Democratised Token Sale – The first DAICO
Beginning of the year Vitalik Buterin, Ethereum’s founder, proposed in a post on ethsear.ch a new revised ICO model. He suggested that by merging the benefits of a Decentralised Autonomous Organisation to an ICO would increase trust of investors and prevent scam ICO’s. The new model, called DAICO, introduces a voting system that will allow investors control the release of funds to developers over a period of time and the option to cancel the project altogether and get a proportional refund of the remaining funds.
The first ever DAICO is planned to be implemented by the project ABYSS is a next-generation digital distribution platform, delivering all types of video games (Free2play MMOs and cryptogames being a key priority), including AAA-titles, to the fast-growing global game community.
How it works
The ABYSS developer team sets the ‘tap’ which is the maximum amount of funds released over a period of time by the smart contract. (tap= wei/sec)
If they need to increase the size of the tap they will initiate a poll asking token holders to vote upon it. To prevent abuse of the mechanism there is a limit of how much % can the tap be increased every time and also the tap cannot be increased in less than days. Only Ethereum wallets that hold the particular tokens can participate to the poll and the company’s and reserve tokens cannot participate. A vote will be weighted by the amount of tokens it holds but to prevent exchanges to participate with all that disproportionate power the weight of each Ethereum-wallet’s vote will be limited by a certain amount of tokens (i.e.≤ 0.1% from Total Supply)
In case The Abyss Team shows unsatisfactory performance, resulting in the decision about the refunds, the Smart Contract switches to withdrawal mode, at the same moment blocking or burning the team’s and Reserve tokens. If the decision about the refunds is made, the remaining funds are returned to token holders.
Will it work?
For me there is no doubt that this DAICO concept will drastically reduce the amount of scam ICO and provide increased trust to investors. This is the very first implementation of this model and I am sure there is room for improvement as time passes and we identify problems. It is going to be very interesting what investors will do with all this new power that is handed to them. What do you think? Please let us know in comment section below.