The concept of funding seems to head for a new direction through Decentralised Autonomous Initial Coin Offerings (DAICOs). Experts suggest that utilisation of DAO-based smart contracts can help build trust among ICO investors, to guarantee equal participation.
According to Snapshot Labs, a crypto-based tool, total number of DAOs went up from 700 in May, 2021, to 6,000 in June, 2022, which showed an increase worth 8.8 times. Social Science Research Network (SSRN), a preprint community, stated that over $3.3 billion was raised through ICOs in 2019. “I think the concept of DAICO proposes to lock all the raised funds in a DAO-smart contract. The control of this DAO is given to the investors who can ensure that the capital is used for the promised initiatives,” Raj Karkara, COO, ZebPay, a cryptocurrency exchange, told FE Blockchain.
It is believed that fundraising through DAICOs can provide benefits such as ethical governance, risk assessment, better hold over capital, among others. Insights from CryptoWallet, a cryptocurrency-based platform, mentioned that DAICOs can get invested funds back to token holders based on the fulfilment of certain predetermined clauses. For instance, investors can hold their coins and projects can keep hold of their funds for reinvestment purposes, if an ICO reaches a predetermined market cap value.
“I believe integrating DAO-based ICOs into the decentralised landscape will result in a more decentralised system, increased transparency, enhanced security, and streamlined operations of decentralised platforms,” Edul Patel, co-founder and CEO, Mudrex, a crypto investing platform, said.
Market research has highlighted that mainstream adoption of blockchain can help drive DAICOs. Insights from Business 2 Community, a business website, stated that in 2023, crypto ICOs such as Meta Masters Guild, FightOut, Metropoly, Calvaria, Robot Era, among others, are expected to be at the forefront of investments. While Meta Masters Guild clocked $130,000 within first 48 hours of its launch, FightOut secured a $3.5 million worth funding in its presale, and Metropoly is believed to witness a 300% profit on launch.
Moreover, future predictions indicate that DAO-based ICOs carry an indefinite timeline before they see widespread adoption. As stated by BitDegree, a crypto learning hub, DAICOs will amplify trust in new crypto projects and reduce total scam campaigns. “I think DAO has garnered opposition from SEC and other regulating bodies, and the automation of the ICO process has attracted investor support. However, a lot will depend on the future fate of the ICOs conducted by DAOs,” Pratik Gauri, CEO, 5ire, a blockchain-based platform, concluded.