Vitalik Buterin has proposed a solution for making the ICOs better

The Ethereum founder has proposed an interesting idea for overcoming some of the limitations concerning the initial coin offerings.

He says that giving too much money for the startup isn`t good for the development of an actual product. One of the problems with ICOs is that they are often based on unreal business ideas, and the ease with which they collect huge sums of money isn`t just logical. However, the ICOs themselves are hardly to blame for the fact that people decide to invest in them without carrying out any kind of adequate research.

However, one of the major drawbacks is the proliferation of fraud and financial abuse. As Buterinsaid in an interview to Cointelegraph:

“Even though the ICOs are happening on a decentralized platform, the ICOs themselves are hardly centralized; they inherently involve many people trusting a single development team with potentially over $200 mln of funding. There are also not very good incentives for people to produce information to help people determine which projects are worth participating in”.

In his blog Buterin offers a hybrid of an ICO and the DAO — DAICO. DAO is a decentralized autonomous organization, a kind of venture capital fund, adjustable by a vote of the investors.

At its first ICO-like phase, which is called the “contribution regime”, people buy tokens using ethers. After the goal is approached the tokens become tradeable.

DAICO differs from the ICOs with two key features:

1. Using a protocol called ‘tap’, the funds available to the project developers would be rationed according to a pre-programmed limit.

2. Investors would be able to vote on two things: a) the flow of the tap — that is, raising and lowering the amount available to the developers; and b) the self-destruction of the project — meaning that a ‘withdraw’ mode can be initialised. The remaining ether would be distributed to the investors.

The Buterin`s idea is very much like our solution: Descrow is a really decentralized tool which is managed by the crowd intelligence — the voting mechanism, which solves both problems, indicated by Vitalik.

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