The idea is as follows. A DAICO contract is published by a single development team that wishes to raise funds for a project. The DAICO contract starts off in “contribution mode”, specifying a mechanism by which anyone can contribute ETH to the contract, and get tokens in exchange. This could be a capped sale, an uncapped sale, a dutch auction, an interactive coin offering, a KYC’d sale with dynamic per-person caps, or whatever other mechanism the team chooses. Once the contribution period ends, the ability to contribute ETH stops, and the initial token balances are set; from there on the tokens can become tradeable.
After the contribution period, the contract has one major state variable: tap (units: wei / sec), initialized to zero. The tap determines the amount per second that the development team can take out of the contract. This can be implemented as follows:
https://ethresear.ch/t/explanation-of-daicos/465