What is an Initial Dex Offering (IDO)?

Maciej Zieliński

15 Mar 2022
What is an Initial Dex Offering (IDO)?

The development of the cryptocurrency industry and IDO is progressing every year. Thanks to this, new ways of raising funds appear frequently. Initial Dex Offering is one such form. This is one of several ways to raise funds for crypto projects. It is worth noting that the first approach to raising funds for a project's token was the Initial Coin Offering (ICO), which in 2017 brought many advantages and negatives. At the same time, ICO has led to the fact that many investors have become millioners within a few days. How does ICO compare to IDO? Why can IDO be a more interesting concept for raising funds? We are writing about this in thie article below!

ICO and IDO

As we have written earlier, ICO is an unregulated approach to crowdsourcing funds from retail investors. In the crypto space, the main challenges of initial coin offering were related to lack of control and protection of investors' funds. Cryptocurrency projects access was based on complete trust. ICO creators were not due diligence tested. This has led to a time when almost every initial coin offering project could promise significant profits - but these promises have repeatedly proved to be empty.

ICO vs IDO

Many ICO projects have simply proved to be a fraud. Decentralized finance (DeFi) can help with this, as they aim to address this problem through alternative fund-raising models. One such model is the decentralized Exchange (DEX) model. DEX offers cryptocurrency investors access to another, more egalitarian model of crowdfunding in the crypto market.

What is a DEX offer or IDO?

It is worth noting that the original concept of the initial offers of DEX has changed enormously over the years and in its current most popular form has little to do with what it planned to implement at the start of the initial IDO (Initial DEX Offering). In fact, the initial offer of DEX is the successor to initial coin offering and IEO, because its goal is to collect money and launch the project. However, unlike ICO and IEO, in which tokens are sold before being listed, in the case of initial dex offering, they are immediately listed on a decentralized exchanges. For this reason, the name DEX was created.

DEX

What is the Raven Protocol? The first ever Initial DEX Offerings took place in June 2019 – it was called the Raven Protocol. The protocol team selected the decentralized Binance DEX exchange. They place a new token at a specific price, and the traders could buy it until the hard cap has been reached on binance dex. 

In theory, this particular way of fundraising had several powerful benefits, including:

  • Quick Trading
  • Immediate liquidity was achieved
  • An open and transparent means pf collecting money has been achieved

However, investors were not satisfied. The reason was that these symbolic sales would be sold out in a few seconds, leaving a small opportunity for the average investor to participate in the project. As a result of the immediate selling of the entire offer, there was speculation that it was done by bots. This is how the first initial dex offering start platforms, which are gaining popularity today, were formed.

What is a starting offer for DEX and IEO (Initial Exchange Offerings)

The first offer of DEX (IDO) is a way to raise funds that receives investment capital from retail investors. IDO was created to address the shortcomings of the 'traditional' model of cryptocurrency community funding, the initial coin offering. Given that IDO works with DEX, unlike centralized exchange, DEX can be regarded as a decentralized liquidity exchange. Decentralized liquidity exchange and  initial dex offering is the latest model for funding cryptocurrency projects that want to raise funds from investors. However, let us remember that DEX is less scalable than ICO and IEO, and many trading processes are based on DeFi platforms

Token Generation EVENT and decentralized exchange

Today, in its most popular iteration and form, the initial offers of DEX are particularly similar to Initial Exchange offerings (IEO) with some key differences.

  • In the case of IEO, it was an echange which reviewed projects and conducted token sales. With initial dex offering, it is a third-party platform that checks the stock exchange, while token sales themselves take place in a slightly decentralized manner.
  • In theory, anyone can raise funds through IDO (initial dex offerings) using a third-party start platform because everything he or she would have to do is open the pool.
  • The way it works is quite simple. The project is sent to the starter, and if it meets the requirements, it is selected for the initial dex offering. The process itself may vary from one starter to another, but the concept is always the same.
  • There is a pool from which users can buy an "IOU" of the token that the project wants to run. The IOU is a confirmation of the debt. In other words, investors pay for their tokens in advance, but receive them at the Token Generation Event (TGE), which usually takes place very shortly after the IDO itself (usually within a few hours).
  • Once the IDO has been successfully concluded and TGE has started, the token is immediately traded on a decentralized exchange. In most cases, this is the case with Uniswap because the vast number of projects is still built on Ethereum and their tokens are based on the ERC20 protocol standard.

