Dynamic Coin Offering (DYCO) in 300 Words
A DYCO is a token sale framework in which utility tokens are USD-backed for an extended time period. This by design generates a token model that is stable to the downside but has the freedom to move upwards.
A DYCO’s downward movement is limited through guaranteed buybacks financed by a major percent of the raised funds, the token retains the ability to move upwards through a speculative and utility value.
Speculative and utility value of a utility token are based on product success, demand in staking, revenue-based buybacks, product fees, token-based loyalty programs, etc.
Projects selling tokens under a DYCO framework guarantee to return most of the raised money back to DYCO participants through buybacks.
ICO/IEO Mcap = Speculative value + Utility value
DYCO Mcap = Speculative Value + Utility value + DYCO refunds
This creates a stop-loss or limited downside for DYCO participants. However, all participants have full exposure to the success and appreciation of a token from day 1.
A. Buyback Rounds
The buybacks are processed in 3 rounds.
The extended time span allows teams to prove themselves. At the same time, the ability of DYCO participants to claim their guaranteed buyback turns into a tool to pressure teams that are not performing well.
B. Burns and Supply Reduction
Any token bought back is burned, thereby reducing circulation and project valuation.
The burns give projects a dynamic token circulation & valuation as holders can change these figures by claiming buybacks.
The burn system also creates a penalty on teams that fail to deliver, as holders can claim buybacks for 100% of the purchased tokens, thereby eliminating the project.
The burns also cause the eventual circulating supply of a token to be left only with long-term believers.
C. Trustless Locks
The team is mandated to buy back sold tokens until the last buyback round is complete.
Any unsold token like tokens for team, foundation, marketing, advisors, etc. begins unlocks after the refund period.
The locks enforced in a DYCO are trustless. If a team attempts to circumvent the terms with a stealth dump, holders’ trust is lost and the project is forced to buy back all tokens from the holders, to a point of token elimination.
Secondary Market Outlook: https://medium.com/daomaker/incentive-theory-in-a-dynamic-coin-offering-dyco-5f1d4218e9c8
Buyback System Explained: https://medium.com/daomaker/dyco-buyback-system-explained-4b5b0da68a3f
Mirror Flips — Profits from Token Drops: https://medium.com/@SolidWater/what-is-a-mirror-flip-and-how-to-profit-through-it-f036fd870d1b