Blockchain technology and the new crypto economy offered tremendous opportunities for investing and raising funds. As an outcome, we can see a skyrocketing growth of Initial Coin Offerings (ICOs). But there are signs that something is wrong, and the proof is that Google, Facebook and Twitter together have banned all ICO and cryptocurrency-related advertising.

The reason for that is that the general public, with little or no previous experience in investing,got access to thousands of investment offers. Most people are simply not aware of how to evaluate startups and often become victims of ambitious promises or even scams. Many Experts expect at least 97% of all ICO startups will fail within the next couple of years.

So, what could is the reason for the problem and how to fix it? First of all, let’s take a look at how the “real world” investing works. We can see that investors and startups actually interact via intermediaries which are legal entities. They also have contracts and laws to protect them.

Just think of what would have happened if VCs started to simply hand out boxes of cash right after the startup’s pitches. Obviously, the return on such investments would be unacceptably low. And we can say that something very similar happens around the majority of today’s ICOs.

Of course, when accredited investors and venture firms participate in ICOs they undertake all the necessary legal actions to protect their interests. But this approach does not really comply with the nature and the initial idea of ICOs — to make investing and fundraising easily accessible for everyone in the world. What is the point of developing breakthrough technologies and trying to fit them into the old framework? It is possible that blockchain smart-contracts could be the legal framework of the future.

The next issue is the current state of ICO tokens. Instead of raising the seed round, issuing equity or security tokens, entrepreneurs try to avoid regulations by structuring their tokens as utilities. The reason for that is that issuing a security in full compliance with the law is unaffordable for small pre-seed stage startups. As an outcome we see a speculative market full of useless tokens that are called utilities, but in fact were only issued to raise funds.

So the bottom line is this: a lot of changes need to be done in the way ICOs work.

This is why Daox is proposing an advanced open source technological solution and a unified protocol that aims at fixing all these problems, preserving the benefits of crypto, raising the efficiency of capital, and establishing the basis for the future investment industry. This solution is the Daox Protocol which allows for deploying Decentralized Autonomous Fundraising Organizations or Fundraising DAOs on the Ethereum blockchain network.