Decentralized fundraising methods: what you need to know about IDO

IDO is a method where projects place new coins on decentralized exchange platforms. Unlike traditional ICOs, where fundraising is controlled by a central authority, here everything happens through blockchain and smart contracts without middlemen.

How Trading Works Through a Liquidity Pool

The basis of IDO is an automatic trading mechanism on DEX. When a project launches an IDO, it creates a liquidity pool with a pair of its new coin and an already known cryptocurrency (usually ETH or BNB). Smart contracts enable instant exchanges — users can trade directly from wallets, without middleman services.

This approach offers several advantages: fair pricing, liquidity appears immediately, and participants are not tied to a single platform. People operate through their cryptocurrency wallets, fully controlling the process.

How IDO Differs from Traditional Fundraising

When a project uses the old method ( like classic ICOs ), a central authority is needed to manage the process, set the price, and control the issuance. IDO works differently — in a decentralized manner, based on algorithms. This reduces entry barriers and removes administrative layers.

Risks and Important Points

Despite the convenience, participating in an IDO requires caution. The price of the coin may drop after launch rather than increase. Not all projects launched through DEX are well thought out — there are also unscrupulous initiatives.

Before investing, it is essential to carefully analyze the information about the project: the team, development strategy, and the coin's economy. IDO is a tool, but like any tool, it requires proper application and understanding of the risks.