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What We Know So Far About Vitalik Buterin’s New DAICO Fundraising Model

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The founder of Ethereum recently proposed a new crowdfunding model designed to minimize the risks associated with initial coin offerings (ICOs).

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Introducing DAICO

In a post on the Ethereum Research Forum earlier this month, Vitalik Buterin outlined a method for merging ICOs with some of the benefits of the DAO. The end result is a system that improves the existing ICO model by reducing both risk and complexity.

Buterin’s new decentralized fundraising platform will be called DAICO, which combines the existing ICO concept with a Decentralized Autonomous Organization (DAO). Put simply, a DAO relies on smart contracts to hardcode specific rules that an organization follows from inception. Although this concept has been around since 2009, it has only recently been put to use with projects like “The DAO.”

Prior to being shut down by U.S. regulators for violating securities laws, The DAO sought to improve governance by democratizing ownership of tokens and allowing creators to implement whatever rules they wanted. This is more or less what the DAO system promotes. The rules hardcoded into the system essentially dictate how the organization operates.

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Buterin proposed the following diagram to illustrate how the DAICO concept evolves:

DAICOs vs. ICOs

As pointed out by Coinsquare, the DAICO fundraising model begins very much like an ICO. It allows startups to raise funds and investors to pay for tokens via Ethereum. And like ICOs, DAICOs can structure their crowdraise however they like, including implementing strict KYC standards. After the crowdsale, the tokens can be listed and traded on any exchange.

Where the two methods differ is around how the funds are ultimately used. The current ICO model allows team members to use the funds in any method they choose, whereas DAICOs enable investors to control which portion of the funds team members can access. If the team wants to spend money on marketing, hire employees or invest in infrastructure, they need to “tap” their investors for approval. Investors then vote on whether to grant the company permission to utilize the funds for that specific purpose.

This difference may appear subtle, but could have significant implications on a market that has attracted its fair share of scammers, con artists and opportunists. For starters, investors will be able to hold startups accountable after the crowdsale is over. Under the DAICO model, startups can’t get away with merely promising to spend money a certain way because they ultimately need their investors’ permission to access the funds. Buterin’s proposal also has the potential to weed out dishonest projects looking to raise a quick buck before vanishing.

On paper, DAICOs support the development of what Buterin has called “Tokens 2.0,” an era of high-quality tokens  that goes above and beyond what the existing market offers. In Buterin’s view, the era of higher quality tokens is a lot closer than most people think.

ICOs generated billions of dollars in revenue for startups last year, with December marking the most active month on record. If time is of the essence, the DAICO model could have a profound impact on the fundraising model in the not-too-distant future.

There’s still no timetable for when this model could be launched. In the meantime, Ethereum remains the undisputed king of crowdraises even as platforms like Stellar begin attracting higher quality projects.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.5 stars on average, based on 145 rated postsSam Bourgi is Chief Editor to Hacked.com, where he specializes in cryptocurrency, economics and the broader financial markets. Sam has nearly eight years of progressive experience as an analyst, writer and financial market commentator where he has contributed to the world's foremost newscasts.




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Analysis

Daily Analysis: Dollar Rebounds as Stocks Struggle at Key Levels

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Friday Market Recap

Asset Current Value Daily Change
S&P 500 2731 -0.08 %
DAX 12,451 0.86%
WTI Crude Oil 61.64 0.31%
GOLD 1351.00 -0.32%
Bitcoin 10030 -0.52%
EUR/USD 1.2405 -0.78%

The main US stock indices entered a crucial zone during the overnight session that we have been monitoring throughout the last two weeks, as the line-in-the-sand zone for the correction. Despite that, the question regarding the fate of the move has been postponed for next week, as the S&P 500 and the Dow failed to clearly rally above the zone, while the Nasdaq showed relative weakness after leading the market higher during the bounce.

