It seems the days of ICO, IEO, and STO are facing out. Therefore, IDO, Initial Dex Offering, is the game-changer, but what is it? Before defining IDO, we must first grasp the basic understanding of ICO IEO, and STO.
ICO, Initial Coin Offering, is a method of raising funds, pioneered in 2017. The avenue opened doors to startups to get funds. However, most ICOs end up as a way of writing good white papers to defraud victims. Examples of successful ICOs include Spectrecoin, NXT, ARK and Stratis.
STO and IEO are similar to ICO because they all use a centralized system to raise funds through smart contracts. While STO stands for Security Token Offering, IEO is short for Initial Exchange Offering. STO regulates ICO. Examples of successful STOs are Blockchain Capital, Nexo and Swarm Fund. In 2017, Blockchain Capital raised $10,000,000, Nexo raised $52,500,000 and Swarm Fund raised $5,500,000. IEO is an advanced ICO that takes fundraising to the exchanges for security purposes.
Similarly, IDO is another way of raising funds through decentralized finance (DeFi). Hence, the name Initial Dex Offering. Unlike the contemporaries, IDO is decentralized and offers ways for DeFi protocols to innovate and build robust and scalable open finance platforms. However, it is still in its experimental phase.
Meanwhile, IDO does not have a well-defined meaning yet. However, lets simply it in the words of Changpeng Zhao, the CEO of Binance, the first exchange to host IDO, who stated,
“With no central custody of funds, Binance DEX offers far more control over your own assets. We hope this brings a new level of freedom to our community. We will work closely with projects and teams to grow the entire ecosystem.”
While several protocols are currently experimenting on IDO, others have also already completed theirs. Raven Protocol is the first IDO and it was hosted on Binance DEX. Other examples include BZX, a lending and margin trading protocol and UMA, a Synthetic assets platform among.
Although there could be upcoming IDO events, much is yet to be known. However, KittieFight, a DeFi lending protocol, is launching an IDO.
On Twitter, they announced distributing KTY tokens and issuing a governance token called SDAO for farmers.
Conclusively, 2020 is said to be the year of DeFi, having seen the many innovations coming out of it. Such include, yield farming, flash loan and IDO.
Okereke has a passion for researching blockchain and cryptocurrency. He enjoys creating long form educational content to inform others on the opportunities in this space.