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Crypto Terms:  Letter D
Jun 19, 2023 |
updated Apr 02, 2024

What is Decentralized Autonomous Initial Coin Offering (DAICO)?

Decentralized Autonomous Initial Coin Offering (DAICO) Meaning:
Decentralized Autonomous Initial Coin Offering (DAICO) - a funding campaign for new crypto projects that employed a decentralized governance model.
2 minutes

Let's find out Decentralized Autonomous Initial Coin Offering (DAICO) meaning, definition in crypto, what is Decentralized Autonomous Initial Coin Offering (DAICO), and all other detailed facts.

A decentralized autonomous initial coin offering (DAICO) brings the principles of decentralized governance into the fundraising campaigns of new crypto projects. The idea was proposed by Vitalik Buterin, the creator of Ethereum (ETH), in 2018.

The goal of DAICOs is to increase the investors’ trust in initial coin offerings (ICOs) by allowing them to have more governance over the project funds.

Initial coin offerings are campaigns used to raise funds for the development of new cryptocurrency assets. During an ICO, the development team dedicates a portion of the new asset to be sold to investors. ICOs set a soft cap for the funding target. If the soft cap is not reached, the project is considered a failure. All funds are returned to the investors.

If the ICO reaches its soft cap target, the developers receive the total funds along with any excess raised at the end of the funding period. The development team acts as the central authority over the financial decisions of the project. In some cases, this can lead to unfavorable outcomes.

ICO projects sometimes do not meet their deadline and are considered vaporware – projects that never reached full development. In some instances, ICOs can be instigated as malicious campaigns or scams as developers do not intend to actually launch the project.

Investors have to provide funds to centralized ICO campaigns based on good faith. Thus, in the instances of scams or vaporware, they may lose trust in ICOs altogether and withhold their funds to ensure that they are not scammed out of their investments.

The concept of DAICO introduces the concept of the decentralized autonomous organization (DAO) smart contracts in ICOs. In DAICOs, all proceedings are kept locked in the smart project while the investors’ group takes responsibility for the shared DAO governance.

Once the ICO campaign is finished, all funds are not released at once. Instead, the investors vote on the tap variable, which determines the per-second rate at which the funds are released. If the developers fail to deliver a finished project, the investors can vote on granting themselves a refund from the remaining resources.

It is expected that DAICO will bring more democracy into the ICO campaigns and grant investors more trust in new crypto projects. DAICO can also act as a protective measure for investors by reducing the number of scam campaigns.