A Decentralized Autonomous Initial Coin Offering (DAICO) is a fundraising method that combines aspects of Decentralized Autonomous Organizations (DAOs) and Initial Coin Offerings (ICOs). The concept was proposed by Ethereum co-founder Vitalik Buterin as a more secure and transparent way to raise funds for cryptocurrency projects.
In a DAICO, a project creates a smart contract on the Ethereum blockchain. This contract starts in "contribution mode,” allowing investors to contribute Ether (ETH) in exchange for the project's tokens. Once the contribution period ends, the contract enters "tap mode.” In this mode, the contract gradually releases funds to the project team over time.
What sets a DAICO apart from a traditional ICO is that token holders have a degree of control over the project's funds. They can vote on proposals to increase the "tap" (the rate at which funds are released) or to self-destruct the contract and refund the remaining Ether to the token holders. This mechanism aims to protect investors by giving them more control and reducing the risk of scams or mismanagement of funds.