Buybacks are the most important aspect of the DYCO token sale framework. They give tokens a price floor and reduce net supply of a token as tokens that are bought back are burned.

Buybacks allow DYCOs to issue money-backed utility tokens. At least 80% of the money spent on token purchases during the DYCO will be set aside for buybacks, and this 80% creates a price floor.

Three Buyback Rounds

For every DYCO, buybacks will be issued in three rounds.

• First buyback will take place 9 months after the TGE
• Second buyback 12 months after TGE
• Third buyback 16 months after TGE

Each buyback has two phases: primary deposit phase and secondary deposit phase.

For each participant, the address used to participate in the DYCO is whitelisted for buyback participation; only these addresses will be able to claim a buyback.

The amount of tokens the address purchases in the DYCO (from the team) is recorded as the primary quota. The tokens purchased on exchanges are secondary quota.

Primary Buyback Phase

During the primary buyback phase, DYCO participants have to deposit tokens into the buyback portal.

Even if a person sold his tokens, he can buy tokens on an exchange and claim a buyback .

If the token price is below the price floor, tokens can be bought on exchanges and then used to claim a buyback from the team, for risk-free profits. Though, during the primary buyback phase, a person cannot claim a buyback for more than the tokens he purchased from the team.

For example, if a person bought 1,000 tokens in the DYCO, he can only claim a buyback 1,000 tokens during the primary buyback phase.

Secondary Buyback Phase

If the entire quota for round 1 buybacks is not claimed, the secondary deposit phase goes into effect.

The primary buyback quota for round 1 is 25% of sold tokens, and 37.5% for rounds 2 and 3.

The primary buyback quota that is not used by people will be pushed to the secondary buyback phase.

For example, round 1 allows buybacks for 25% of sold tokens. If people only claim half of this in primary phase, 12.5% of sold tokens can be bought back in secondary phase.

There is an important difference between primary buyback and secondary buyback. The primary buyback is limited to the maximum number of tokens a person bought from the team during the DYCO, but the secondary buyback is 4x the number of tokens a person bought.

What this means is if a person buys 1,000 tokens in the DYCO, primary buyback is limited to just 1,000 tokens, but secondary buyback is as high as 4,000 tokens.

Of course, the additional 4,000 tokens have to be bought from other DYCO participants on an exchange. These tokens are still offered a guaranteed buyback.

Deadlines

Tokens must be deposited no later than 7 days before the designated deadline of each buyback phase.

Though, skipping or missing a round does not change the ability to participate in other buyback rounds.

The buyback portal will be opened 30 days prior to deadline, giving DYCO participants plenty of time to deposit their tokens so there should be no excuse for missing the deposit phase.

Quota Per Round

Again, there are three buyback rounds. Buyback phases are not the same as Buyback rounds.

Each round has 2 two phase.

• Round 1 happens 9 months after TGE, and it has a primary phase and a secondary phase
• Round 2 happens 12 months after TGE, and it also has a primary phase and a secondary phase
• Round 3 happens 16 months after TGE, and it also has a primary phase and a secondary phase

Recap: The primary phase lets a DYCO participant claim a buyback for only the tokens he purchased from the team. The secondary phase lets them claim buybacks for tokens they bought on the exchange.

In each round (again, there are 3 rounds), DYCO participants will be able to claim a buyback for a portion of the amount they paid in the DYCO.

During the primary deposit phase, people can claim:

• 20% of their payment back in round 1
• 30% back in round 2
• 30% back in round 3

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To make this easier to grasp, if a person invests $100 to buy 100 tokens:

• In round 1, 25 tokens will be deposited to claim a $20 buyback (80%)
• In round 2, 37.5 tokens will be deposited to claim a $30 buyback
• In round 3, 37.5 tokens will be deposited to claim a $30 buyback

After all three buybacks have been claimed, the person would return the 100 tokens bought in the DYCO for an $80 buyback. All the tokens the person had bought in the DYCO would be burned.

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Splitting buybacks into three rounds is important as it gives teams enough time to prove the viability of their product and the product/market fit.

If holders believe teams have done well in the first 9 months, they won’t claim a buyback and teams will be able to access some of the funds that had been set aside for buyback.

With these new funds, teams will have a few months to either advance their product or use the funds for acquiring users and scaling their development.

If the holders are impressed with the performance (as in the token is doing really well), no buybacks will take place in any round and the team will be able to access even more funds to continue their work.

Notably, if a team is performing well, people could still claim buybacks. This will benefit the true believers of the project. Some of the supply will be burned, with the remaining supply left only in the strong hands of the true community of believers.

On the other hand, if teams fail to deliver, holders will simply claim maximum buybacks in each round.

The three-round system ensures that teams are allowed an opportunity to prove themselves. If the team continuously underperforms, investors can return 100% of the tokens, thereby eliminating the project while claiming their maximum buyback.

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Resources

Website: https://daomaker.com/dyco