Explanation of DAICOs
ethresear.ch
ethresear.ch
"Dishonest" developers could start with 100% of coin and then sell 49% of coins. As long as the developers retain 51% they can control the entire voting process.
This makes me think you should have a clear accounting of real people to each coin for something like this to work. Otherwise you're vulnerable to devs using shells to scam or bribing holders to increase tap. You're better off cutting out the middle man and just sending your coins to the "honest" developer directly because you really don't have any recourse when that happens.
Vitalik's assumption that developers will always be "honest" seems kind of silly because if developers are always honest what's the point of this complicated system he's set up? Might as well just give funds away to our "honest" developers' address.
Coins are used for some kind of service that it provides (transaction fees for decentralized exchange, computation, storage). Developers fund development from the initial selling of the coin and have incentive to increase the price.
I wonder if the two tiered model (ETH/Gas, Factom/Entry Credit, there are lots) is better or worse
So much money grabbing happening right now, and often they don't have any kind of service or working software yet. Definitely a lot of specutlation, are these all tulips?
The only reason the blockchain was invented is to avoid having a centralized authority.
The first is process serving. To start a lawsuit you need to be able to identify and notify the other party (except in very special circumstances). If you transact with anonymous counterparties, you won't get much help from the courts.
The second is a nexus. Basically, it's something the court has the authority to reach out and grab. It might be property, a passport, a right, money, accounts, whatever. So long as the court can make an order and someone, somewhere will enforce it, there's a nexus. Without a nexus a court's order is just warm paper. Wave it all you like, the other guy won't feel any heat.
If you don't have a nexus -- if trust and authority is totally distributed, relying on code you hope is the first bug-free code you've ever written in your life -- then it's pretty hard to go from starting a dispute to receiving compensation or enforcing retribution.
Distributing trust sounds really cool, but it turns out that the unit economics suck. There are economies of scale involved for both malicious actors and those who want to punish them. In the current ecosystem, the adversaries are few and their interests highly concentrated. The defenders are many, widely dispersed and poorly able to coordinate their efforts. This is the sort of situation centralised trust is much better at sorting out.
I am of course not a lawyer and nothing here is not legal advice.
Court cases often come down to who had the better evidence. If you sue me saying you never approved something, but I have meeting minutes showing otherwise, then I am more less going to win by default. Likewise if I say you never had authority to withdraw money from the company account, but you can produce a copy of an authority letter held by the bank with your name on it, you win.
Blockchain promises to shortcut a lot of evidentiary stuff, which is a win. That's why there are so many banks interested in distributed ledgers, title registries, supply chain custody and so on.
(This is assuming the ICO investors become more sane in the first place; otherwise DAICOs are no use anyway)
Perhaps thus could be partially circumvented by requiring the sale of all coins to be simultaneous, but a reasonably clever person could use other financial machinery (loans, etc) to avhieve the same effect.
That really only brings things down to my second point, though- the developer just needs to finagle a sizeable amount of cash at one time, with the guarantee of getting it back afterwards even if he doesn't manage to rope in enough marks to double it.
One of the biggest assumptions which has always been made is on the miner's side. They can't attack the network because 51% stops it. But that has proven wrong when F2pool manipulated the Status ICO:
https://steemit.com/ethereum/@dhumphrey/f2pool-manipulates-u...
So what happens if there is a miner working in conjunction with the devs?
A DAICO is a merger of two dubious ideas, and inherits the flaws of each. It has DAO problems- that it trusts a large quantity of money to public code that can't be fixed without breaking the guarantees provided by the immutability of that same code. It also has ICO problems- the combination of extremely volatile "stores of value," non-expert enthusiasm, and anonymity of the developers is ripe for fraud.
Something like this might work for a "distributed Kickstarter," once the bugs have all been worked out of a standard "form" contract and assuming that no payout is promised to token-holders. But this requires abandoning the core conceit of an ICO (that there are valuable "coins" involved) as well as a reasonably important feature of DAOs (that they can be meaningfully adapted towards specific use-cases.)
The tools, frameworks and contracts keep getting better and more mature, so hopefully we won't see occurrences like the ones of TheDAO.
> But this requires abandoning the core conceit of an ICO (that there are valuable "coins" involved) as well as a reasonably important feature of DAOs (that they can be meaningfully adapted towards specific use-cases.)
I honestly don't agree with this, there is no reason for coins not to retain its value.
Overall, if the main goal is to improve the ICO mechanism to reduce fraud and increase accountability from the development team, that in my book is worthy of consideration and discussion.
Wouldn’t it make more sense to dispurse new funds in tranches only after the first tranch has been repaid with interest?
Isn't the entire point of voting in the first place to determine what >= 51% of the voting population desires?
Calling a system working exactly as intended an attack seems a bit...odd.