The rise of DeFi has added a new member to the IXO family: IDO. There are different opinions on the meaning of the name of IDO. This article adopts the meaning of Initial DeFi Offering, that is, the initial launch of the decentralized protocol.

IDO has attracted more and more attention from users in the encryption community, and has become a more common way for new projects to launch, raise funds, and acquire early users. With the help of Uniswap, Balancer, PolkaStarter, DuckStarter and other channels, project parties, especially grassroots project parties, have a lower threshold and a relatively fairer distribution method, although the accompanying risks cannot be ignored.

In this article, we take stock of some of the more common channels recently and analyze their characteristics and possible risks for readers’ reference.A special reminder is that new projects have huge risks, so we must participate cautiously and balance the risks. In addition to the possible code risk of the project itself, the risk of running away, and the reasons for the token design itself, excessive authorization may also cause losses, readers are also reminded.

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1. What types of new project issuance platforms are there?

In June 2019, Raven Protocol conducted IDO on Binance DEX, which is generally considered to be one of the earliest IDO projects. Binance CEO CZ put forward a point of view at that time that, compared with traditional issuance methods, the benefits that DEX can bring are that users have more control, and assets do not have to be hosted in a centralized entity, but are controlled from the wallet by themselves. Bring more freedom and autonomy to investors.

However, the IDO concept did not become popular at the time. About a year later, in the summer of 2020, with the gradual improvement of the DeFi infrastructure, the attention of DEX projects has skyrocketed, and IDO has more real scenarios.

The benefits brought by IDO can be summarized as follows:It is more open and fair, the transaction speed is fast, and the liquidity is sufficient. After the issuance of the primary market is completed, the secondary market can be launched quickly.

The author roughly divides it into the following several channels:

• Issued through DEX platforms, such as Uniswap, Balancer’s LBP, SushiSwap, DODO crowdfunding pool building, etc.;

• Through token issuance platforms, such as PolkaStarter, DuckStarter, Bounce, Mesa, etc.;

• Issued through DAO platforms, such as Dao Maker;

• Other new channels of play: The ITO method created by MASK is announced and issued with the help of social platforms such as Twitter.

Of course, in addition to this, there is no shortage of centralized online distribution methods, such as LaunchPad and CoinList of Binance and other exchanges.

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2. Uniswap: a minimalist distribution method

Swap rose because of Uniswap. Although Bancor's approach was earlier, it was not until the liquidity mining boom that the mainstream narrative of DEX became the world of Swap. With the help of Swap or AMM, the project can easily complete the initial online issuance with the help of trading protocols such as Uniswap, which is also called IUO, but this term is not commonly used.

On the Uniswap platform, there is no special module specially set up for the online issuance of new projects, but it is the same as other token trading pairs. After the project party adds liquidity to the token trading pair, it can start participating in the transaction on Uniswap.

Take the above picture as an example. It is the DeGate project, which is about to start issuing tokens on Uniswap. Liquidity has not yet been added. After the project party injects USDC\DG token liquidity on time, the issuance activities will begin.

Due to the simplicity of Uniswap, project parties often need to create their own issuance information pages, as shown in the example below.

The AMM method is convenient and easy to use, and anyone can issue it, which lowers the threshold for participation, but it also brings a series of problems that need to be dealt with.

Foremost among them is the issue of counterfeit currency. Anyone can create tokens and token trading pools, which means that anyone can counterfeit them. Such examples are not uncommon. Therefore, the issuing project party will publish the corresponding token address on its official channels for verification. This step of work cannot be omitted by every participant.

Other aspects are related to the characteristics of AMM itself.

Image credit: Dmitriy Berenzon

As shown in the figure above, Uniswap and other AMM-type DEXs often use a fixed multiplier algorithm. The total price ratio of the two tokens in the token pool is 1:1, which corresponds to the scenario of a new project being issued online. Suppose a token NB, the trading pair is USDC-NB. If the initial price of the project is low, only a small amount of funds (such as a small amount of USDC) is needed to make the market, which also means that after the project starts, a small amount of funds can greatly increase the price of the currency several times or even dozens of times times.

