In a recent post on the Ethereum forum, founder Vitalik Buterin has laid out his idea for improving the current ICO model by adopting benefits of Decentralised Autonomous Organisations (DAO) which he hopes will help to address issues of trust as well as “complexity and risk.”
Buterin’s vision is of a Decentralised Autonomous Initial Coin Offering (DAICO), and follows an interview with a South Korean newspaper last September in which he intimated his general dissatisfaction with current ICO models and their centralised aspects of structure in particular.
Development Teams Handed “Millions of Dollars with Little Oversight”
With the DAICO, Buterin tackles the concerns he expressed in that same interview in regards to the way ICO funds are raised and the fact that a small development team is handed millions of dollars with little oversight.
Trust has become a prime question within the ICO investment arena as a result of a series of recent scams, legal complications and statutory inefficiencies in adapting to the new blockchain-based crowd-funding model.
Leveraging wisdom of the crowds, crowd-voting within the DAICO is implemented to allocate projects with a monthly budget. As Buterin explains, “voters start off by giving the development team a reasonable and not-too-high monthly budget.”
The development team is then given time to demonstrate its capacity to execute on the project’s remit. Subsequently, “if the voters are very unhappy with the development team’s progress, they can always vote to shut the DAICO down entirely and get their money back.”
In recognising that voting systems are open to abuse, he goes on to argue that by employing Game-theoretic Security the main risks are bypassed. A discussion of his proposition can be found here.