Introducing IDOs, the latest acronym to surface in the alphabet soup of token offerings.
In the beginning, there was the IEO. Now, we have the Initial Dex Offering, or IDO, a token sale conducted on a decentralized exchange. Last week, Raven Protocol conducted the world’s first IDO on the Binance platform and successfully raised its hard cap of $500,000. Led by AI expert Sherman Lee, Raven Protocol describes itself as a “distributed and decentralized learning protocol.”
If you’ve never heard of a decentralized learning protocol, you’re not alone. Raven Protocol’s network consists of a distributed marketplace in which token-holders — including developers and users of AI models — can transact and exchange content. Users all over the world will also use the token as payment for idle computer power, thus aggregating processing power in lieu of centralized server nodes.
The project’s Binance community website notes that it intends to “pull the power of AI/ML out of the hands of mega-corporations like Amazon/Facebook/Google and put it into the hands of the community.”
According to the founders, “This experiment could lead to setting the gold standard for how young projects can get the resources they need to stay heads down and build.”
Wait — What’s an IDO?
The people behind Raven Protocol have demonstrated a quality that is sometimes lacking in the crypto community: Honesty. They themselves admit they do not know the exact definition of an IDO. “We are literally paving the way and setting a precedent for how projects could leverage the entire Binance chain ecosystem,” said the protocol’s founders.
At this stage, what we do know about IDOs is what remains the same as in other offerings. Startups or protocols attempting to raise money from investors in IDOs must still outline their concept, roadmap and team details in a white paper.
We also know the mechanics of the offering process differ from IEOs. Because an IDO is conducted on a decentralized exchange, the offering must be approved by all validator nodes, or nodes responsible for approving all transactions in a blockchain.
Binance’s decentralized exchange consists of eleven nodes, which are responsible for storing and processing all transactions on the exchange. According to Raven, all 11 nodes within Binance’s network approved the offering.
However, the process and criteria for approval have not been made clear by either Binance or Raven, and many questions remain. Among them: How is a team’s project vetted? What happens if one of the validator nodes does not agree to an offering, but a majority do, and how do the validator nodes interact with one another during the process?
A decentralized exchange is meant to enable a direct connection between buyer and seller, removing intermediaries (in this case, the cryptocurrency exchange) from the process. It remains to be seen how this would affect offering and token costs for both parties.
ICO Ranker will continue to monitor the development of IDOs and update readers on this new type of offering as more information becomes available.