Pre-IDO refers to the token offerings that occur prior to the actual initial DEX offering (IDO).
It is an innovative concept that enables users in the decentralized finance (DeFi) space to gain exposure to new and upcoming crypto projects.
Simultaneously, pre-IDOs allow DeFi projects to enhance their fundraising capabilities irrespective of market movements.
What Is a Pre-IDO?
A pre-IDO involves projects offering coins or tokens before the official initial DEX offering (IDO), which is more commonly known.
Unlike a pre-sale, where tokens are exclusively available to a selected group of investors, a pre-IDO allows anyone the chance to invest in upcoming DeFi projects.
Navigating Token Sales
While IDOs serve as a means to raise funds for a project, the market condition significantly influences the token price.
However, with a pre-IDO, developers can secure funds regardless of market volatility.
The tokens offered in pre-IDOs are future unlocked tokens, meaning they come with a predetermined lockup period established before the pre-IDO launch.
Each token is unlocked only after the lockup period expires.
A pre-IDO provides more democratized investment access and potential price advantages than an IDO.
Moreover, there is a lockup period, and investors gain instant liquidity access after the token listing.
Advantages of Pre-IDOs
Pre-IDOs offer general users exposure to VC-style funding events.
Typically, venture capital firms and institutional investors with substantial funds invest in these projects. They obtain a first-mover advantage and enjoy lower prices compared to the IDO.
Individual investors can participate and purchase project tokens at private investor and VC-level rates through a pre-IDO.
This grants them a first-mover advantage and price benefits compared to acquiring tokens during the public IDO.
The concept of pre-IDO also benefits developers.
Projects can raise funds and expand their capacity by hosting a pre-IDO.
Furthermore, a pre-IDO ensures developers receive adequate funds for the project regardless of market fluctuations, allowing them to focus entirely on product development.