1. What is DAICO?
Improved model of fundraising ICO, including some aspects of DAO.
The idea came from acne Buterin (Vitalik Buterin) in January 2018. It is how to make ICO more secure, attracting investors to the process of the initial development of the project.
It will also allow owners of tokens to vote for the reimbursement of paid money if they are dissatisfied with the progress of developers.
Projects that have implemented the concept of DAICO, increase the accountability of developers and the owners of the token will receive the added peace of mind, because it is guaranteed that they will either see at least a minimum viable product, or return your money.
2. As DAICO work?
Starts with smart contract in the mode of contribution.
DAICO in the contract will be the mechanism through which investors will be able to send funds in the project in exchange for specific tokens in the network. When the period of krautsalat ends, the contract will forbid anyone further donations, that is the usual sale of tokens.
After the period of Deposit shall enter into force the so-called variable “tap”. Tap the contract specifies the amount (in second) that developers can remove with the funds collected from sales of tokens.
Initially the limit is set to zero, but investors will be able to vote to increase tap.
3. What components are included DAO?
Taken from DAO to three main elements.
First, none of the stages there is no trust a centralized command. Decisions about the tools from the very beginning accepted in a democratic voting system.
Second, the funding is not lump sum, but distributed across time.
Finally, it is possible to return the invested money. This decision is based on the “wisdom of crowds”, i.e. depositors can vote for the refund, if the team cannot implement the project.
4. How is this different from the ICO?
The main difference is the access to the funds.
In ICO after the sale of tokens developers have full access to all assets. Developers need to pre-calculate as necessary for the production of a minimum viable product, and once they reach this amount, called the “soft capom”, you can start to work on the product and spend money on something that will fit. If you have not reached your soft cap, you have to return the money. However, if achieved, more than they have no real obligations will not.
In DAICO investors can vote on the resolutions (in the development stage) to zoom in or tap to return the remaining funds (self-contract).
5. What are the advantages compared to ICO?
Investors have more control.
The depositors have much more possibilities to Express their opinions and influence the project development. If they are dissatisfied with how the project is progressing, you can set the contract for withdrawal and receive a refund.
It completely removes the risk of fraudulent ICO, when the developers make the sale of tokens, and then run away with the money once the ICO is completed without making any product.
Since the amount of funds withdrawn from the smart contract, is limited and strictly controlled, this reduces the likelihood of attack 51%. Even if there is an attack of 51% when the attacker wants to send funds to any third party, you will be able to send only the amount allowed by the contributors (or team) to output in a certain time (tap).
When the team collects tens of millions of dollars on ICO, it suffers from deterioration of motivation for the project; or, at least, activity is significantly reduced. Model DAICO motivation of the team to bring the idea to life, that is to create a product that is maintained throughout the development period.
6. What are some of the potential problems with DAICO?
As with any new concept, there are some problems to be overcome.
If developers hold on to it a lot of tokens, to obtain additional funds from the smart contract is potentially enough to affect the voice of a small percentage of depositors.
Also crucial to the education of investors. They need to understand why the price of a particular token is rising or falling, to make the right decision when voting on the increase in the amount of tap or the return of funds. The best solution is a decision based on facts regarding the project itself, not on the emotions associated with the price of a particular token.
Finally, investors can also decide to stay away, completely trusting of the concept DAICO. They may find that they do not have to participate in the voting and resolutions, which reduces the marginal majority and weakens the security of the mechanism.
7. What are some of the main characteristics DAICO?
Hard to say, since the concept has not been implemented.
However, to answer this question, it is useful to look at the project, which plans to hold the world’s first DAICO.
For example, The Abyss, the digital distribution platform next-generation of ecosystem-based cryptomonadales, plans to implement the following features DAICO:
· The decision about voting to increase the tap can only be initiated by the project developers.
· There is a percentage limit by which the tap can be increased at a time (to prevent abuse).
· Frequency of potential tap is limited (no more than once per two weeks).
· Voting can only be used with tokens of investors and not those that belong to the project developers.
· Scheduled interviews of investors will be informed in advance.
· When investors decide to stop the project, the smart contract will be transferred to the mode of withdrawal and return the money to them, at the same time destroying tokens developers.