According to CoinMarkerCap, in June there will be 22 token sales, with 14 projects listing tokens in the IDO format (Initial DEX Offering, primary offerings on a decentralized exchange).
Among such projects is the CoinsPaid platform: IDO token CPD started on June 1. The CoinsPaid ecosystem includes a crypto-processing service, an OTC platform, and a B2B- and B2C-wallet system.
CEO CoinsPaid Maxim Krupyshev discusses the IDO and the prospects of this fundraising model.
ICO, IEO and IDO: key differences
The first ICO (Initial Coin Offering, провел the Mastercoin protocol in 2013. In 2017-2018, ICO popularity peaked — in 2017 projects raised $5.6 billion, and in Q1 2018 $3.3 billion.
By the end of 2018 the sphere of primary offerings had exhausted itself, so crypto exchanges offered an alternative to the ICO — Initial Exchange Offering (IEO, initial exchange offering).
In 2019 IDO replaced IEO: in June 2019 the Raven Protocol project placed tokens on Binance DEX.
What distinguishes these fundraising methods? During an ICO the issuer selects exchanges and negotiates token listings. For IEO, funds are raised by a centralized platform such as Binance and FTX, while in IDO — a decentralized exchange such as Binance DEX and Uniswap.
For ICO and IEO, projects pay listing fees. DEXs do not charge listing fees.
How to prepare for an IDO?
The first step is to choose the blockchain for issuing the token. DeFi projects проводят IDOs on Ethereum, Binance Smart Chain, Tron and Solana.
CoinsPaid will issue the CPD token on Ethereum. It is the most popular network for DeFi protocols: by May 2021 its users had locked about $82.53 billion in the sector.
It is also important to define the token’s use cases and its distribution model. For example, CoinsPaid customers will receive a 50% discount on fees when paying in CPD and will be able to send tokens to staking.
Total CPD supply is 800 million. CoinsPaid will sell 156 million CPD in private token sales and another 16 million CPD — in the IDO. The remaining tokens will be distributed among the project’s community, exchanges, members of the CoinsPaid team, advisors and partners.
CoinsPaid will distribute the tokens over 18 months. After that, the company will burn a portion of CPD every month.
During an IDO, investors must be protected from fraudsters. Most often, scammers create and publish counterfeit token-sale contracts.
The project should make the IDO as transparent as possible: publish the address on the website and on social media, and delete posts with fake addresses from fake accounts.
Why is CoinsPaid conducting an IDO?
CoinsPaid has built a full ecosystem: in 2020 the platform processed more than 6 million transactions worth €1.25 billion. The Cryptoprocessing.com service is used by more than 600 B2B clients with 5 million users worldwide.
«IDO is our ticket to DeFi. The CoinsPaid team has earned the trust of customers with timely and in-demand solutions. The next step is to scale the existing ecosystem and develop new offerings», says Maxim Krupyshev.
DeFi solutions will allow CoinsPaid to implement new features on the platform, optimise payment-processing workflows, and launch a staking service. Users will be able to earn up to 20% per year on CPD.
Conclusions
In mid-May, the amount locked in DeFi protocols reached $163 billion. As the sector grows in popularity, so does IDO.
«DeFi is a young market; it still has to prove itself and secure its position in the industry. For now, the sector resembles the Wild West of crypto, as ICOs did in 2017. But open and honest projects will emerge ahead. They will write themselves into the history of the digital economy and spark new opportunities in decentralized finance», says the CEO of CoinsPaid.
In his view, the IDO format helps promising projects secure funding and implement their ideas. Companies do not need to pay for listings or negotiate with regulators, and buyers can fund projects safely and anonymously.
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