Decentralized Autonomous Initial Coin Offering

Written by Jeff Kuan

Introduction

A DAICO is a fundraising methodology which combines the benefits of decentralized autonomous organizations (DAOs) and initial coin offerings (ICOs) and provides investors with more control, transparency, and mitigates some of the risks associated with the traditional ICO model of fundraising. Like ICOs, DAICOs allow startups to crowdsource funding without the need for venture capital or other traditional means of financing while protecting against poor capital management, governance issues and exit scams.

DAICOs have three main attributes:

1. After the contribution period, investors decide on a ‘tap’, which dictates the amount of contribution/second that the development team can withdraw from the contract for operational use.
2. Investors can vote to change the contribution amount released by the ‘tap’ and therefore control the amount and cadence of capital accessible to the project team, which are generally tied to project milestones.
3. Investors can vote to refund capital contributions if they feel the team is not performing up to par.

The first project to utilize the DAICO model was The Abyss, a digital, distributed platform for MMO/MMORPG games. The project completed the first successful DAICO on May 16, 2018, raising more than $15M.

Suggested Reading

What is a DAICO, Explained by Chrisjan Pauw

Vitalik Has a New Idea for ICOs – And It’s Being Tested by Brady Dale