However, other blockchains are also gaining popularity, including Solana, Polkadot and Binance Smart Chain (BSC). Therefore, some projects prefer to run their tokens on them to avoid high network charges in Ethereum. In this case, the token would be listed on a native stock exchange, such as the BSC’s PancakeSwap.

How do IDO cryptocurrencies work?

IDO (initial dex offering) works because DEX can provide instant liquidity for tokens based on smart contracts. That is why DEX tends to reward liquidity pool providers with attractive rewards. Liquidity pools allow DEX to operate without unexpected problems for their users. In order to help trade, most projects provide liquidity to DEX by allocating a part of the funds. This approach has become standard practice. Many projects are also supported by the “Proof of Stake (POS) mechanism. The POS consensus is designed to keep the network secure. But in this case, the mechanism mainly serves to discourage investors from selling tokens too fast. This ensures that investors hold their token capital in their portfolio. In return, they earn rewards for their "participation" in the network. Then, when the project is launched, investors can immediately start trading the token. Investors who have purchased tokens faster can sell them at a higher price when initial dex offerings begins to operate. When the public sale starts, the token value increases.

Fees and smart contracts

In the event of an ecchange, the fees for the performance of the new smart contract are negligible, as the trading pairs provide a high degree of liquidity. Smart contracts help manage the asset token and the liquidity pool. It should be stressed that unlike traditional fund-raising models, IDO can immediately create tokens. In addition, any meaningful IDO project can be qualified to raise funds from retail investors. The same can be said about avoiding the high costs of Initial Exchange Offerings (IEO). Investors do not have to wait long for the desired tokens to appear on the stock exchange. The list usually appears immediately after the initial dex offerings is complete. This time allows investors to make money on their investments much quicker compared to initial coin offering .

Pros and cons of IDO

Like any funding method, IDO has its advantages and disadvantages for project's token, which we have decided to present below:

Pros of IDO

  • Availability - IDO has no procedures that can be associated with IEO. As a result, many people can raise capital without unnecessary bureaucracy.
  • Speed - investors are quickly informed of the arrival of tokens on the stock exchanges and start trading because they have immediate access  to trade. The listing occurs almost immediately after the IDO has ended. Its good for token projects. 
  • Immediate liquidity - in connection with the promotion of PoS, significant capital is leftavailable on the stock exchange, thus improving its liquidity.
  • Transparency - anyone can review token contracts and projects beforehand.

Cons of IDO

  • Verification - the low level of verification leads to many rogue creators who attempt to defraud funds.
  • Competition - it is extremely difficult to participate in IDO because of a huge number of competitors who wish to purchase tokens.
  • Token sharing - most tokens in IDO generally reach the team and private investors first, and afterwards to the rest of the entities.
  • However, IDO still seems to be an attractive form of investment, with little bureaucracy and tempting, significant profits.

Crypto projects offered by IDO are lightning-fast. The initial waiting period for selling tokens at the exchange is short, which allows many people to profit quickly. Unfortunately, these offers are often attractive and, as a result, an average crypto trader may not be able to make the purchase in time, as you will see if do your own research into the matter. Moreover, IDO are not usually present on centralized exchanges, which means that they are also directed towards a smaller group of people. However, IDO is attractive due to the lack of bureaucracy, quick access to funds and the immediate provision of liquidity to the platform.

Most viewed


Never miss a story

Stay updated about Nextrope news as it happens.

You are subscribed

AI-Driven Frontend Automation: Elevating Developer Productivity to New Heights

Gracjan Prusik

11 Mar 2025
AI-Driven Frontend Automation: Elevating Developer Productivity to New Heights

AI Revolution in the Frontend Developer's Workshop

In today's world, programming without AI support means giving up a powerful tool that radically increases a developer's productivity and efficiency. For the modern developer, AI in frontend automation is not just a curiosity, but a key tool that enhances productivity. From automatically generating components, to refactoring, and testing – AI tools are fundamentally changing our daily work, allowing us to focus on the creative aspects of programming instead of the tedious task of writing repetitive code. In this article, I will show how these tools are most commonly used to work faster, smarter, and with greater satisfaction.

This post kicks off a series dedicated to the use of AI in frontend automation, where we will analyze and discuss specific tools, techniques, and practical use cases of AI that help developers in their everyday tasks.

