What is Initial Dex Offering or IDO? The benefits of IDO fundraising

Photo by Ewan Kennedy on UnsplashInitial DEX offering or IDO is a new fundraising model that offers better liquidity of crypto assets, faster, open, and fair trading. IDO model is the successor of fundraising models such as ICO, STO, and IEO.Before we learn about Initial Dex Offering, let’s brush up on our knowledge on the fundraising concept via token sales. If a company wants to raise funds to build new products or expand its business, it has multiple options. The traditional option is to go for financial loans or investments from banks and VCs.However, since the success of cryptocurrencies — Bitcoin, and Ethereum, more companies had used it as an instrument for raising funds via token sales. Here, the company would create crypto tokens and issue them to the general public in exchange for Bitcoin, Ethereum, other major cryptocurrencies, and fiat currencies. This process is called fundraising via token issuance.There are different methods to do token sales, namely Initial Coin Offering or ICO, Security token offering or STO, Initial Exchange offering or IEO, and the latest method — Initial Dex Offering or IDO.An IDO is a fundraising method in which the token is issued via decentralized liquidity exchange.A decentralised liquidity exchange is a type of crypto asset exchane that relies on liquidity pools with which traders can swap tokens.Liquidity pools are pairs of crypto assets and stable coins. Fo example, USDT/ETH is a liquidity pair. Traders can swap between crypto asset and stable coin based on market conditions. As volatility of stablecoins are negligible, it offers a safe option for traders to manage the high volatility of crypto tokens and assets by swapping it with each other.As a result, decentralized liquidity exchanges enable companies to launch a token and access immediate liquidity.In an IDO, the token is issued via decentralized…