IDO
Initial DEX Offering — a token launch that takes place directly on a decentralized exchange, without a centralized intermediary.
How it works
An IDO is a token's first offering directly on a decentralised exchange. The project creates a liquidity pool, deposits its tokens along with some stablecoins or ether, and trading opens automatically for everyone.
The format emerged in 2020 as an answer to two problems with its predecessors. In an ICO money was raised before listing and a project could vanish with it. In an IEO everything depended on one exchange's decision. In an IDO trading starts immediately and liquidity is visible on-chain.
The flip side of an immediate start is the absence of any filter. Anyone can list a token, no checks apply, and the entire burden of assessing a project falls on the buyer.
What happens in the first minutes
A token launches into a pool with $100,000 of liquidity. Here is a typical first hour.
| Starting price | $0.10 |
| Peak after 4 minutes | $0.85 |
| Price after an hour | $0.18 |
| Share of first-block buys by bots | up to 80% |
Whoever saw the rally and bought at the peak was down about 80% within the hour. Automated programs reach the pool in the same block it is created, so an ordinary person physically cannot be first — they are buying from the bots.
What to watch for
- Is liquidity lockedIf the creator can pull liquidity out of the pool they can zero the price in one transaction. A time lock is verifiable on-chain and should be stated in the documentation.
- Who holds most of the supplyA handful of wallets holding most of the tokens is future selling pressure. The distribution is visible in an explorer before you buy.
- Does the contract carry special powersThe ability to mint new tokens, change fees or block particular addresses from selling is written into the code and can be checked before trading.
- Speed does not work in your favourCompeting with automated programs for the first seconds is pointless. If a strategy depends on being fast enough, it is not a strategy.