AI in Frontend Automation – How It Helps with Code Refactoring

One of the most common uses of AI is improving code quality and finding errors. These tools can analyze code and suggest optimizations. As a result, we will be able to write code much faster and significantly reduce the risk of human error.

How AI Saves Us from Frustrating Bugs

Imagine this situation: you spend hours debugging an application, not understanding why data isn't being fetched. Everything seems correct, the syntax is fine, yet something isn't working. Often, the problem lies in small details that are hard to catch when reviewing the code.

Let’s take a look at an example:

function fetchData() {
    fetch("htts://jsonplaceholder.typicode.com/posts")
      .then((response) => response.json())
      .then((data) => console.log(data))
      .catch((error) => console.error(error));
}

At first glance, the code looks correct. However, upon running it, no data is retrieved. Why? There’s a typo in the URL – "htts" instead of "https." This is a classic example of an error that could cost a developer hours of frustrating debugging.

When we ask AI to refactor this code, not only will we receive a more readable version using newer patterns (async/await), but also – and most importantly – AI will automatically detect and fix the typo in the URL:

async function fetchPosts() {
    try {
      const response = await fetch(
        "https://jsonplaceholder.typicode.com/posts"
      );
      const data = await response.json();
      console.log(data);
    } catch (error) {
      console.error(error);
    }
}

How AI in Frontend Automation Speeds Up UI Creation

One of the most obvious applications of AI in frontend development is generating UI components. Tools like GitHub Copilot, ChatGPT, or Claude can generate component code based on a short description or an image provided to them.

With these tools, we can create complex user interfaces in just a few seconds. Generating a complete, functional UI component often takes less than a minute. Furthermore, the generated code is typically error-free, includes appropriate animations, and is fully responsive, adapting to different screen sizes. It is important to describe exactly what we expect.

Here’s a view generated by Claude after entering the request: “Based on the loaded data, display posts. The page should be responsive. The main colors are: #CCFF89, #151515, and #E4E4E4.”

Generated posts view

AI in Code Analysis and Understanding

AI can analyze existing code and help understand it, which is particularly useful in large, complex projects or code written by someone else.

Example: Generating a summary of a function's behavior

Let’s assume we have a function for processing user data, the workings of which we don’t understand at first glance. AI can analyze the code and generate a readable explanation:

function processUserData(users) {
  return users
    .filter(user => user.isActive) // Checks the `isActive` value for each user and keeps only the objects where `isActive` is true
    .map(user => ({ 
      id: user.id, // Retrieves the `id` value from each user object
      name: `${user.firstName} ${user.lastName}`, // Creates a new string by combining `firstName` and `lastName`
      email: user.email.toLowerCase(), // Converts the email address to lowercase
    }));
}

In this case, AI not only summarizes the code's functionality but also breaks down individual operations into easier-to-understand segments.

AI in Frontend Automation – Translations and Error Detection

Every frontend developer knows that programming isn’t just about creatively building interfaces—it also involves many repetitive, tedious tasks. One of these is implementing translations for multilingual applications (i18n). Adding translations for each key in JSON files and then verifying them can be time-consuming and error-prone.

However, AI can significantly speed up this process. Using ChatGPT, DeepSeek, or Claude allows for automatic generation of translations for the user interface, as well as detecting linguistic and stylistic errors.

Example:

We have a translation file in JSON format:

{
  "welcome_message": "Welcome to our application!",
  "logout_button": "Log out",
  "error_message": "Something went wrong. Please try again later."
}

AI can automatically generate its Polish version:

{
  "welcome_message": "Witaj w naszej aplikacji!",
  "logout_button": "Wyloguj się",
  "error_message": "Coś poszło nie tak. Spróbuj ponownie później."
}

Moreover, AI can detect spelling errors or inconsistencies in translations. For example, if one part of the application uses "Log out" and another says "Exit," AI can suggest unifying the terminology.

This type of automation not only saves time but also minimizes the risk of human errors. And this is just one example – AI also assists in generating documentation, writing tests, and optimizing performance, which we will discuss in upcoming articles.

Summary

Artificial intelligence is transforming the way frontend developers work daily. From generating components and refactoring code to detecting errors, automating testing, and documentation—AI significantly accelerates and streamlines the development process. Without these tools, we would lose a lot of valuable time, which we certainly want to avoid.

In the next parts of this series, we will cover topics such as:

Stay tuned to keep up with the latest insights!

