Thanks to the rapid growth of cryptocurrency, the Initial DEX Offering (IDO) has emerged as one of the more recent fundraising methods on the blockchain. The Initial Coin Offering (ICO) was the first cryptocurrency fundraising method prevalent during the crypto boom of 2017 and 2018.
However, because initial coin offerings (ICOs) are not yet regulated, the process can be confusing and alarming. Several initial coin offering (ICO) projects turned out to be scams run by market manipulators, including involvement by Centralized Exchanges. As a result, ICOs have tarnished the reputation of the cryptocurrency industry and discouraged new investors from joining.
The Initial Exchange Offering (IEO) was created in response to the declining reputation of ICOs. The IEO model was first released in early 2019 and has since become a popular launching of new crypto projects. An IEO is similar to an ICO in that it involves the distribution of new crypto tokens to a group of investors or the general public.
An Initial DEX Offering (IDO) is a crowdfunding technique that allows cryptocurrency projects to launch their native token or coin through a decentralized exchange (DEX). The IDO model is the infamous successor to ICOs, which allows projects to launch on their own to raise money for growth and development.
Below are some advantages of an IDO:
Many fundraisers who use the IDO model do not rely on conventional private funding to launch their firms. Instead, investors purchase the cryptocurrency at a reduced cost when the token sale becomes public. They make a substantial profit by reselling these tokens to the broader population. Additionally, since no CEX or approval is necessary to begin fundraising, anyone, not just private investors, can organize or participate in an IDO.
An IDO provides project tokens with immediate liquidity. The liquidity pool guarantees liquidity without slippage at any price level. An IDO enhances financial inclusion and offers more alternatives for project token distribution.
Investors can begin trading a project’s token from the day it is released. As a result, traders attempt to purchase a new token as soon as it becomes available and then later sell it at a higher token price.
A DEX operates based on self-executing smart contracts. Deploying a new smart contract that manages the asset’s liquidity pool and tokens only costs “gas” when a project uses a DEX without an intermediary.
A DEX processes trades and adds them to the blockchain through smart contracts, enabling secure transactions. Additionally, since a DEX does not retain funds, bad actors are less likely to target them.
How To Launch An IDO?
IDOs seem the newest and fairest way to go about crypto fundraising. Let us now look at the steps you need to take to launch a successful IDO. The whole process can be separated into 2 milestones that need to be considered to launch an IDO.
Milestone1: Follow the below Steps Before IDO:
Step 1: Do Proper Market Research
View IDO's project website, whitepaper, team page, social media and channels. You can also view its most recent successful ICO. Examine websites, news portals, and social media pages for similar products and services. You may also conduct a proper competitive analysis to identify specialized offerings, as the cryptocurrency community hosts several token offerings each month.
Step 2: Create a website with all possible Information.
For an IDO launch, an informative website and a professionally written white paper are the basic requirements for marketing collateral. The website should have information about the project, product (if MVP, short video with product features and testimonial), White paper, Roadmap, Smart Contract Address, Supporting Wallets types to store your tokens, Founders and core team member's profiles with Social media handle, decision-making structure (ideally DAO or governance model), How to article (About the project, Product, How to store your token, etc. Track your website with google analytics to plan your marketing strategy. IDO Press Note should have a clear message around IDO, Roadmap, and fund utilization plan.
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Step 3: Start Building Community.
Community validation plays a vital role in the success of any IDO. Get involved with various DEMO Day events, and participate in hackathons to discuss product ideas. Participate with AMA (ask me Anything), Add posts on various active community channels, and Be active on the community forums. Involve active Community members with Your project by giving roles like community manager, Content creator, Technical writer, and partnership manager. Cross-pollination is also important for bringing various community members to support your project. Use all the latest and old blockchain/cryptocurrency forums to connect with a broader community. Use a cryptocurrency event calendar to showcase upcoming events, such as IDO, to a wide audience.
Note: All the Above steps must be done before starting the IDO.
Milestone2: Create your token:
What is the Token?
Tokens, in this regard, are a representation of an asset, right, ownership, access, cryptocurrency, or anything else that is not unique in and of itself but can be transferred. The standard allows tokens representing one of these factors—along with smart contracts—to be exchanged for a token that represents another.
