IDO、ICO、IPO

I. IPO (Initial Public Offering) — Initial Public Offering

Definition: It refers to the process in which an unlisted enterprise issues shares to the public through a stock exchange to raise funds and achieve listing. It is a financing method in the traditional financial market.

Core Characteristics:

• Strict regulation: It needs to comply with the compliance requirements of securities regulatory authorities in various countries (such as the US SEC and China Securities Regulatory Commission), and submit detailed documents such as financial reports and business plans.

• Entity nature: Aimed at physical enterprises (such as technology companies and manufacturing enterprises), the financing is used for enterprise development, expansion or debt repayment.

• Investment logic: Based on the fundamental analysis of the enterprise's profitability, market share, industry prospects, etc., investors share the enterprise's growth profits or dividends by holding shares.

• Liquidity: After the shares are listed, they can be traded in the secondary market, but there is a lock-up period (such as the lock-up period for executives' shares).

Typical Cases: Alibaba (NYSE IPO in 2014), Tesla (NASDAQ IPO in 2010).

II. ICO (Initial Coin Offering) — Initial Token Offering

Definition: Blockchain projects raise mainstream cryptocurrencies such as Bitcoin and Ethereum from the public by issuing cryptocurrency tokens (Tokens) for project development. In essence, it is a decentralized financing method.

Core Characteristics:

• Decentralized financing: There is no need to go through intermediaries (such as investment banks). The project party directly sells tokens to investors, and investors subscribe with cryptocurrencies.

• Token attributes:

  • Utility tokens: Used for payment and governance within the project ecosystem (such as ETH for Ethereum Gas fees);

  • Equity tokens: Represent certain rights to the project (such as dividends and voting rights).

• Regulatory risks: Many countries regard ICO as "unauthorized securities issuance", and there are legal compliance risks (such as China banning ICO in 2017).

• High-risk characteristics: Most projects are in the early stage, lack actual landing scenarios, and are prone to problems such as "air coin" fraud and team running away.

Typical Cases: Ethereum (ICO in 2014, raising 31,531 BTC), Filecoin (ICO in 2017, financing 257 million US dollars).

III. IDO (Initial DEX Offering) — Initial Decentralized Exchange Offering

Definition: A token issuance based on a decentralized exchange (DEX). The project party sells tokens to users through liquidity mining, pledge subscription and other methods on the DEX platform. It is an iterative model of ICO.

Core Characteristics:

• Decentralized issuance: Relying on the smart contract of DEX to complete the token offering, no need for central exchange review, and the issuance process is more open (such as Uniswap, PancakeSwap).

• Issuance model:

  • Liquidity mining: Users provide liquidity to the trading pair (such as token + ETH) and receive newly issued tokens as rewards;

  • Fair Launchpad: Users obtain subscription quotas by staking platform tokens (such as BNB) and distribute tokens proportionally.

• Community-driven: Relying on user participation and community communication, the issuance process is transparent (smart contract can be checked), but there may also be risks of rug pull (project party running away with liquidity).

• Reduce centralization risks: Compared with ICO, which needs to rely on the project party's self-built platform, IDO reduces the risk of fund misappropriation through the liquidity and user base of DEX.

Typical Cases: SushiSwap (issuing SUSHI tokens through Uniswap in 2020), PancakeSwap (issuing CAKE through IDO on BSC chain).

Core Difference Comparison Table of the Three

Dimension	IPO	ICO	IDO
Domain	Traditional financial market (physical enterprises)	Cryptocurrency field (blockchain projects)	Cryptocurrency field (projects based on DEX)
Financing Method	Issuing stocks to raise legal tender	Issuing tokens to raise cryptocurrencies	Issuing tokens through liquidity mining/pledge on DEX
Regulatory Environment	Strict regulation (need to comply with securities regulations)	Ambiguous regulation or prohibition in most countries	Decentralized issuance, regulation is still under exploration
Investment Target	Enterprise equity	Project tokens (functional/equity)	Project tokens (relying on DEX ecosystem)
Risk Level	Medium-low (relying on enterprise fundamentals)	Extremely high (early stage of project + regulatory risks)	High (market volatility + smart contract vulnerability risks)

Risk Warnings

• Compliance of ICO and IDO: In most countries, ICO and IDO are still regarded as high-risk investments, and may even involve illegal financing. We need to pay attention to local regulatory policies.

• Investment prudence principle: Projects in the cryptocurrency field are of mixed quality. IDO and ICO projects often have the phenomenon of "hype-driven price surges followed by crashes". We need to be wary of false propaganda and avoid blind follow-up.

• Boundary between traditional finance and cryptocurrency: IPO is strictly regulated and has perfect information disclosure, while cryptocurrency issuance lacks a unified regulatory standard. Investors need to clarify the risk differences between the two.

China prohibits any illegal financial activities related to virtual currencies. It is recommended to comply with laws and regulations and stay away from unauthorized token issuance investments.