The Ultimate Web3 Backend Guide: Supercharge dApps with APIs

Tomasz Dybowski

04 Mar 2025
The Ultimate Web3 Backend Guide: Supercharge dApps with APIs

Introduction

Web3 backend development is essential for building scalable, efficient and decentralized applications (dApps) on EVM-compatible blockchains like Ethereum, Polygon, and Base. A robust Web3 backend enables off-chain computations, efficient data management and better security, ensuring seamless interaction between smart contracts, databases and frontend applications.

Unlike traditional Web2 applications that rely entirely on centralized servers, Web3 applications aim to minimize reliance on centralized entities. However, full decentralization isn't always possible or practical, especially when it comes to high-performance requirements, user authentication or storing large datasets. A well-structured backend in Web3 ensures that these limitations are addressed, allowing for a seamless user experience while maintaining decentralization where it matters most.

Furthermore, dApps require efficient backend solutions to handle real-time data processing, reduce latency, and provide smooth user interactions. Without a well-integrated backend, users may experience delays in transactions, inconsistencies in data retrieval, and inefficiencies in accessing decentralized services. Consequently, Web3 backend development is a crucial component in ensuring a balance between decentralization, security, and functionality.

This article explores:

  • When and why Web3 dApps need a backend
  • Why not all applications should be fully on-chain
  • Architecture examples of hybrid dApps
  • A comparison between APIs and blockchain-based logic

This post kicks off a Web3 backend development series, where we focus on the technical aspects of implementing Web3 backend solutions for decentralized applications.

Why Do Some Web3 Projects Need a Backend?

Web3 applications seek to achieve decentralization, but real-world constraints often necessitate hybrid architectures that include both on-chain and off-chain components. While decentralized smart contracts provide trustless execution, they come with significant limitations, such as high gas fees, slow transaction finality, and the inability to store large amounts of data. A backend helps address these challenges by handling logic and data management more efficiently while still ensuring that core transactions remain secure and verifiable on-chain.

Moreover, Web3 applications must consider user experience. Fully decentralized applications often struggle with slow transaction speeds, which can negatively impact usability. A hybrid backend allows for pre-processing operations off-chain while committing final results to the blockchain. This ensures that users experience fast and responsive interactions without compromising security and transparency.

While decentralization is a core principle of blockchain technology, many dApps still rely on a Web2-style backend for practical reasons:

1. Performance & Scalability in Web3 Backend Development

  • Smart contracts are expensive to execute and require gas fees for every interaction.
  • Offloading non-essential computations to a backend reduces costs and improves performance.
  • Caching and load balancing mechanisms in traditional backends ensure smooth dApp performance and improve response times for dApp users.
  • Event-driven architectures using tools like Redis or Kafka can help manage asynchronous data processing efficiently.

2. Web3 APIs for Data Storage and Off-Chain Access

  • Storing large amounts of data on-chain is impractical due to high costs.
  • APIs allow dApps to store & fetch off-chain data (e.g. user profiles, transaction history).
  • Decentralized storage solutions like IPFS, Arweave and Filecoin can be used for storing immutable data (e.g. NFT metadata), but a Web2 backend helps with indexing and querying structured data efficiently.

3. Advanced Logic & Data Aggregation in Web3 Backend

  • Some dApps need complex business logic that is inefficient or impossible to implement in a smart contract.
  • Backend APIs allow for data aggregation from multiple sources, including oracles (e.g. Chainlink) and off-chain databases.
  • Middleware solutions like The Graph help in indexing blockchain data efficiently, reducing the need for on-chain computation.

4. User Authentication & Role Management in Web3 dApps

  • Many applications require user logins, permissions or KYC compliance.
  • Blockchain does not natively support session-based authentication, requiring a backend for handling this logic.
  • Tools like Firebase Auth, Auth0 or Web3Auth can be used to integrate seamless authentication for Web3 applications.

5. Cost Optimization with Web3 APIs

  • Every change in a smart contract requires a new audit, costing tens of thousands of dollars.
  • By handling logic off-chain where possible, projects can minimize expensive redeployments.
  • Using layer 2 solutions like Optimism, Arbitrum and zkSync can significantly reduce gas costs.

Web3 Backend Development: Tools and Technologies

A modern Web3 backend integrates multiple tools to handle smart contract interactions, data storage, and security. Understanding these tools is crucial to developing a scalable and efficient backend for dApps. Without the right stack, developers may face inefficiencies, security risks, and scaling challenges that limit the adoption of their Web3 applications.

