DAICO Versus ICO – the Potential of a New Fund Rising Model
Creation of the majority of cryptocurrencies starts with the procedure that is titled ICO (Initial Coin Offering). There are other numerous names like “public sale” or “token generation event”. The creators let the society to decide the potential value of the cryptocurrency that greatly depends on the capital that is invested.
Regardless of the popularity growth the decentralization model of the ICO still has got some flaws that are considered by the financial experts throughout the world.
The necessity for the growth of existing ICO model
Although the model seems to be really effective and reliable the greatest problem that has occurred within the model is the presence of dishonest people, who ignore all the rules and regulations and transform the ICO into some sort of a scam and fraud. There is no need to mention all the scams and Mybtgwallet.com, where investors lost 3.3 million usd, is one of the greatest machinations.
The creator of Ethereum, Vitalik Buterin has introduced a new model of fundraising that is called DAICO and currently available only within Ethereum network. This model grants more flexible methods for the control of ICO. Itl is, in fact, a unification of a previously mentioned ICO model and decentralized autonomous organization (DAO) that has got strict rules and regulations that were encrypted into the program code.
DAICO starts with splitting of the shares that allows the creators to gather the finances. The potential investors can get tokens for investments into the DAICO project within Ethereum network.
There are several conditions through which the operation can be conducted:
- Open or close sale;
- Direct coin offering;
- Resellers offering.
It might seem that there is no difference between the DAICO and ICO and that would be close to the truth. However, when the leverage method is activated the situation changes. The token holders gain the possibility to control the amount of funds that are available for the creators. That will lower the risk of machination for ethereum forecast.
The present ICO model is deprived of such possibility: all the funds are under control of the creators and they can easily take all the money and disappear. The DAICO project adds some elements of democracy where the majority decides what should be done.
The DAICO leverage can be adjusted for the following actions:
- Frequency of money transfer;
- The amount of money that can be issued per operation;
- The quantity of operations per peculiar time lap.
The potential of the system
The basic goal of this model is to increase the responsibility of the team and control the money in possession of the team. The owners of shares can decide to increase the share of available funds for the team of programmers. Finally, the investors can cancel their participation in DAICO project and bring back all the funds.
The creation of the Buterin seems to be a great outburst in the world of cryptocurrency as it proves the reliability of the new system and shows its great potential and availability for people of all social layers.