What is DAICO?

DAICO → Decentralized Autonomous Initial Coin Offering. This decentralized ICO is the attraction of investments through the sale of tokens , where the main transactions are controlled not by people, but by smart contracts.
The idea was suggested by Vitalik Buterin in January 2018 and is aimed at making ICO’s more secure by involving investors in the initial project development process.

It will further enable token holders to vote for the refund of the contributed funds if they are not happy with the progress being made by developers.

According to the new concept, development team publishes a DAICO contract, and then “contribution mode” is on. Investors can send Ethers and get tokens, which become tradeable after contribution period ends. And here is a distinctive feature of DAICO: funds are not fully available to the developers right after end of token sale. Buterin introduces a concept of “tap”, that determines the amount of money team can take out of contract per second. Initially the tap’s limit is set to zero. Token holders can vote and, depending on how successfully team is fulfilling its promises, raise the tap or destruct the contract. So if the community is not satisfied with developers’ team work, it can vote for the refund of remained money. Option of lowering the tap by voting is not available.

The DAICO principle for raising funds was first used by The Abyss gaming platform . The sale of project tokens ends in less than a day. While the developers have successfully collected soft cap.

The model is young, and still has some weak points, that probably will be improved in the future. But technical decisions offered by Buterin solve problems, that frequently occur during or after “classical” ICOs. Hopefully, DAICO will be implemented in life and diminish the number of fraudulent projects, attracting more investors to the promising start-ups.

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