Unlike traditional backend development, Web3 requires additional considerations, such as decentralized authentication, smart contract integration, and secure data management across both on-chain and off-chain environments.

Here’s an overview of the essential Web3 backend tech stack:

1. API Development for Web3 Backend Services

  • Node.js is the go-to backend runtime good for Web3 applications due to its asynchronous event-driven architecture.
  • NestJS is a framework built on top of Node.js, providing modular architecture and TypeScript support for structured backend development.

2. Smart Contract Interaction Libraries for Web3 Backend

  • Ethers.js and Web3.js are TypeScript/JavaScript libraries used for interacting with Ethereum-compatible blockchains.

3. Database Solutions for Web3 Backend

  • PostgreSQL: Structured database used for storing off-chain transactional data.
  • MongoDB: NoSQL database for flexible schema data storage.
  • Firebase: A set of tools used, among other things, for user authentication.
  • The Graph: Decentralized indexing protocol used to query blockchain data efficiently.

4. Cloud Services and Hosting for Web3 APIs

When It Doesn't Make Sense to Go Fully On-Chain

Decentralization is valuable, but it comes at a cost. Fully on-chain applications suffer from performance limitations, high costs and slow execution speeds. For many use cases, a hybrid Web3 architecture that utilizes a mix of blockchain-based and off-chain components provides a more scalable and cost-effective solution.

In some cases, forcing full decentralization is unnecessary and inefficient. A hybrid Web3 architecture balances decentralization and practicality by allowing non-essential logic and data storage to be handled off-chain while maintaining trustless and verifiable interactions on-chain.

The key challenge when designing a hybrid Web3 backend is ensuring that off-chain computations remain auditable and transparent. This can be achieved through cryptographic proofs, hash commitments and off-chain data attestations that anchor trust into the blockchain while improving efficiency.

For example, Optimistic Rollups and ZK-Rollups allow computations to happen off-chain while only submitting finalized data to Ethereum, reducing fees and increasing throughput. Similarly, state channels enable fast, low-cost transactions that only require occasional settlement on-chain.

A well-balanced Web3 backend architecture ensures that critical dApp functionalities remain decentralized while offloading resource-intensive tasks to off-chain systems. This makes applications cheaper, faster and more user-friendly while still adhering to blockchain's principles of transparency and security.

Example: NFT-based Game with Off-Chain Logic

Imagine a Web3 game where users buy, trade and battle NFT-based characters. While asset ownership should be on-chain, other elements like:

  • Game logic (e.g., matchmaking, leaderboard calculations)
  • User profiles & stats
  • Off-chain notifications

can be handled off-chain to improve speed and cost-effectiveness.

Architecture Diagram

Below is an example diagram showing how a hybrid Web3 application splits responsibilities between backend and blockchain components.

Hybrid Web3 Architecture

Comparing Web3 Backend APIs vs. Blockchain-Based Logic

FeatureWeb3 Backend (API)Blockchain (Smart Contracts)
Change ManagementCan be updated easilyEvery change requires a new contract deployment
CostTraditional hosting feesHigh gas fees + costly audits
Data StorageCan store large datasetsLimited and expensive storage
SecuritySecure but relies on centralized infrastructureFully decentralized & trustless
PerformanceFast response timesLimited by blockchain throughput

Reducing Web3 Costs with AI Smart Contract Audit

One of the biggest pain points in Web3 development is the cost of smart contract audits. Each change to the contract code requires a new audit, often costing tens of thousands of dollars.

To address this issue, Nextrope is developing an AI-powered smart contract auditing tool, which:

  • Reduces audit costs by automating code analysis.
  • Speeds up development cycles by catching vulnerabilities early.
  • Improves security by providing quick feedback.

This AI-powered solution will be a game-changer for the industry, making smart contract development more cost-effective and accessible.

Conclusion

Web3 backend development plays a crucial role in scalable and efficient dApps. While full decentralization is ideal in some cases, many projects benefit from a hybrid architecture, where off-chain components optimize performance, reduce costs and improve user experience.

In future posts in this Web3 backend series, we’ll explore specific implementation details, including:

  • How to design a Web3 API for dApps
  • Best practices for integrating backend services
  • Security challenges and solutions

Stay tuned for the next article in this series!