What Is a DYCO (Dynamic Coin Offering)?

DYCO (dynamic coin offering) is a new crowdfunding model developed by DAO Maker that employs utility tokens that are backed by USD for the first 16 months of their lifespan in order to promote accountability from project developers.

Notably, the USD backing allows DYCO investors to refund their tokens in the event that the project claims their share in case the project is not able to deliver a viable product. For example, if an investor sees that project developers veered off course, they can opt to return their allocated tokens and get their money back. Refunded tokens permanently leave circulation via burning, giving the project an adjusted valuation as the token supply is reduced, which in turn, increases each token’s value.
The USD backing also provides a hedge against a token’s downward price movements while offering unlimited upward momentum.

Apart from targeting the primary market, DYCO has a second iteration called dynamic coin offering version two (DYCO v2), which focuses on building trust even on the secondary market.

In a DYCO v2, a smart contract distributes tokens to investors in the form of a toll bridge, catering to original buyers who have no intention to stay with the project long-term. In such a case, it allows them to refund their allocations and exit during a project’s initial days.

Notably, a team that seeks investments through a DYCO has no power to alter the set refund dates. DYCO v2 fine-tunes this functionality by accounting for a project’s early growth without inconveniencing those who want to leave early and negatively affecting the secondary market’s confidence.

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The first blockchain project to use this model was the Orion Protocol.