Investors Need More Control Over ICOs

At least, it is according to the creator of Vitaleum Buterin ethereum. One of the first thinkers to shape the concept of crypto funding mechanism, he did not quite put aside the idea, suggesting last month that it could be combined with a decentralized autonomous organization (DAO) to allow investors to have their say. is manipulated.

Flash forward to today and what Buterin has called a "DAICO" is already under development, with the cloud game startup The Abyss building its own version for its next chip sale.

"This idea has found a free place in my heart," said Konstantin Boyko-Romanovsky, the project's founder. "We really want to do something beautiful."

As Boyko-Romanovsky points out, the ICO model has been questioned, primarily to allow entrepreneurs to raise vast sums of money without a product or a flat -form is already built. (Even Boyko-Romanovsky was burned by several ICOs, which is why he thinks that a better technology could help ensure that the team of one token is not interested in seizure of funds.)

By first adopting the DAICO model, he also wants to show investors that The Abyss is really a source of disruption to video game sales platforms (like the leading Valve, Steam website) by making it more flexible the promotion of video games. more money for developers.

Yet while the concept will be the subject of a test with The Abyss Project, others are skeptical that it will be widely adopted.

First of all, like the OICs, the CAD concept has a rough history, since the first DAO had a vulnerability that allowed an "attacker" to transfer $ 60 million worth of money. # 39; ether. (The consequences and unease of the fallout are still being felt throughout the community.)

Yet Preston Byrne, Monax's former legal advisor and OIC skeptic, has raised a deeper question: do ICO investors really want to be bothered by governance?

"Most CAD users are less interested in managing their project than in unloading their coins at a huge profit on new entrants as quickly as possible," he writes.

But Boyko-Romanovsky believes that the industry has matured enough, with a significant number of sophisticated institutional investors coming to the table, to have such insight into the internal workings of a transmitter of l & # 39; ICO.

He told CoinDesk:

"DAICO, that's real crypto for me, because it uses the best of ethereum."

Minimum viable DAICO

So, how exactly does DAICO combine two of the most popular concepts of the ethereum?

In Buterin's post, he describes an intelligent contract in which token holders vote to set up two mechanisms: a "tap" and a "refund". First, the tap is the rate at which the smart contract would allow the issuing team to extract the smart contract ether that holds funds raised in a crowdsale.

"The intention is that voters start by giving the development team a reasonable and not too high monthly budget, and lift it over time because the team demonstrates its ability to competently execute its existing budget, "said Buterin. in the post.

The refund then allows users to vote if they have to "self-destruct" the ICO, which simply empties the smart contract of any remaining ether and returns it to the token holders in proportion to the number of tokens that they hold.

For Boyko-Romanovsky, it's a great idea.

"Most people do not understand what DAICO is and how that will change the industry," he said.

But it was all the more attractive as Buterin himself had proposed

He told CoinDesk:

"We had a lot, a lot more attention because of that."

Improvement of Vitalik

But as much as Buterin's DAICO idea has spoken to Boyko-Romaovsky, the developer is fine-tuning the mechanism to make it more suitable for The Abyss.

For example, The Abyss DAICO will have another way to increase funds for the team, called a "buffer". The buffer is an option for a single payment, so if a month they have a major expense that the flow does not cover, they can offer a buffer vote to the token holders.

In addition, the tap of the project is more limited than that proposed by Buterin.

On the one hand, the flow can never be increased more than half as fast as before. So, if the tap is 100 ETH per month now, it can not exceed 150 ETH per month at the next vote. After the vote he could not exceed 225 ETH per month, and so on.

Even then, the rate of increases could still happen fairly quickly, so the Abyss team has inserted another limit. After each vote, no vote of the same type can take place for two weeks.

The team also set some rules on what it takes to establish a "quorum" – the number of people needed for the vote to be legitimate.

The number of electors in each vote must be equal to at least half the number of electors of the previous vote. Therefore, if 100 people vote in the first ballot, at least 50 people must vote next time to constitute a quorum. That said, if 200 people vote for this second ballot, it will take at least 100 people to have a legitimate vote next time.

Refunds of chips?

Perhaps, however, the most radical change of the abyssal team has been in what is needed to initiate a refund vote.

The Abyss will look for three to five crypto fixtures to serve as "oracles" over their ICO, and a majority of these oracles must accept a refund vote for it to be initiated. If oracles vote for a refund poll, then token holders will have a chance to vote on it

This change protects an honest developer who handles a DAICO against investors who ask for a refund because a rapid increase in the price of the ether makes them want to cash in the ether now , instead of waiting for later returns from the ICO.

Having added this condition, however, Boyko-Romanovsky said: "I am not afraid that my project will be closed because of a refund or something else."

And the industry will see soon, as the OIC The Abyss will begin next month, with a cap of 60 million dollars in the ether.

"People are asking why we need $ 60 million, but we really need a lot of money to compete with Steam," Boyko-Romanovksy said.

The KYC project will be run from Switzerland, where the company is domiciled, although the team is working from Russia. According to the company's website, in the United States, only accredited investors can participate in ICO, but everywhere else, the crowdsale is open to everyone.

With the KYC and the restrictions imposed on investors, the project seems to adhere to the rules, which corresponds to the interest of Boyko-Romanovski to be a trusted member of the crypto space.

According to him, just as the DAICO concept has attracted attention thanks to Buterin's support, potential investors have more confidence in people that they do not understand the underlying technology or business models of the platforms. working with tokens.

And in this way, Boyko-Romanovsky concluded:

"I want to become in this market: no matter what I do, what I do is very good, I think people will see in a year, I will get people's trust."

Picture of Vitalik Buterin via TechCrunch Disrput

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Disclaimer: This article should not be considered as investment advice and is not intended to do so. Please conduct your own thorough research before investing in a cryptocurrency.