10 May 2021 22:45, UTC
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IDO has become one of the most popular ways to raise funds in the crypto industry. On what platforms do projects release their tokens, how to participate in the distribution and what is their disadvantage
A fundraising method called IDO began to gain traction in 2020 amid growing interest in DeFi. At IDO, fundraising is done using smart contracts. The tokens issued by the projects are already backed by investors’ liquidity pools on DEX. Often, the IDO token grants its holders the right to vote and control the direction of the underlying protocol.
A distinctive feature of IDO: the supply of tokens is limited, so the organizers resort to special mechanics to allow the maximum number of participants to participate in them. For example, they limit the volume of tokens for purchase per user, or hold lotteries.
Each project has its own rules for the lottery. For example, to participate in the public IDO of the A2DAO crypto-accelerator, you need to buy at least one “lottery ticket” – which is the ATD token. One ATD token costs $ 1,000. Then you need to register using a telegram bot. The more lottery ticket holders have, the higher the chances of participating in the IDO. In another IDO of the 1MLNNFTS project on the Yellow Road platform, participants need to hold a platform token for $ 500.
To take part in most IDOs, participants need to register in advance and sign up for the white list. This is done via Telegram / Twitter, or by registering your wallet (usually Metamask).
Often, within a few days after the completion of the IDO, projects appear on Uniswap, Binance Dex, Bancor or other exchanges with a significant premium to the original price.
You can search for IDOs through special aggregators such as CoinList. At the moment, it is common practice that projects conduct token sales at several sites at once.
As for projects on the Ethereum blockchain, such IDOs are carried out in the form of a listing of tokens on decentralized exchanges, primarily Uniswap. The first major IDOs took place there in mid-2020. Due to the high fees on the Ethereum network, IDOs are growing in popularity on other blockchains as well.
Projects in the Polkadot network run IDOs on the Polkastarter platform. It issues its own POLS tokens and Polkastarter governance tokens. Polkastarter was launched in December 2020 and has funded over 40 projects since then.
The price of tokens of some projects has risen sharply relative to the initial one: Shift – 15 times, Bridge Mutual – 19 times (Polkastarter), ExeedMe – 37 times. Polkastarter’s tokens went up 500% in two months from December 2020 to January 2021.
One of the very first IDOs on Binance was the Raven Protocol in June 2019 powered by Binance Dex. Binance obliges token sale participants to keep the launchpad coin, in this case BNB, at least a week before the IDO.
IDOs on the Binance Smart Chain blockchain are carried out by several platforms at once, including the PancakeSwap decentralized exchange. Projects such as FairMoon, TrustSwap Ethereum wallet and others carry out sales on the Binance Smart Chain blockchain.
In March, the Solana blockchain platform launched its Solstarter launchpad, which already has more than 70 thousand subscribers on Telegrams and about 140 thousand on Twitter.
Launchpads, which previously only worked on Ethereum, are also connecting other blockchains. For example, DxSale, founded in December 2020, has integrated Binance Smart Chain into its work. Similarly, ZeeDo announced its readiness to conduct IDOs simultaneously not only on the Ethereum and Binance Smart Chain blockchains, but also on Polygon and Huobi.
Due to the hype, many platforms can’t keep up with the influx of users, which leads to crashes. An example is the recent situation with the IDO CrossPad:
On May 2, on the CrossPad multi-chain platform, twenty thousand participants were allowed to trade instead of the traditional three hundred, a technical failure occurred in the system, the site became unavailable
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