Before you Deploy your Token, please research the token name, token supply, and tokenomics. Please check cryptocurrency data sites coinmarketcap and CoinGecko to get references around the token name, token supply, token ticker name, etc. Ensure you have a unique token Name to avoid confusion with other existing token names.
Step 1: Token Deployment on Testnet or Apothem Network
Tools required for smart contract development on XDC Network
XinFin Remix - Learn How to develop smart contract using XinFin Remix
First, deploying a token on testnet or Apothem Network is always advisable. We will deploy the token on the Apothem Network with a 10 million total supply. And the contract used for the token deployment should be an audited smart contract You can also get your smart contract audited from Certik, Slowmist, Hacken, Solidproof
The contract will have burning, minting, and blacklisting functionalities for more details, please check out the article “Minting, Burning and Blacklisting Your XRC-20 Tokens in XDC Network” for complete training on How to mint, burn or blacklist an address.
Once the contract is deployed on Apothem Network, Learn How to manage your funds using a Hardware wallet like dcent, safepal, or a Multisig wallet such as YPLUSVault, or OrryVault and Custodians, namely Fireblocks, Liminal to protect your token Assets. You can also store your tokens in SOF (Send Offline Functionality) which means your tokens are stored completely offline.
Here is a Demo Contract that we have deployed on the Apothem network, and you can monitor all the transactions on the explorer. After testing a few transactions, API and explorer activity. This Step will provide great confidence before you Launch your OWN Token on Livenet/MainNet.
Step: 2 Tokens Deployment on XDC Main-net Network
The Process will be the same over the main net which we did for the apothem test network, and the same contract and process will be followed on the main net
After the deployment contract. Please learn to manage Asset Custody for your token. Please learn about Multisign Custody, Hardware Wallet, and Self custodian wallet.
Step 3 Select IDO Launchpad
ICO Launchpad:- You can create your launchpad where a user can purchase your tokens against crypto or fiat currency. Here are launchpads built on XDC Network, namely XSWAP Launchpad, and Globiance Launchpad.
For more details regarding the IDO launchpad, please check out this article.
And if you do not want to create your launchpad, you can tie up with the exchange and create a launchpad on the exchange where users will be able to purchase your token on the exchange.
For more details, please check out this link
Note: It's always advisable to get Initial validation to get funding commitment from close friends, relatives, private circle, or initial community members even before you go to Launchpad. This gives very good validation about YOUR Project.
Step: 4 Be always Active on Social media
Please note you will have to create a social media account on Twitter, Linkedin, Facebook, and XDC.Dev forum and create an announcement channel on telegram and a discord server. Always reply Quickly to any Community query or question. Always Participate in AMA(ask me anything) sessions with the community members, For example, XDC Community AMA, Chainlink AMA by Joshuwa, and Blockchain Hustle AMA by Meenu Sarin. Informative social media posts will also help you get feedback from the community. Always keep educating the community about your product regularly through sharing articles, demo videos, and posts from social media, and also get frequent feedback from the community.
Step: 5 Exchange Listing
Once the IDO is over, you will have to list your token on the exchange, where users can trade your token.
You can find the list of the exchange at https://coinmarketcap.com/rankings/exchanges/
And once your token is listed on the exchange, you will have to apply to list your token at coinmarketcap and coingecko; also, make sure you provide every detail in the form to get your token listed. Do not forget to add the tag XDC Ecosystem and make sure your tokens are added under "XDC Ecosystem".
Step: 6 Appoint Market Makers and Keep Deep Liquidity for YOUR token.
You will have to appoint a market maker to help you with the volume and an order book with good depth. With DEX, you must keep at least 10-20% of funds raised in the Liquidity Pool. More Liquidity depth boosts confidence from the community members and traders.
Wish you All The Best! If you have any doubts, please feel free to post your questions in the comment.
What a fantastic and beautiful article Ruslan. Such excellent content and usefulness. Ver well written! ...always enjoy your work. Thank you for what you do for all of us.
Great article, but I would recommend to add the Tokonomo (tokonomo.com) launchpad to the step 3.