Initial Dex Offerings (IDO) and Initial Liquidity Offerings (ILO)

There are two types of cryptocurrency exchanges, centralized and decentralized. Both have advantages and disentangles based on what they are used for. The main difference between the two is the existence of the middleman (or a third party), which helps conduct the transactions in the centralized exchange.

ICOs, or Initial Coin Offerings, exploded in popularity in 2017. In 2019, it was Initial Exchange Offerings (IEOs), where centralized cryptocurrency exchanges like Binance served as third-party springboards for new token offerings.

The rising DeFi sector has been decentralized exchanges (DEXes), upon which users can trade tokens 24/7 and in a non-custodial and permission-less fashion. DeFi or decentralized finance came as an idea to avoid control and the heavy hand of central banks by a group of crypto enthusiasts in 2017. They made an alternative solution to offer every financial service you need — savings, loans, trade, insurance, and others, all available through decentralized platforms and internet connection.

Programmers working on the Ethereum blockchain after the bitcoin “boom” came to an idea on how to upgrade the technology and make “smart contracts”. They thought of (DeFi) banks, exchanges, and loan places that rely on smart contracts and automatically perform them between two anonymous people using the software.

There is no third person or middle man in these contracts who verifies the deposit or loan, instead, the authentication of the contract is kept on thousands of computers across the world (in the blockchain) and it’s impossible to falsify them It’s also impossible to hide details of the contract between the two sides because it’s all written into the contract and available for everyone to see. Programs that run all of those applications are called decentralized applications or Dapps for short.

What is IDO?

Last summer a decentralized blockchain/AI platform, announced that it will hold an Initial Dex Offering (IDO) on Binance DEX. We could say that IDO is a fundraising method that will enable protocols available for traders. IDO is different from other common fundraising schemes, and according to Binance, it can lead to a progressive revolution in the crypto arena. While ICOs and IEOs dominated crypto companies’ fundraising in the past, it seems that Initial DEX Offering is becoming the preferred method to distribute tokens and raise capital in DeFi.

What are the advantages and disadvantages of IDO model?

Between many advantages, we will mention the main such are

· Immediate liquidity

· Immediate trading

· Lower cost

Speaking about the disadvantages we can say that are

· Lack of control

· Immediate price movement

What is Initial Liquidity Offering?

Initial Liquidity Offerings (ILOs) have taken the cryptocurrency world by storm and recent reports suggest that they have emerged as the most popular option for the launch of new tokens overtaking Initial Coin Offerings (ICOs) by a significant value. The emergence of ILOs has however caught many by surprise and projects which were preparing to move ahead with an ICO or an Initial Exchange Offering (IEO) to release their tokens realized that they needed to change their approach.

A new financial strategy in which you stake your capital in return for a profit. You become a third-party funder for people who lack the money to cover their legal costs. Depending on how the process goes, you receive a share of the financial outcome, similar to Initial Public Offerings (IPO).

ILOs have become an important popular approach to rapidly scale and develop new tech. However, they have also attracted high cases of “rug pull” scams.