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S&P 500, 4-Hour Chart Analysis

We are still leaning on the side of the bears regarding the short-term outcome, as the technical damage of the Volatility-Armageddon seems bigger than what a straight-line recovery would suggest. That said, the fundamental news was great today (not counting the latest developments in the Russia-Gate), as the US housing market sent positive signals amid the rising yields, while the UOM Consumer Sentiment Index also beat expectations.

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On an interesting note, the rise in yields paused, despite the positive economic news, and in this perverse world that led to a strong rebound in the Dollar, right after the new multi-year highs in the EUR/USD pair during the overnight session.

EUR/USD, 4-Hour Chart Analysis

The Euros weakness helped equities of the old continent is finally showing some relative strength, and the same goes for Japan, as the oversold readings in the USD/JPY pair that we noted also led to a rebound, back above the 106 level. While the bounce slightly helped the negatively diverging benchmarks, the clear technical weakness remains another bearish sign for the coming weeks.

DAX, 4-Hour Chart Analysis

The Dollar’s bounce pushed the price of gold lower too after the encouraging rally, but the Shiny Metal remains just a tad below its rally high, which is commendable, given the improving risk-sentiment throughout the week, even as another short-term correction is possible here. Crude oil enjoyed another positive day, although it remains well below its recent highs, just as the commodity-related risk-on currencies, where we already noted the relative weakness yesterday. That also adds to the cautious outlook for equities even in the face of the 5/5 positive days this week.

Gold, 4-Hour Chart Analysis

Cryptocurrencies

The crypto market continued to show robustness amid the hectic trends in traditional assets, and today’s meager correction adds to the bullish signs that emerged last week and remained with investors throughout this week. While not everything is rosy, with still several coins in dominant downtrends, including Bitcoin and Ethereum, there is clear leadership behind the rally, and if the coming short-term pullbacks remain in-line with today’s move, bulls should have their hopes up

BTC/USD, 4-Hour Chart Analysis

What would change the bullish posture is a return to the “everything moves together with high volatility and bearish volume” regime of the preceding steep sell-off, but, for now, that seems unlikely, and a quiet consolidation this weekend would be just what the doctor ordered for the segment.

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Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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Analysis

Pre-Market: US Stocks at Make-or-Break Levels as Euro Tests 40-Month Highs

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Traders might be in for another exciting Friday session in the US, as although the coming Chinese year of the dog means that liquidity might be lower than usual, the aftermath of last week’s crash is in a crucial phase. The surge in cryptocurrencies also halted a bit, and all major asset classes look ripe for an action-packed day, including bonds, commodities, and fiat currencies.

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The key levels in the major US indices that we have been monitoring ever since the crash are now in play, with the Nasdaq actually being already above the corresponding resistance zone. That said, apart from the tech benchmark, the Dow and the S&P 500 are hovering right near the “hot” zone, and before a clear move above it, bears could still have their moment, with a possible re-test or even new correction lows in the coming weeks.

S&P 500 Futures, 4-Hour Chart Analysis

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As we noted previously, it’s unlikely that the bull market is dead just yet, despite the fact that we agree with Peter Toogood (really) that “this market is nuts…” from a valuation perspective, but short-term, these are the levels where the bounce should fail, in theory, that is.

At this point, even bulls should take a step back, and wait for the next pullback before jumping in, as the short-term indicators are stretched, while bearish traders could be looking for entry points today, and long-term investors could just enjoy the show.

Heavy Trading in Forex Markets

Although equities and Treasuries are mostly in the headlines, the most important forex pairs are also very active, with the Euro, the Dollar, and the Yen all being pushed around by the quick repositioning of the big players.

EUR/USD, 4-Hour Chart Analysis

This creates a great day-trading environment, with clear, significant swings in both directions, within the strong trends. The Dollar is generally trading lower since the bounce started, and the EUR/USD pair already managed to reach a new 40-month high during the Asian session, before turning lower in European trading.

USD/JPY, 4-Hour Chart Analysis

The USD/JPY pair traded with a 105 handle today, again a more than 1-year low, and the trend looks clear, even as the short-term picture is oversold. Gold might also be preparing for a new multi-year high, so everything looks set for more fireworks in currencies too. Stay tuned.

