IDO vs. INO vs. VC: what’s the difference?
GamesPad provides the opportunity to invest in Initial Dex Offerings (IDO), Initial NFT Offering (INO), and Venture Capital (VC) deals.
IDO (Initial DEX Offering) is when a project decides to launch its token on a Decentralised Exchange (DEX), which assists in the fundraising process. IDOs provide three benefits to the projects compared to an Initial Coin Offering (ICOs) and Initial Exchange Offerings (IEOs):
- Better and immediate liquidity. It allows investors to openly trade tokens almost immediately and provides better liquidity that ensures lower price fluctuations.
- Democratized investing. During IEOs and ICOs, projects typically give a certain allocation to private investors. IDOs allow almost anyone to invest, which makes the project appealing not just to the VCs, but to retail investors as well.
- Lower fees and simple solutions. Some DEXs offer projects the services to launch IDOs to projects in a short span of time and at lower cost compared to IEOs.
This allows projects to focus more about on the development of their projects and not to worry so much about the fundraising portions.
IDOs are one of the many innovative products in the DeFi space. Being early on promising projects is something all crypto investors desire, and IDO platforms offer to achieve that. While the returns on some IDOs are in the thousands of percents, it is unwise to “degen” into any IDO you see.
Initial NFT Offering (INO) involves offering a set of first generation NFTs, or genesis NFTs, for a certain period of time. Therefore, the Initial NFT Offering empowers participating investors to benefit from the inherent supply scarcity of the NFTs. As the NFT market matures, Initial NFT Offering rises as a solution to incentivize and reward investors and the communities.
Meanwhile, Initial NFT Offering solves many of the challenges for artists and creators selling art NFTs and collectibles. Anyone can issue limited edition NFTs through decentralized platforms with the advantages of instant liquidity and cheaper listing costs.
The difference between these IDO and VC deals is that the first one is a public sale, while a VC is a private sale. VC deals usually feature lower prices compared to IDO deals.
Usually, investing in VC deals means that the project is at an earlier stage compared to those having a public sale. Some projects may even be at the earliest stages where they have the whitepaper, tokenomics, and an experienced team but may not even have an attractive website to showcase their project.
Before investing in VC deals, keep in mind the following:
- It may take days, weeks or months for the project to issue their tokens
- The vesting time can be between 6 to 24 months
- In some projects, there might be an additional cliff for private investors, meaning that you may not receive tokens during 1-3 months after the token launch.
- Projects can change their vesting terms for private investors and extend the vesting period.
Thus, these deals are catered to long-term investors. While this raises the risks of the investment, early sales allow investors to jump into the deals at the lowest prices and benefit in the long term once the projects launch and start investing in marketing and building a community around them.