Building a platform based on DAICO standards of governance. An improvement on current ICO fundraising models.

Kuda S
Kuda S
Sep 4, 2018 · 4 min read

In one of our very first posts we mentioned what we dislike about current ICO fundraising models and also stated our passion to contribute towards a better ICO space. One of the biggest issues currently is that post-ICO, once funds have been successfully raised, investors do not have any real control over how the money is used or the direction the project will take. This tips the scales significantly in favour of the project development teams that then have unhindered access to the funds.

This huge imbalance of power between ICO fundraisers and investors has led to the need for progressive post-ICO governance solutions that aim to realign this power dynamic. Our desire to see the ICO space evolve towards adopting better post-ICO governance combined with our key focus to provide a best-in-class service has led our team to work on developing a fundraising platform built in line with the DAICO standards for ICO governance.

While there are a number of other solutions attempting to address this very same issue, such as CGS (Coin Governance System), we love the DAICO approach and what it promises to offer both investors and development teams. Therefore, we would like to take this opportunity to introduce the concept to those who may not have come across it yet and also expand on the specific aspects of this approach that we find appealing.

So, what is DAICO?

DAICO is a new fundraising model that will potentially provide improvements on the current ICO model. It incentivizes good behaviour from the development team and heavily penalises mediocre projects, slow progress or projects that are then proven to be scams. We will not be the first project to implement the DAICO approach, The Abyss is a good example of a project that has adopted the DAICO concept and applied it to their token sale.

The way in which DAICO differs from a normal ICO predominantly lies within how their respective smart contracts operate once funds have been raised. What is currently happening in the ICO space is that once the fundraising stage of an ICO has been concluded the ICO smart contracts cease to be operational. Essentially handing over the entire lump sum of funds raised and control to the fundraisers.

DAICO smart contracts do not cease to be operational after the conclusion of the fundraising phase. Instead, after the fundraising phase or ‘contribution mode’ has ended one new variable comes into effect called the tap variable, which switches the smart contract into ‘tap mode’.

What happens in ‘Tap Mode’?

The tap mechanism allows investors to have a say in determining the amount of funds the project development team can access at any given time. It stipulates an amount per second that is available to the developers, thereby regulating the flow of funds. And just like a tap regulates the flow of water, the flow of funds can be increased or reduced.

The flow of funds can only be be increased if the majority of token holders vote for an increase. This would most likely occur in scenarios were the developers are reaching project milestones on time or ahead of schedule, or any other scenario that results in increased investor confidence with regards to how the project is progressing. The project development team can not increase the flow of funds but may only reduce it, if the need arises.

Token holders may also hold a vote for the withdrawal of all remaining funds if the general consensus is that the project team is not delivering on project milestones or the project has been proven to be a scam.

Quick summary of why we love the DAICO model

We think DAICO trumps ICO when it comes to the things that matter to us; trust, access to funds, investor control, accountability and targeting scams.

In future posts we will explore the DAICO approach further and also provide more details as to how exactly it will be incorporated into the Launch Token platform. Please sign up for our newsletter in order to stay up to date with any important announcements or the latest posts.

Find out more about what we are working on by going over our whitepaper or visit our website

Follow our official updates via Twitter, Facebook & Linkedin

Chat to us on Telegram

Look out for more articles on Medium

We welcome ideas and feedback from the community and are open to collaborations! You can send us an email here: business@launchtoken.me

Launch Token

Creating a more secure and accessible gateway to ICO fundraising

Kuda S

Written by

Kuda S

Blockchain| Cryptocurrency| Fintech | Believer in a better ICO Space

Launch Token

Creating a more secure and accessible gateway to ICO fundraising

Welcome to a place where words matter. On Medium, smart voices and original ideas take center stage - with no ads in sight. Watch
Follow all the topics you care about, and we’ll deliver the best stories for you to your homepage and inbox. Explore
Get unlimited access to the best stories on Medium — and support writers while you’re at it. Just $5/month. Upgrade