On June 14, Raven Protocol, a decentralized blockchain/AI platform, announced that it will hold an Initial Dex Offering (IDO) on Binance DEX.
Wait, what? Not an ICO, STO, or IEO, but an IDO?
Yes, you read that right. Initial Dex Offering is the brainchild of Binance DEX, and a new fundraising method in crypto space.
But before going into the details about IDOs, let’s first take a look back and go through today’s most popular fundraising schemes used in the crypto sphere.
What is Initial Exchange Offering (ICO)?
ICO is probably the most popular fundraising method among blockchain-based startups. It’s a crowd-sale where a project trying to raise funds attracts investors into their ecosystem.
With ICOs, startups have been able to raise millions of dollars in a couple of seconds. In fact, in 2017, ICOs raised a total of $5.6 billion.
FileCoin, open-source cloud storage, managed to raise $257 million with an ICO.
What is Security Token Offering (STO)?
Security Token Offerings showed up in the crypto scene as a safer and more regulated alternative to ICOs. With STO, distributed tokens are linked to an underlying investment asset such as stocks, bonds, real estate investment trusts, etc.
Securities and Exchange Commission (SEC) uses the so-called Howey Test to confirm whether a token complies with the rules.
Nexo, a platform that instantly loans out cash/fiat and accepts crypto as collateral, successfully raised $52.5 million with an STO.
What is Initial Exchange Offering (IEO)?
As its name suggests, an Initial Exchange Offering is a fundraising scheme conducted on the platform of a crypto exchange. The exchange is responsible for managing the IEO, and the tokens are sold on the crypto exchange.
One of the first exchanges launching the IEO platform was Binance with its Binance Launchpad. Soon after that, BitTorrent started a token sale on the platform and raised $7.2 million in less than 15 minutes.
What exactly is Initial Dex Offering (IDO)?
Since IDO is a completely new concept, this question is hard to answer. But, we’ll do our best.
Binance DEX hosted the first IDO. According to Binance, they launched the decentralized exchange to bring new possibilities to the crypto space. Binance CEO Changpeng Zhao said that DEX will give users more control over their assets:
“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.”
So you could say that IDO is a fundraising method that will enable protocols available for traders. It’s similar to ICOs, however, without any accountability to a central party.
As we already mentioned, Raven Protocol held the first IDO on Binance DEX. According to Raven’s blog, the sale started on June 17 and ended after reaching a hard cap of $500,000. Investors had to go through a KYC process.
In July, another startup announced they were holding an IDO. Cubiex, a blockchain-powered gaming platform, stated in their blog post that the company would conduct an Initial DEX Offering on Binance DEX. Going through KYC is also required.
Why IDO will make a change?
Despite that Initial Dex Offering is a new approach to the crypto fundraising, it’s already gathering its fans. IDO is different from other common fundraising schemes, and according to Binance it can lead to a progressive revolution in the crypto arena.
That’s one of the reasons why here at Airdrop Alert we decided to integrate a DEX into our dashboard.
However, the concept is still new and it hasn’t been explored in detail so far. This means that there is a lot of work ahead of IDOs.
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