Vitalik Buterin Releases Revolutionary New DAICO Model for ICOs …
It’s an improvement on the ICO fundraising model that incorporates certain aspects of DAO’s. 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. For projects that implement the DAICO concept, it will force a level of accountability on developers and give token holders additional peace of mind that they are guaranteed to either see at least a minimum viable product or get their money back.
How does a DAICO work? It starts off as a Smart Contract in contribution mode.
The DAICO contract will have a mechanism where contributors can send funds to the project in exchange for network specific tokens. When the crowdsale period ends, the contract will prohibit anyone from contributing any further, i.e., normal token sale. There is one variable that comes into effect after the contribution period has ended called the tap variable. This tap in the contract can be programmed to predetermine the amount (per second) that developers can withdraw from the token sale funds. Initially, the limit will be set to zero, but contributors can then vote on a resolution to increase the tap.
How is it different from an ICO? The main difference is access to funds.
With an ICO, once the token sale finishes, developers have complete access to all the contributed funds. Developers have to calculate in advance how much is necessary to produce a minimum viable product and once they reach this amount, called ‘the soft cap’, they can start to work on the product and spend the money on whatever they deem necessary. If they don’t reach this initial soft cap, they have to refund the money. But if they do, there’s no further real obligation. With a DAICO, contributors can vote on resolutions (during the development phase) to either increase the tap or to retturn the remaining contributed funds (self-destructing the contract).
What is Boyko-Romanovsky Bringing to the table? Boyko-Romanovsky, being true to his developer nature, is tweaking Vitalik’s revolutionary idea for The Abyss’ DAICO. While Buterin spoke only of the “Tap” and “Refund” mechanisms, Boyko-Romanovsky is setting rules to them and tweaking the system to work for The Abyss. The first one being the “Buffer”. A buffer provides the token holders a one-time payment option, that increases funds for the product. Suppose the team has an unusually high expense for a month that the cash flow cannot cater for, they can go to the token holders and proper a buffer vote to the token holders. The second rule, the Boyko-Romanovsky set is the cap on the amount of increase between months. The token holders cannot increase funds by more than fifty percent from one month’s “Tap” to the next. That is if the first month’s Tap was 50 dollars, the second month’s cannot be more than 100 dollars. The third rule The Abyss has set is that no vote of the same type can happen within a period of two weeks. So if you’ve voted tap, you have to wait for another two weeks before you can do that again. The fourth and final rule, so far, that The Abyss has set is that of the number of people it takes to make a vote legitimate, or in crypto terms a quorum. For a vote to be legitimate the second time around, fifty percent to the initial number of token holders have to vote. So if you had 50 votes at least 25 of them need to vote again for their vote to be legitimate again.