there. On one hand this huge hype around the question of “how to create a cryptocurrency exchange” makes this market quite competitive.

But the more the market develops, the more trust is gained from users, and the more benefit it gets to those who know how to work with it. This is why creating a high quality cryptocurrency trading app is a wonderful idea. So, let’s take a look at what you need to pay attention to starting a cryptocurrency exchange service through the app:

A signup or login page is the first thing a user will see, but its main point is not only after registering people but to protect the system from any unauthorized login, hack attacks, or any other type of manipulation. For this reason, this functionality must be very well developed and conform to the highest standards. In addition to the normal login / password combination, there is also 2FA to provide additional security for users.

User Verification

One of the reasons why the crypto exchange market is so trusted among users is that every user is fully verified. Depending on the type of verification, verified users usually have more possibilities. For example, clearance limits for verified users are higher than non-verified ones. Verification is important to ensure transparency of trades and reduce the possibility of scams.

Deposit OR Withdrawal

This feature allows merchants to deposit money into the internal wallet shown by the cryptocurrency exchange software, as well as withdraw money to the wallet outside the software according to the limits set by the company.

Transaction Creation

Each user should have the possibility to buy or sell currency to other users in the system. It is very important that all trades are happening rapidly and without any system error. There should be many possibilities for creating order in the system so that users can choose the time which is convenient for them.

Analytics

A very useful feature that allows various graphs and statistics to be created for better visibility.

Internal API

Exchange’s own APIs need to allow users to create their own automated trading systems or data exchanges between verified devices using cryptocurrency exchange scripts.

Admin Panel

With the help of the admin panel, the employees of the exchange company will be able to monitor trades based on their access levels and manage the actions taken on the exchange.

These are only the main features required for any application of this type. There is much more to be implemented not only to make the app usable but also to make it safe and user friendly.

Steps to Create Cryptocurrency Exchange

Recently, the development process of most applications has been divided into aspects that are handled separately. Different aspects are usually developed by different teams in collaboration with each other. Such moments may include an API, web interface, and more. Their number and variations depend on the complexity of the application. Exchange trading systems such as Binance will require attention to the following app-building aspects:

Design

This is the first thing for the client before they start using the application. To develop a harmonic design combining both beauty and utility, we recommend you follow trending best practices and keep in mind the requirements of the product. Design construction consists of the following steps.

1. Wireframe: the basis of future design where its key features are implemented.

2. Prototype: Detailed visualization of user interaction with the application that allows for potential UX-related issues to be prevented.

Client-side Development

The web part of the application contains client-side logics of all the pages of the website and is based on a previously designed design. Front-end developers typically design by using HTML, CSS markup and JavaScript programming languages, including the Angular.js, React.js, Vue.js frameworks.

The API is the back-end part of the application that is not visible to the end-user. The server part of the application is responsible for executing the application’s internal logic and handling basic tasks:

1. User Authentication and Authorization

2. Server-side function of admin panel

3. Newsletter

4. Cryptocurrency bets and user deals

5. API which could be used by third party organizations

Blockchain

The part that is responsible for the actual processing and storage of data related to trades between users in a secure environment (any change by either party is impossible for the blockchain).

Testing

An essential part of modern application development. This is extremely important as it allows to isolate and eliminate most bugs within the UI, along with the logic before actually launching the application.

Security

Since the application is storing sensitive information of its users, it has to be properly secured to prevent potential data leaks and hacking attacks. We recommend securing user information in the following way:

Secure Architecture – When developing the back-end part of an application, focus on creating a secure way of storing and exchanging confidential information. Firstly, the major components of the exchange are located on different servers and interact through dedicated channels. After that the encryption keys are also located on a dedicated secure server.

Authentication of the user – To prevent the possibility of unauthorized login to the user account, it is best to implement two-factor authentication by generating a token once. Additionally, users receive notifications about their account login, specifying the location and IP-address.

Encrypted data is exchanged with the help of the latest algorithm SHA-256, which is currently impossible to hack. This generates a hash – a unique signature of the text that changes each time the initial message is edited. This allows checking whether the sent hash matches the received one, and to find out if the data was edited. Since the hash is not encryption, the original message cannot be decoded

Conclusion

Given the popularity of crypto exchanges all over the world right now, it is understandable why more and more people are incorporating themselves into these systems. Digital currency exchange offers great opportunities for both those who are familiar with the market right now. Are happening and who already have a very good experience. But the market still has some limitations depending on the country or the currency provided and it always means growth potential. Creating a high-quality application for your own cryptocurrency exchange company can bring you great benefits in a very short time.