Initial DEX offering (IDO)

How it works

The project simultaneously deploys the token contract, seeds the AMM pool with the launch liquidity allocation, and distributes purchased tokens to buyers. Price discovery begins in the same block the pool is seeded.

Launchpad platforms add structure by handling KYC, lottery allocation, and tiered access, but the underlying mechanism is still an open AMM pool once the listing is live. Unlike an IEO or ICO, no central gatekeeper delays listing or manages order flow.

Design consequence

Sell pressure arrives before any secondary market structure exists to absorb it. There are no market makers on an order book, no delay between token receipt and liquidation. Get the float-to-depth ratio wrong and price discovery becomes a disorderly unwinding in the first hour of trading.

Example

A project seeds a $400K pool on a $20M FDV and sells 10% of supply at a 50% discount through its launchpad. That allocation is worth $2M at TGE price, and buyers hold 100% upside from day one. If 30% of them sell at open, the pool faces $600K of sell pressure against $400K of depth. The price drops before the team finishes celebrating.

Common mistake

Teams treat the IDO as a liquidity event rather than a liquidity design problem. The launchpad community generates demand, but demand without depth is not a stable launch. Any IDO checklist that omits a float-to-depth stress test is incomplete.