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What is IDO? Should I invest in IDO?

The crypto and blockchain market is a fast-growing market. Besides “getting to the right place”, investors also prioritize “coming in at the right time,” and arriving at the right time means getting there early.

Usually, to access a project at an early stage, investors will participate in initial coin/token issuance rounds such as ICO, IDO or IEO. ICO (Initial Coin Offering) is the first form of coin issuance in the crypto market where investors can put their money, since the project only exists "on paper", with initial ideas and proposals. However, most of the time only investment funds or influential individuals can participate in ICOs during private sales rounds.

Source: Cryptorank

IEO (Initial Exchange Offering) is a form of fundraising on a centralized exchange (CEX), and is guaranteed by the reputation of this exchange. IEO projects on major exchanges such as Binance often have very high profit margins.

However, winning IEO tickets on Binance and other exchanges is not easy, because investors have to buy and hold a certain amount of the exchange's tokens to get a "lottery" ticket, and pray they are lucky enough to "win the lottery". In other words, investors must have a lot of money and luck.

IDO (Initial Dex Offering) is a form of fundraising made on a decentralized exchange. In essence, IDO is the successor of ICO and IEO, both of which aim to raise capital to launch a project.

So why is IDO so hot?

As mentioned above, the probability of small investors participating in ICO is almost non-existent, while IEO’s participation is also limited by economic capability and the element of chance, not to mention the number of investors. Investments purchased from IEOs are also few and far between.

However, with IDO, investors have the opportunity to buy and hold tokens of the projects they consider to have potential as soon as possible. That token can skyrocket in price after the first sale, meaning huge profits for investors.

2021 is a booming year for GameFi, and projects through IDO have also brought investors huge profits. For instance, according to Cryptorank.io, Elemon's ATH ROI is 371 times, Crabada's is 173 times and Star Atlas's (POLIS token) is 136.8 times.

Besides the high-profit factor, IDO is also preferred by investors because it has easier access. The requirements to participate in IDO on DEX exchanges are easier to meet; for example, you just need to stake a certain number of exchange tokens.

Depending on the Launchpad platform, the mechanism for allocating IDO slots is different. Some Launchpads use the Guaranteed Allocation mechanism, which makes it possible for all investors to be guaranteed an IDO purchase rate, such as the case of BHOPad. BHOPad guarantees the IDO buying rate for all investors with a minimum staking requirement of only 50,000 BHO, which is roughly $140 at the moment. With the said mechanism, BHOPad gives opportunities to all investors in the most fair and transparent manner.

Published on April 03, 2022

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