What is an initial DEX offering?
An initial DEX offering (IDO) is a fundraising approach that pools investment capital from retail investors. The IDO was created to compensate for the shortcomings of the “traditional” ICO crypto crowdfunding model. Because an IDO works with a DEX, as opposed to a centralized exchange, DEXs can be thought of as decentralized liquidity exchanges.
IDOs are the newest model for crypto projects looking to raise funds from investors. But they’re not without their limitations. For instance, DEXs are less scalable. It’s not uncommon for ICOs and IEOs to be able to raise more than $1 billion. For DEXs, this is unheard of. Because DeFi platforms come with a steep learning curve, a lack of knowledge regarding how crypto works may act as a barrier to entry for the average crypto trader. Countering this challenge efficiently would require funding education in DeFi. Armed with the right information, nothing can shake an investor’s confidence. The challenge will be in the ability of DEXs to raise funds for such ventures.