A DAICO is a Distributed and Autonomous ICO. This is an evolution of the concept of ICO where the entire process is decentralized, with all its business rules encoded into a smart contract that manages the entire ICO process.
Via a DAICO, investors send contributions to a smart contract which then distributes tokens on behalf of the organization. All the transactions are immediately committed onto the blockchain and can be viewed and audited by anyone. A DAICO does not involve human action during token distribution.
The DAICO smart contract can be programmed to distribute tokens to investors according to any rules decided by the ICO organizers. Pre-sale investors, who send funds to the smart contract before a certain date (in practice, before a certain Ethereum block) can receive a certain amount, while those who send funds to the contract after this block may receive a different amount, similar to how ICO’s are currently run, except this process does not involve human action at all. All these rules are directly encoded in the smart contract and are automatically executed. Or the smart contract can be programmed to immediately convert the received ETH to tokens and pay the investors immediately using the Ethereum source address.
Simply by exploring the smart contract internal and external transactions using a tool like Etherscan all users are able to see all the DAICO transactions live, with 100% transparency.
Additional business rules may be encoded into the DAICO smart contract. For instance, privileged owner-only functions can allow a group of board members to run functions that regular users would not. This would allow a select group of ICO managers to manage funds, tokens and other administrative functions, all in clear view of regular users through the blockchain.
DAICO’s were idealized by chief Ethereum developer Vitalik Buterin in early 2018 and have since been an intensive field of research by organizations and there is already a DAICO success case: The Abyss token project has raised over U$ 15 million using a DAICO earlier in 2018!
DAICO’s expand on the ICO concept by allowing a complete ICO project to be 100% decentralized and automated. Managers are able to keep control of the process through owner-only privileged commands encoded in the smart contract. A DAICO makes 100% transparency possible through the blockchain where users can view all transactions in real time. DAICO’s are already a success and have been market tested, raising several million dollars in one of its first iterations in the ICO market.