DeFi scientists and giant whales can use a large proportion of funds to increase the price of the currency at the moment the project starts, while subsequent participants can only get a relatively expensive price. AMMs themselves have no order books and can only trade at market prices, so it can be cost-prohibitive for participants. At the same time, due to the surge in ETH transaction volume, the gas fee is instantly raised. Even if the currency price increases, the profit may be swallowed up by the gas fee.

The DeFi community has developed a series of tools and applications around Uniswap, adding functions such as viewing candlesticks, submitting limit orders, and scanning new transaction pairs on Uniswap, which helps to alleviate the above problems to a certain extent. However, the issuance of tokens on Uniswap will often become a battlefield for scientists to compete with each other. It is also common for gas fees to soar over a thousand Gwei. Participating in it must at least be psychologically prepared, and small investors are not recommended to participate.

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3. SushiSwap: a one-stop distribution platform

SushiSwap is one step closer than Uniswap, and provides better support for token issuance creation. With the help of MISO, the process of starting a new project on SushiSwap is simplified, including token creation, liquidity pool creation, mining selection, initial issuance method ( Such as fixed price, lot auction, or Dutch auction) and other practices.

The project party completed crowdfunding on SushiSwap through MISO, and subsequent trading pairs will also be launched on SushiSwap.

According to the official introduction of MISO, MISO is a set of open source smart contracts designed to simplify the process of launching new projects on SushiSwap. MISO aims to drive new capital and transactions into Sushi by increasing the attractiveness of SushiSwap as a token creator and community to launch new project tokens. The goal is to create a startup platform for founders of technical and non-technical projects that will give communities and projects all the options they need to safely and successfully deploy to SushiSwap. MISO will serve as a personal project launch platform for the SushiSwap community, with all aspects handled through trusted open-source contracts.

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4. Balancer: unique price reduction auction mode

The token issuance on Balancer is called LBP. LBP is the abbreviation of Liquid Bootstrap Pool, a liquidity startup pool. Currently, LBP is becoming the standard for more and more project issuances.

Simply understand, Uniswap and other AMMs that use 1:1 token trading pairs will encounter problems that we have discussed above. The initial currency price will rise rapidly with the influx of a large amount of funds; Balancer will do the opposite.The LBP method allows the project party to initially set a relatively high currency price. As time goes by, if no one participates, the price will gradually decrease. The LBP model is a variant of the Dutch auction or reverse auction, created through a smart pool.

APY.Finance (APY), Perpetual Protocol (PREP), Furucombo (COMBO), MASK, KINE and other projects have all issued tokens using the LBP model. Subsequent LBP will also become the choice of more projects. For example, Tidal Finance, a Polkadot-based programmable insurance market, also announced that it will conduct IDO on Balancer on March 25.

The participation method is similar to the Uniswap page, directly select the corresponding trading pair (the project party will give a link) and participate in the transaction.

Take the release of KINE on the evening of March 11 as an example.

The initial setting price is $4, the ratio in the initial token pool is 93:7 (KINE:USDC), and the set final ending weight is 40:60, which means, in the way of LBP:

• High initial price to avoid FOMO;

• If user participation is low, the currency price will gradually decrease according to the preset method;

• Of course, if users are quite enthusiastic, even though the initial price setting is relatively high, the influx of users will also increase the currency price.

As shown in the figure above, the price of KINE once jumped to more than $8 after the market opened yesterday, and the opening price was set at $4, and the subsequent price will automatically drop if no one participates. The current price of LBP is about 3.88 knives, which is maintained near the opening price.

The weight composition in the token pool has also changed from 93:7 (KINE: USDC) at the beginning to about 7:3.

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5. Polkastarter: Popular IDO platform

Polkastarter is a protocol built for cross-chain token pools and auction transactions, enabling start-up projects to raise funds in a decentralized and interoperable environment based on the Polkadot network. With Polkastarter, decentralized projects can raise funds quickly and cheaply. Users can participate in project fundraising in a safe and compliant environment, and use assets other than the current ERC20 standard.

Since most projects have set a private distribution method, to participate in the distribution activities on the Polkastarter platform, you often need to back up your address information with the project party and obtain a whitelist before you can participate. In addition, the project party can set a fixed price for the token, which is relatively friendly, and participants do not have to face the risk of price fluctuations.

