Pre-IDO

Pre-IDO, also known as pre-initial DEX offering (IDO), is a concept that allows DeFi users to gain exposure to new crypto projects before the actual IDO takes place. It provides an opportunity for DeFi projects to enhance their fundraising capability regardless of market movements.

Understanding Pre-IDO

Pre-IDO refers to the offering of coins or tokens before the initial DEX offering (IDO). Unlike a pre-sale, which is limited to a selected group of investors, a pre-IDO allows anyone to invest in upcoming DeFi projects.

While IDOs are a way to raise funds, the price of tokens can be influenced by market conditions. However, with a pre-IDO, developers can raise funds regardless of market volatility. The tokens offered in pre-IDOs are future unlocked tokens, meaning they come with a predetermined lockup period before the launch of the pre-IDO. Each token is unlocked only when the lockup period expires.

Compared to an IDO, a pre-IDO offers more democratized investment access and a relatively high price advantage. Additionally, there is a lockup period, and investors can access liquidity immediately after listing.

Benefits of Pre-IDOs

Pre-IDOs provide general users with exposure to VC-style funding events. Typically, VC firms and institutional investors invest millions of dollars in these projects, giving them the first-mover advantage and a lower price compared to the IDO. Public rounds of IDOs usually have predetermined token prices that are higher than those of seed and private funding rounds.

Individual investors can participate in pre-IDOs and purchase project tokens at rates similar to private investors and VC firms. This gives them the advantage of being early investors and enjoying price benefits compared to buying tokens during the public IDO.

The concept of pre-IDO also benefits developers. It allows projects to raise funds and increase their capacity. Furthermore, a pre-IDO enables developers to secure sufficient funds for the project regardless of market fluctuations, allowing them to focus on product development.

Author:

Oscar Yeung, co-founder of Convergence, the first decentralized interchangeable assets protocol, has over a decade of experience in blockchain, tokenization, and venture capital.

Oscar is a partner at venture investment firms EONXI, DAO Ventures, and Liquefy, a leading blockchain and crypto company.

Connect with Oscar on LinkedIn.