The Rise of DeFi Projects and IDOs: A Good Move for Blockchain Development?

The level of development and adoption the cryptocurrency ecosystem has witnessed in the past decade is a testament to the revolutionary prospects blockchain seeks to engraft, and people’s trust in what is being created or churned out.

Decentralized Finance (DeFi) is an emerging niche in the cryptospace that seeks to offer an alternative to the products traditional financial institutions have to offer to bother of lending, to creating marketplaces such as decentralized exchanges amongst others. With each DeFi project that gets to make its entrance into the broader crypto-ecosystem, a governance token is also always birthed.

These tokens in the earlier stages may be utilized by the project developers to raise funds by selling them to early investors through Initial Decentralized Offerings (IDOs). IDOs are a type of Initial Exchange Offerings (IEOs) that permeated the cryptospace around 2018 the major difference between these two is that the former is a funding event held on Decentralized Exchanges (DEXs) with or without emphasis on DeFi tokens.

IDOs are now as popular as the funding alternatives that preceded them including IEOs, Initial Coin Offerings (ICOs), and Security Token Offerings (STOs), and they present a testament to the advancement of the entire blockchain innovation.

Are IDOs A Welcome Development in The Space?

Just as we have in the mainstream financial world, every legitimate business or tech-based enterprise needs financing to meet their operational needs, and DeFi projects are not an exception. Creating a niche platform specifically to enhance decentralized financing procedures is also a plus to the organic organization of the already novel blockchain and cryptocurrency ecosystems.

However, the proliferation of tokens seeing IDOs may become anathema as the cryptospace is still battling a means to shuffle out the chaff from the wheat. Unless the DeFi space develops a measure to put these checks in place, the indiscriminate debut of IDOs may wane out some novel projects as fraudulent ones with no addressable needs may proliferate.

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