Featured image from Shutterstock

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.7 stars on average, based on 96 rated postsTrader and financial analyst, with 10 years of experience in the field. An expert in technical analysis and risk management, but also an avid practitioner of value investment and passive strategies, with a passion towards anything that is connected to the market.




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Market Overview

Glorious Happy Dog

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We would like to wish a very happy New Year to all of our clients, partners, and colleagues in China and around the globe.
The Dog is very noble and compassionate and unlike the Cock, she has a strong sense of the difference between right and wrong.
As well, today holds mystical significance in both the Jewish and Muslim calendars being the first day of the new month of Adar and Jumada Al-Thani respectively.
For Jews, it is a time of happiness and a time to change your fate. For Muslims, this is the last month of Winter. So no matter how cold it is outside we know that it will not last and very soon we will be able to prepare for a spiritual journey.
In the words of one of my kid’s favorite movies, Rock Dog, we’ll be Glorious.
https://www.youtube.com/watch?v=stctZ-8akds
eToro, Senior Market Analyst

Today’s Highlights

  • Trading Inflation
  • Dollar Getting Slammed
  • Cryptos Continue Recovery
Please note: All data, figures & graphs are valid as of February 16th. All trading carries risk. Only risk capital you’re prepared to lose.

Traditional Markets

The so-called rout on Wall Street has now faded like a bad bizarre dream and though we’re still a bit off the top, the last 5 sessions have been solid green.
Here we can see traders remaining loyal to the Dow Jones…
Now that the markets know inflation is back in town, analysts will be dusting off the old playbooks and should start coming out and over the next few days, giving us the historical perspective on how to position for it.
In the meantime, it’s manifesting in a weaker US Dollar. Despite the higher expectations for the Fed to get aggressive on rates, the Dollar is sinking fast.
At the moment, the US Dollar Index is at its lowest point since 2014.
With that, we’ve also had breakouts in several dollar related currency pairs on the long term charts.
Here’s the new top in the EURUSD
…and a breakout of the long term range in the USDJPY.
The main benefactor of the weaker Dollar seems to be Gold, which also may be benefiting from increased appetite for a safe place to store value.

Cryptos

Speaking of a safe store of value, we’re also seeing a bit of a sprint to the crypto markets. Bitcoin did indeed take out 10k yesterday. However, the breakout didn’t last very long and we’re again below the line in many places around the world.
Similar to some of the previous rallies, the buying pressure seems to be coming mainly from Japan.
Bitcoin volumes in the world’s top crypto country have been strong throughout February, with an additional push higher yesterday.
Though the volumes in South Korea are still relatively weak, the premiums are creeping back.
Traders in both Japan and South Korea are now paying about 6.5% more for bitcoin than traders in the West. Though the US Dollar value holds no psychological significance to them we can see that both countries are buying bitcoin at well above $10,000.
It will be interesting to see what happens this weekend when cryptotraders have more time to analyze the market and take actions.
Wishing you a glorious weekend!!
This content is provided for information and educational purposes only and should not be considered to be investment advice or recommendation. The outlook presented is a personal opinion of the analyst and does not represent an official position of eToro. Past performance is not an indication of future results. All trading involves risk; only risk capital you are prepared to lose. Cryptocurrencies can widely fluctuate in prices and are not appropriate for all investors. Trading cryptocurrencies is not supervised by any EU regulatory framework.

eToro (EU) Ltd, authorized and regulated by the Cyprus Securities Exchange Commission (CySEC)

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Best regards,

Mati Greenspan

Senior Market Analyst

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eToro: @MatiGreenspan | Twitter: @MatiGreenspan | LinkedIn: MatiGreenspan | Facebook:MatiGreenspan

Important: Never invest (trade with) money you can't afford to comfortably lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here. Trade recommendations and analysis are written by our analysts which might have different opinions. Read my 6 Golden Steps to Financial Freedom here. Best regards, Jonas Borchgrevink.

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4.6 stars on average, based on 29 rated postsSenior Market Analyst at Etoro.com.




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