Dynamic Coin Offering (DYCO) avoids volatility issues when funding blockchain projects by having the tokens backed by the US dollar for the duration of the first 16 months.
Blockchain projects and startups are either funded by ICOs (Initial Coin Offering)/presales or similar methods. Both types of funding rely on tokens to be sold. This gives investors a stake in the project, with the potential for tokens to appreciate over time. At the same time, developers gain much-needed funds to focus on the work ahead.
However, both ICOs and presales rely on tokens to appreciate as the project gains traction. If that doesn't happen, investors and developers lose out. To solve this financing problem, the DAO Maker platform came up with the novel DYCO idea.
DAO Maker, not to be confused with Maker DAO, is a blockchain platform specialized in helping startups off the ground, while helping investors reduce risk. In other words, DAO Maker is a blockchain version of Venture Capitalism (VC), which is at the forefront of financing startups and small businesses.
As such, DAO uses utility tokens that are collateralized by USD, serving the role of stablecoins. This removes the crypto volatility problem with funding. Down the line, investors then have the option to withdraw their funds, just as if they had invested in USD. If that happens, Utility tokens that are withdrawn are burned, i.e., permanently put out of token supply circulation.
This is another way to accurately give the project a new valuation. DAO Maker facilitates DYCO with the help of its core product - DAO Pad. This multi-investment platform makes it possible for investors to stake their utility tokens and take part in token presales. Thus far, startups that took advantage of DAO Maker have accumulated up to €5.7 billion in market capitalization.
Building upon the success of DYCO, the follow-up iteration - DYCO v2 - uses a novelty called toll bridge. Through this bridge, smart contracts distribute tokens to investors, so that original investors can exit the project if they choose to do so with a full refund.
One of the first startups to take advantage of DYCO was Orion Protocol (ORN), a decentralized exchange (DEX) aggregator quite similar to 1inch (1INCH).