Decentralized ICOs (DAICOs) Could Enable Blockchain Startups To Raise Funding Securely Through DeFi

A new technology called DeFi (Decentralized Finance) is trying to solve the participant risk problem in startup investing, which was a fatal flaw in ICOs. Hopefully we can now use technology to protect early investors.

You may have heard of ICOs during the 2017 crypto boom. Thousands of ICOs we’re started and abandoned as early investors lost their money.

Decentralized projects such as PAID Network and Polkadot are trying to innovate solutions that can allow people to participate in crowdfunding early technology startups with lower risk by introducing:

• Decentralized escrow
• Smart contracts to release funds at specific dates
• Community voting to determine project milestones and audits
• Return of funds to investors upon dispute resolutions

What is a DAICO?

DAICO stands for Decentralized Autonomous Initial Coin Offering. DAICOS may offer a most robust solution to protect investors and lower risk through community voting, reputation scoring and dispute resolutions.

Startup Crowdfunding Using Smart Contract Mediation

The PAID Token whitepaper mentions use cases for DAICOS to enable blockchain startups to launch crowdfunding on the PAID Network DAICO Platform, where the funds are locked in escrow smart contracts and released on set dates.

Community Voting To Access Funds

The PAID community investors can vote to release funds to the startup or raise issues, which the startup would need to rectify or the funds would get redistributed back to the token sale participants.

Ignition Platform

PAID’s Ignition platform will allow token holders the opportunity to participate in public token auctions. Blockchain-based token projects to offer their private and public auctions to participants, leveraging both PAID Network and Polkadot technology.

Ignition will initially support Ethereum based projects and then offer multi-chain through Polkadot. The project recently raised $150,000 in January 2021.

Polkastarter

Polkastarter is a protocol built for cross-chain token pools and auctions, enabling projects to raise capital on a decentralized, permissionless and interoperable environment based on Polkadot.

Conclusions

DeFi could revolutionize how we do global finance, but is an early technology that has not been fully tested and regulated. We have seen hackers take millions recently from DeFi platforms.

As always, be diligent when participating in early investment opportunities, do your own research and seek expert financial advice.