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What are ICO, IEO, and IDO?

lnhngn 14/11/2021 14:12 480 views

What is IDO?

IDO (or Initial DEX Offering) is a form of fundraising through the offering of tokens on decentralized AMM platforms. IDO will usually have 2 pools, one for the community, and the other for users who hold platform tokens (POLS, DAO,…).

How does IDO work?

IDO can be organized by the project itself, the token’s issuer, without the involvement of any other unit, organization, or individual.

IDO can be performed directly from the project’s own development team on the blockchain platform through transactions from the project’s product and the issuer.

Advantages and disadvantages of IDO

Advantages

  • It is easier for new projects to raise capital than IEOs on CEX.
  • IDO has developed many other fundraising methods, including the very successful IFO at PancakeSwap.

Disadvantages

  • Like other trends, scam projects set up to pump & dump abound.
  • Activities such as registering for IDO or buying and selling later (mostly listed in DEX) are dependent on gas fees (especially in Ethereum).

What is ICO?

ICO (or Initial Coin Offering) is a form of fundraising quite popular in digital cryptocurrency projects (Cryptocurrency). When a company or group issues their own cryptocurrency, they usually create a certain number of Tokens and sell these tokens to investors in various Crowdsale. Usually developers will accept investors for payment in Bitcoin or Ethereum.

How do ICOs work?

ICOs are often used to launch a new service or product in the cryptocurrency market, typically a new token. In fact, it is very similar to IPO (Initial Public Offering) which is a form of raising capital of a new company when it first enters the stock market.

Just like the stock market, investors will gain profit if the value of tokens appreciates relative to the initial price (ICO) of that token.

Advantages and disadvantages of ICO

Advantages

  • Initializing and setting up an ICO project is relatively easy compared to STOs and IEOs.
  • The cost of launching an ICO is relatively low, so it is suitable for new investors in the market with a small investment.
  • The Government has less intervention in this form.
  • More liquidity in a short period of time.
  • Investors have full control over their money.
  • One can raise funds through bounty programs, private sales, public and through AirDrops.

Disadvantages

  • The system is easily exploited and scammed by bad guys.

What is IEO?

IEO – Initial Exchange Offering, as the name implies, this form is implemented on the platform of a cryptocurrency exchange. In contrast to an ICO, an IEO is managed as well as a reputable representative by a cryptocurrency exchange for a startup seeking to raise funds with the issued tokens.

How does IEO work?

Startups that want to offer an IEO on a centralized exchange must pay a listing fee along with a percentage of the number of tokens sold.

In return, the tokens of these companies will be listed on the exchange right after the IEO ends.

Advantages and disadvantages of IEO

Advantages

  • All exchanges are KYC/AML verified, ensuring very high security for investors.
  • Investors directly participate in the exchange, unlike ICOs and STOs.
  • Due to the levels of regulation, the trusted platform of exchanges can protect investors from fraudulent activities.
  • Investors do not transfer their funds into a smart contract like an ICO, but buy directly into their account.

Disadvantages

  • Funding costs are very high in IEOs and the system is difficult to set up.
  • Liquidity is very low compared to the other two groups.
  • Investors have very little control over the operations of the exchange.

The difference between 3 types of fundraising ICO, IEO and IDO

TermsICO (Initial Coin Offering)IEO (Initial Exchange Offering)IDO (Initial DEX Offering)
Definition is a form of token issuance that is first sold on the marketis a form of token issuance for the first time on centralized exchangesis the first form of token issuance on a decentralized exchange.
DescriptionProjects will self-issue tokens on Crypto social networks, communities to raise capital by selling a certain amount of tokens in Token Sales rounds.Projects issue their tokens on a centralized exchange – CEX These CEX exchanges will be responsible for calling for investment capital for the project and as a partner to ensure the credibility of that project. CEX exchange will collect listing fee and percentage of tokens sold in IEOProjects that issue tokens on a decentralized exchange – DEX These DEX exchanges will list/list that token on their exchange to jointly expand and develop the ecosystem CEX exchange will provide, allowing new projects to use new technological advancements on their platform
Legal RequirementsThe project is developed freelyCEX exchanges will be authorized to take responsibility through smart contractsDEX exchanges and self-responsible projects

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lnhngn

"Don't invest in what you don't know. Learn first then invest"