Selling ICOs or tokens can be very effective with the help of Ethereum smart contracts. This will improve the sales process and make it fairer and more transparent. Vitalik Buterin recently announced that the DAICO model is a combination of DAO and ICO models. The DAICO variable named "tap" is used by the DAICO model development team in conjunction with the DAICO smart contract. Old ICO contracts start with a "contribution mode" like the old ICO contracts, where investors are free to donate ether according to ICO rules. In the DAICO model, the "tap" button determines the amount of Ether that a developer can withdraw from a contract per second, and this withdrawal limit is set by DAICO contributors. This is with the developer in mind as the developer is limited to the withdrawal limit and therefore cannot be run with all the money deposited. This is an efficient way to manage and audit ICOs using Ethereum smart contracts.
ICOs are an effective way to quickly raise money for a budding technology company. But the risk to investors and the crowded field of potential ICOs makes it hard to stand out. Often, those who are promising pie-in-the-sky products will take investment dollars from you because people buy into the hype. This is making investors sour on the idea of the ICO, with several high-profile cases of fraud or ‘exit scams’ where company founders take the proceeds of the ICO and shut down the project.
The acronym DAICO meaning ‘Distributed Automated ICO’ is a combination of the DAO concept, or ‘Distributed Automated Organization,’ and the traditional ICO. According to it, investors can become greatly involved in the development process, even to the point of approving how the business should be run. The key concept of the DAICO model is the smart contract, embedding rules about the system right into the code of the blockchain. By making those rules part of the ICO, you already build key safeguards to assure the investors against common risks in the traditional ICO.
To truly build trust with your potential investors, you’ll want to strongly consider the DAICO model for your project. The inherent risk in a traditional ICO is causing investors to have second thoughts, and keeping even promising projects from making their funding goals. You could have the best product idea and a talented team behind it, but you might not maximize your fundraising potential unless you embrace the newest fundraising model.