On the project page, specific project details will be listed. Before participating, you must remember to do your homework and verify the corresponding information.

Although Polkastarter has become a popular IDO platform, it should be noted that not all project parties are high-quality projects, and you still need to do your homework.

Taking Kylin Network as an example, users need to complete multiple steps:

• Through the official whitelist application channel, complete operations such as following Twitter and joining Telegram, and then perform KYC certification and submit the whitelist address.

• The whitelist will be synchronized to the Polkastarter platform to screen out successful bidders.

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6. Bounce: Elastic Auction Tool

Bounce is based on the batch auction tool created by Ethereum. It needs to set the upper limit and duration of each auction. Funds exceeding the upper limit will be bounced back to the user.

The Bounce platform is divided into two categories: a decentralized auction platform where everyone can participate, and a community-certified auction platform.

As shown in the figure, in addition to token issuance, there are multiple components such as liquidity lock auction, NFT auction, community pool, lottery and prediction market. There are three types of token pools: fixed price, closed auction, and Dutch auction.

In addition, Bounce has a community-certified auction platform, where platform token holders jointly decide which items can be activated and participate in the sale. Compared with the decentralized auction platform, the community authorized auction platform has a certain screening mechanism, and the project quality may be relatively higher.

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7. DuckStarter: a community-driven platform

DuckStarter is a distribution platform created by the DuckDAO community.

At present, there are mainly niche projects on the platform, and there is a whitelist setting. You need to apply for the whitelist before you can participate. The specific method of obtaining the whitelist depends on the project party's own regulations. Vortex DeFi and Shadows Network are projects that were previously launched on the DuckStarter platform.

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8. ITO: a new way of social distribution

On February 11, Mask Network announced the issuance of the token MASK, which was carried out through ITO. Several other projects have also started to play issuance activities through ITO.

ITO refers to the release of token issuance information through the Twitter platform. After installing the MASK plug-in, users can directly participate in it on the Twitter page after linking wallets such as Metamask. During the ITO period, the gas fee was also greatly increased.

After completing the above operations, you can directly view the corresponding account information on the Twitter page, complete the transaction, and participate in the ITO.

The ITO method is relatively new, so I will say a little more here. For each ITO event, the issuer will send encrypted information through Twitter, and only users who have installed the MASK plug-in can see and participate in it. The specific operation is actually similar to trading on Uniswap. The difference is,The ITO method created by MASK adds more restrictions on robots at the level of smart contracts.first level title

Nine, other

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Mesa: Limit Auction

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DODO: Crowdfunding to build a pool

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Poolz

Poolz supports two IDO participation methods, ETH and BNB, and needs to apply through the whitelist first. Issued by the project party, it is also necessary to submit an application to Poolz.

Taking HAPI, which recently completed IDO, as an example, the following operations need to be completed in order to be eligible to participate in the token auction.

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10. Summary

This article summarizes several common new token issuance methods and the corresponding commonly used platforms. However, due to limited space and attention, it is inevitable to miss everything. Readers are welcome to correct me.

The launch of a new project is a high-risk thing. Although the risk warning has been made, a few more words are needed at the end of the article.

Due to many factors such as the project party running away, the characteristics or problems of the token issuance platform, excessive authorization of the wallet, and the performance of the secondary market after the currency price is launched is not as good as expected. Financial precedent. Readers still have to discern carefully and do their homework.

The cutting-edge trends of the encryption industry, the first-hand information of the blockchain industry, mining and analysis of potential projects, welcome to join the "Block Guest Space" carefully created by the Blockchain Research Institute, and capture 100 times coins with senior investors!

https://instantmiso.gitbook.io/miso/

https://www.chainnews.com/zh-hant/articles/513417450560.htm

https://medium.com/i-am-hapi/hapi-opens-whitelisting-for-poolz-ido-participation-49f97faa6d0f

Disclaimer: This article is the author's independent opinion, does not represent the position of the Blockchain Institute (public account), and does not constitute any investment opinion or suggestion.

The cutting-edge trends of the encryption industry, the first-hand information of the blockchain industry, mining and analysis of potential projects, welcome to join the "Block Guest Space" carefully created by the Blockchain Research Institute, and capture 100 times coins with senior investors!

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