During the early stages of blockchain technology and its attempt to gain adoption, most cryptocurrency industry founders who did not have enough funds to bootstrap a DeFi startup on their own had a primary concern: fundraising.
Legacy institutions have already implemented a VC fundraising model, but this model goes against the ethos of blockchain and everything it stands for. So instead, ICOs, or Initial Coin Offerings, were created by blockchain enthusiasts as alternative fundraising models that were best aligned with the objectives of blockchain technology.
ICOs were initially effective, but they became highly centralized and disorganized as time passed. Because ICOs were unregulated, many scams were prevalent in the cryptocurrency industry. Many investors have lost large sums of money to these scam projects, with the Bitconnect fraud of 2017 being a prime example.
This article will look at IDOs, a more effective fundraising model used in the blockchain industry, its role in protecting blockchain investors from scams associated with early fundraising models like ICOs and STOs, and how it has revolutionized fundraising in the cryptocurrency world.
Problems Associated With Early Fundraising Models
Initial Coin Offerings (ICOs) and Security Token Offerings (STOs) were the first fundraising models in the cryptocurrency industry. The ICOs were incredibly simple to launch, had a positive network effect, and were mainly unregulated. While these features appeared beneficial to the crypto community at first, bad actors exploited them, and scam projects based on the ICO model became common in DeFi.
Furthermore, projects using the ICO model have had a shallow success rate over the years, owing primarily to investor skepticism. STOs were another fundraising model used to scale ICOs, but they also had issues due to a high barrier of entry and a degree of centralization due to the procedures required to run an STO.
What Is An IDO?
An initial DEX offering, or IDO, occurs when a project launches its tokens through a decentralized liquidity exchange. Blockchain projects in an IDO seek funding from individual investors rather than the traditional funding method from Venture Capitalists before launching their project.
IDOs were introduced as a much better fundraising method in the blockchain space. The Initial DEX Offering (IDO) is a self-organized, completely decentralized model for raising funds for blockchain projects. In essence, an initial DEX offering is a forerunner to both ICOs and STOs.
IDOs provide numerous benefits, including decentralization, quick liquidity, and lower listing costs, making IDOs accessible and open to all. IDO launchpads have played an essential role in smoothing out IDO processes for DeFi startups, and SkyLaunch, a multi-chain launchpad, is one to keep an eye on in this regard.
SkyLaunch: A Multi-chain IDO launchpad
SkyLaunch is a multi-chain IDO launchpad that aims to move away from a sole fundraising model and become more comprehensive by providing all necessary Pre-IDO and Post-IDO support, tools, and resources for projects listed on its platform. It is more of a platform for IDO accelerators, providing long-term growth and sustainability goals.
SkyLaunch helps blockchain startups look for a platform to host their first IDO with product development, information security, law, finance, project marketing, and much more. Skylaunch addresses the critical issues that must be addressed if a project has a successful IDO and continues to be successful.
Furthermore, after a successful IDO round, SkyLaunch goes above and beyond by providing post-IDO support. Projects that conduct their IDO on SkyLaunch have access to a diverse set of experts who will mentor and assist them in developing their projects. Synergia Capital VC fund, a reputable VC firm with a track record of successful blockchain projects, is backing SkyLaunch.
Conclusion
IDOs are a breath of fresh air in terms of crypto fundraising. IDO launchpads have changed the way promising projects grow and realize their visions. If DeFi ever completely replaces traditional finance, IDO launchpads will be critical to the success of the next generation of DeFi projects because of their uniqueness and innovativeness.
Disclaimer: This content contains links to third-party websites. Coinfomania does not endorse and is not responsible for or liable for any content, accuracy, quality, advertising, products, or other materials on this page. Readers should do their research before taking any actions related to the company linked in the report.
