What is an IDO in crypto and how does an initial DEX offering work?

What is an IDO (Initial DEX Offering) in the cryptocurrency market?

Token sales have evolved, and the problematic ICO* and IEO* models have been replaced by a new format — IDO, or Initial DEX Offering, which has addressed many of the risks and limitations of previous models.

* ICO (Initial Coin Offering) is an initial token offering in which a crypto project independently sells its tokens to investors to raise funds for further development. Typically, investors purchase tokens directly from the project, without an exchange acting as an intermediary. Investors receive tokens in the expectation that they will later be listed on trading platforms and increase in value. The main risk of an ICO is that the project may fail to deliver on its promises, while the token itself may never gain liquidity or secure a listing.

* IEO (Initial Exchange Offering) is an initial token offering conducted through a centralized cryptocurrency exchange. Unlike an ICO, investors purchase tokens not directly from the project but through a trading platform that first reviews the project's application and organizes the token sale. This format partially reduces risk for participants because the exchange screens and selects projects.

What is an IDO?

An Initial DEX Offering (IDO) is an initial token offering conducted on decentralized exchanges, or, in other words, an initial listing on a DEX platform. Crypto IDOs became one of the major trends in the digital asset industry in 2020–2021, during the boom in decentralized finance (DeFi) and the growing popularity of DEXs.

The first widely recognized IDO in the crypto industry is considered to be the token offering of the Raven Protocol project. The crypto IDO itself was conducted on the decentralized exchange Binance DEX, and later the project's tokens also became available for trading through liquidity pools on Uniswap.

Examples of some of the most successful projects that conducted an initial DEX offering include Blocktopia (BLOK), AstroSwap (ASTRO), and My Neighbor Alice (ALICE), whose tokens increased by 550%, 330%, and 300%, respectively, compared with their IDO prices.

The success of crypto IDOs led to the emergence of new decentralized initial offering models, such as Initial Farm Offering (IFO)*.

* IFO (Initial Farm Offering) is an initial token offering format in which participation in the sale is linked to providing liquidity or using yield farming mechanisms. In yield farming, users deposit assets into a liquidity pool, lending protocol, or other smart contract and receive rewards in return — for example, trading fees or additional tokens.

How crypto IDOs differ from other token sale formats

Initial Coin Offering (ICO), or an initial token offering, was the first major token sale format. ICOs reached the peak of their popularity in 2017 — the same year cryptocurrencies gained worldwide recognition.

However, beginning in 2018, the hype surrounding ICOs started to decline, while the amount of funds raised by projects decreased significantly. This was driven by the growth of fraudulent projects, which undermined investor confidence. According to analysts' estimates, more than 80% of ICO projects turned out to be fraudulent.

In response to the problems associated with ICOs, a new model was introduced to the market — the Initial Exchange Offering (IEO), or an initial exchange-based token offering. The key difference between these token sale formats was that IEOs were conducted on centralized exchanges, whose teams carefully selected crypto projects for participation.

In addition, investors participating in IEOs received assurances that the token would be listed on an exchange. However, the IEO format also had several disadvantages related to:

High fees charged by centralized exchanges;
Mandatory identity verification;
Individual allocation limits (the number of tokens allocated for purchase by a single investor);
High competition among investors.

The ICO crisis and the limitations of IEOs became the main prerequisites for the emergence of the initial DEX offering. The key advantages of the new crypto IDO format included:

Automation of transactions through smart contracts;
Fully anonymous participation for all investors;
Immediate access to liquidity on a DEX immediately after the token sale and without the involvement of a centralized intermediary.

Thanks to these features, the Initial DEX Offering format quickly became popular among crypto projects. Public token sales peaked in the first quarter of 2025. During this period, crypto projects raised around $849 million across 429 public offerings, including IDOs, ICOs, and IEOs.

The success of crypto IDOs in 2025 was driven by the overall euphoria in the digital asset market. However, activity later declined: in the second quarter of 2026, projects raised 85% less through initial DEX offerings compared with the first quarter.

At the same time, more than 50% of tokens lost over 99% of their value following their Initial DEX Offering. Despite this, crypto IDOs remain the dominant format, accounting for almost 70% of all token sales.

The weak performance of crypto IDOs reflects the key problems associated with the format, including:

Lack of regulation;
High concentration of assets in the hands of early investors and team members;
Fraudulent schemes resulting from anonymity and unrestricted access to decentralized markets;
Low-liquidity issues.

Stages of conducting a crypto IDO

The first stage of a crypto IDO involves developing the project's tokenomics*, which determines the token price, total supply, vesting* schedule, and other parameters of the new asset. Once the tokenomics have been developed, the team creates a smart contract and uses it to issue its own token.

* Tokenomics is the economic model of a token that describes how it will be issued, distributed, and used within a project. Tokenomics usually includes the total token supply, allocations for the team and investors, the number of tokens in free circulation, the unlocking schedule, mechanisms for additional issuance or burning, as well as the token's utility.

* Vesting is a predetermined schedule according to which tokens gradually become available to their owners. For example, an investor may be entitled to 1 million tokens, but only 10% may be available immediately, while the remainder will be unlocked monthly over two years.

At the second stage of the IDO, the project team selects a DEX or a specialized platform for conducting the Initial DEX Offering.

After that, the initial DEX offering is conducted on a DEX and a launchpad platform*, through which investors can purchase tokens once the token sale begins.

* Launchpad platform is a specialized platform that helps new crypto projects conduct initial token sales, including IDOs. It acts as an intermediary between a project and investors: the project publishes information about the token sale, while users gain access to token purchases through the platform.

A crypto IDO, like the issuance of the token itself, is conducted automatically through a smart contract, which locks investors' funds allocated for purchasing the asset.

As a rule, immediately after an IDO is conducted on a DEX platform, a liquidity pool is created through which users can freely trade the new token.

Quite often, following the initial DEX offering, the team also lists the token on major centralized exchanges, which often has a positive effect on the asset's price performance and helps attract additional liquidity.

Prominent examples of such projects include Arbitrum and 1inch, which listed their tokens on major platforms such as Coinbase, Binance, and Kraken following their crypto IDOs. For example, after being listed on centralized exchanges in 2023, the ARB token price more than doubled — from $1.1 to $2.5.

Which platforms conduct initial DEX offerings?

The leading platform in terms of startup launches among IDO platforms is DAO Maker. More than 170 crypto IDOs have been conducted on this platform across the Ethereum, BNB Chain, and other blockchains, with projects collectively raising around $107 million.

Other popular platforms for conducting Initial DEX Offerings include Seedify, BSCPad, Polkastarter, and PancakeSwap. Each of these platforms has conducted more than 100 crypto IDOs.