Initial Uniswap Offerings (IUOs)

Basics

• From this article which writes why IUO's have their issues (18-9-2020):

"Initial Uniswap Offerings (IUOs) offer teams the benefit of accessing the most liquid DEX market, as well as the most simple and straightforward process for participating in a token sale. However, these benefits come with downsides.

Since Uniswap pools are strictly weighted 50/50 between the token being offered and ETH, teams using an IUO to launch their token must provide a sometimes prohibitively large amount of capital upfront, equivalent to the total initial value of the tokens they are selling — but not all startup teams have this kind of capital laying around.

But I would be remiss if I didn’t mention the frontrunning and FOMO buying that occur on IUOs. Since IUOs operate on a bonding curve, once the token sale starts, each purchase of tokens necessitates that the price increases. This creates incentives for investors to be the first to buy, and to acquire large amounts of tokens, at all costs. How is this done successfully? With bots that submit lightning fast orders as soon as the token sale begins, at times paying astronomically high gas to ensure their transactions are mined ahead of anyone else’s. The result? The token price often immediately explodes, gas prices skyrocket, the upside from token appreciation gets highly concentrated among the most advanced and well-capitalized players, and the token sale opportunity can end before many earnest investors get to participate.

The IUOs of UMA and BZRX are now infamous for suffering immensely from these issues."