Abbreviation DAICO stands for Decentralized Autonomous Initial Coin Offering. As in the course of ICO, the project team sells tokens for crypto currency. Subsequently, tokens can be used both within the project itself, and are sold or exchanged on exchanges.
So it was in ICO, is not it?
Not certainly in that way. DAICO is a new model of raising funds. Creator of the blockcain Ethereum Vitaly Buterin proposed this model, combining the advantages of decentralized autonomous organizations (DAO) with the classic ICO. The idea to create DAICO was the answer to those problems and challenges that faced both developers and investors. This model allows to make the process of collection and spending of funds as transparent and safe as possible.
How is DAICO arranged?
At the heart of DAICO is a smart contract that regulates all actions to attract and work with deposits. From DAO, the concept takes an extended control from the side of the holders of the tokens. For example, after the public sale of tokens is completed, the contract temporarily blocks their free sale in order to avoid manipulation by the project team, and also determines how many developers can receive monthly. On the other hand, as in the classical ICO, a team of developers works on the project, and not all those who wish, unlike the traditional DAO.
What are the advantages of DAICO over ICO?
DAICO gives tokens holders control over the expenditure of collected funds and guarantee the security of their investments. Payments to developers are made not once, but gradually, for example, once a month. If they need a larger amount than what is prescribed in the smart contract, then this issue is put to the vote. And the holders of the tokens can either approve this offer, or not. If the holders of the tokens are dissatisfied with the progress of the project, they can vote for the return of funds remaining on the smart contract. Moreover, this synergy between DAO and ICO reduces the risk of attack by 51%.
DAICO has two goals for collections - Soft Cap and Hard Cap. Hard Cap determines the final goal, the greatest desired result. Soft Cap is the minimum amount of funds needed for development. If it is not reached within the specified period, the contract is closed and automatically returns all collected funds to depositors. If Hard Cap is reached, then the sale of tokens is stopped. The important point is that during a public sale, developers do not have access to funds.
How can investors manage the development of the project?
This is not project management. This is control over the amount that can be allocated to the project team in excess of the established budget. That is, the developer can ask to increase the size of the monthly payment, and the decision remains for the holders of the tokens who vote for or against. Secondly, as already mentioned above, the developer can not take and hide with money. This excludes the contract. The funds can not be written off at one time. Holders of tokens can initiate the return of the remaining funds if they think that the developers can not cope with the tasks.
What are the risks and shortcomings of DAICO?
Decentralized management has its own characteristics. No one can guarantee that all 100% of the holders of tokens will actively vote, which reduces the decentralization of management.
Not all tokens holders have an understanding of the development process and often can not correctly assess the current situation. This can lead to emotional decisions that can harm the project if the developers do not have adequate protection against them.
What should I look for before investing in DAICO?
As in the case of traditional ICO, before buying tokens, you must carefully prepare and examine all available information. The more of the following items are present in the project, the higher its reliability:
- developers provide agreements, sales rules, detail all procedures and steps for DAICO
- a smart contract is freely available on GitHub for learning
- an audit of the contract was carried out, and by well-known auditing companies, and it is better if there were several; The texts of reports should also be available for study
- competently compiled and concise whitepaper with a detailed description of the product and a plan for its development
- availability of a ready product prototype
- the registration data of the company that conducts DAICO
- the procedure for carrying out the crusdale satisfies the requirements of the regulators of the countries in which the sale of the tokens
- the project team has the relevant competencies and experience
What are some examples of DAICO projects?
At the moment, the DAICO model has not yet become a uniform standard for the industry, but some projects have already announced the adaptation of DAICO or have already begun to implement it. The Abyss team, which announced the launch of the world's first DAICO, is now holding a token, and has collected more than $ 10 million. YouToken, using the DAICO model, successfully completed the first round of fundraising. According to forecasts, more and more projects will use the DAICO model instead of ICO in the near future.
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