The IDO is Dead — Long Live the ILO
What is IDO?
The Initial DEX Offering, or IDO, is a crypto coin (or token) offering that takes place on a decentralized exchange (DEX) or Launchpads with decentralized exchanges.
IDO is the next phase of ICO and IEO (initial exchange offering) development. In contrast to an ICO, where tokens are sold prior to exchange listing, tokens in an IDO are immediately listed on the DEX via which they are sold. In contrast to IEO, the process is decentralized, and easier to start (IDOs are being held mostly on Launchpads, they usually have a less strict due diligence process than exchanges).
What is ILO and why is it so cool?
The ILO (Initial Locked Offering) is the next step in raising capital in Crypto.
Usually, when projects sell tokens (without ILO), investors start receiving them after the TGE (token generation event) event and Cliff period. Unless these periods are finished, users do not receive any assets from the projects, but they have already paid for their tokens.
In the case of ILO, investors who purchase tokens, receive them wrapped in NFTs.
To get tokens from the NFTs they should wait for TGE and Cliff or just unwrap their NFTs — it depends on the terms of each ILO.
What is the difference?
- Investors may sell their NFTs (and the tokens inside) prior to the TGE, Cliff and Vesting periods. Thus, ILO makes their investment more liquid
- In some projects NFTs have a lot of utility functions, so that many people do not even unwrap them. Such as, NFT staking, special terms of using services, bonuses or premium accesses in the games, access to VIP events or private chats with founders, etc
- For crypto projects ILO is a way to keep more tokens from going into circulation — so, less pressure will be on the project’s token price
- Moreover, for projects NFTs may be an additional source of income — they may set commission for each deal with NFTs
What’s the issue here?
75% of launched projects are down from IDO price, even though many of them once were at huge multiples from IDO price.
This is primarily because of the design of the tokens, which were launched with a very small amount of float so that even minor buy pressure would result in enormous multipliers to the token price. At this point, insiders would dump their tokens for an immediate profit before there was any indication of product-market fit or the development of a real business. After this kind of launch, there are extremely little chances of actually creating something significant because the incentives aren’t aligned.
Teams need a way to raise capital and distribute their tokens to as many people as possible to raise money for their project. Why is it so important? Because VC and institutional capital is only here when retail is here; if one leaves, the game stops. Moreover, it starts in the very beginning — if founders can’t raise, nothing will get built and all the market will stagnate.
It is obvious that launchpads are not inherently bad, but despite the fact that we are going towards the democratization of the market, crypto is still very much a business for insiders. Launchpads are trying to fix this situation by giving newborn projects some desired attention. They serve an important function of initial token distribution and establishing an early user base for new products.
Why is ILO so awesome?
This launch strategy allows the community to build positive tokenomic outcomes, engaging new members and driving users into the project. Our Community = Our Users. It is very important to us, you are very important to us.
Longer time horizons for token unlocks gives a chance to the team to build the project with the support of their investors, who are now incentivized in long-term success.
The main issue is that in ILO users can sell their tokens (which are inside NFT) even before the end of the cliff and vesting!
Suitable Tokenomics Models for the ILO or Why We Should Think More Forward?
Because an ILO launch without a dynamic locked tokenomics model is simply a delay of an inevitable dump once its locked tokens are released.
On the other hand, properly executed ILOs with innovative tokenomic models including vested token multipliers, daily APY rewards, and additional incentives provide the framework for a successful launch and future for a protocol and its token.
How does it work at 8.Finance?
In 8.Finance we also provide the opportunity to buy our tokens via ILO, wrapped in NFTs. Some details:
- We will mint only 1000 NFTs:
- 800 NFTs are the basic (for purchase 8F tokens from 1000 USDT to 5000 USDT),
- 200 NFTs are unique (for purchase 8F tokens from 5000 USDT and more)
- The name of NFT collection is Crazy Owls — you can find their design here — https://bit.ly/3KG3pjw
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- Owners may sell/ transfer NFTs before the TGE, Cliff and Vesting
- Put them on Staking with a 30% yield in tokens
- Get access to unique Tournaments and events in the Snake for Crypto game
- Get unique starter pack and limited skins in Snake for Crypto game
- Get access to a private VIP chat for NFT holders
- Access to the closed events of 8.Finance and our partners
We believe the ILO model to be the natural successor to the IDO with some significant advantages described in the article.
We welcome you to read more about our NFTs https://docs.8.finance/wiki-eng/tokenomics/fair-token-sales/8f-tokens-wrapped-in-crazy-owls-nfts and purchase them — https://bit.ly/3gH1ekO
At 8.Finance, we have a marketplace where users can purchase lots of items for 8F and 8G in the Snake for Crypto game. Moreover, we have utility NFTs that provide their owners with a lot of interesting features. We call them Crazy Owls NFTs. After the launch we do not sell NFTs, but other users do.
Crazy Owl NFT is a document certifying the right for 8F tokens. Inside Crazy Owl NFT there are tokens that are wrapped in NFT, you can buy tokens or byu NFT with tokens inside. Why to buy NFT? To get its utility and to be able to sell tokens before cliff and vesting.
To start cliff and vesting countdowns you should “unwrap” NFT on the 8.Finance platform. In this case, NFT will be burnt, and token Cliff and Vesting will start on the wallet from which the “unwrapping” took place. Until the NFT is “unpacked”, Cliff and Vesting periods do not start counting.
NFTs can be sent and sold to other people at any time, allowing investors to exit before the Cliff and Vesting periods end.
One of the major NFT features is being able to sell at any time or stake them at a 30% profit in project tokens.
In addition to providing vested tokens over the lock period, Crazy Owls NFTs also entitle holders access to a private VIP chat for NFT holders; access to the closed online and offline events: closed AMAs with the project team, free access or discounts to our events and those of our partners; additional benefits in Snake for Crypto game, and other more benefits
In conclusion, we believe the ILO model to be the natural successor to the IDO since its features include:
Aligning VC, Team, and Retail Incentives
Being a Safeguard Against the Pump and Dump
Giving a Protocol the Time to Build a Great Community and Product
The ILO aligns incentives for all and helps protect retail by ensuring teams build a product that creates actual value. We hope to motivate users and builders to engage in this new launch strategy.