http://www.gizmag.com/d-dalus-uav-design/18972/
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As with anything there are pluses and minuses with the concept. The airfoils appear to be articulated, which means that they are changing pitch during each rotation. This is OK, but you have to have a robust linkage system and that also sucks power. The relative tip speed of the rotor has to be pretty low. That is because the airfoils are arranged so that the loads caused by rotation create bending loads in the airfoils. The combined centrifugal and lifting loads get limited because of that. If you look at a typical prop, most of the work is being done by the outside third of the blade. This is where the higher swept velocity is, and where the total area is greater. Since forces are a square of the speed, the higher velocity provides a lot of lift ( which is thrust to a prop). The outer section of the prop creates a lot of centrifugal pull, but since the blade is relatively straight, that pull all goes to the hub. In this design the airfoil loads and the centrifugal loads all create bending loads in the blades. You will notice that there are a couple of intermediate spacers that help take out the radial blade loads, but since the blades are in bending they can't support the load that a radial element (like a prop or fan blade) can. The advangage of the system is that the entire area is creating lift twice (once as the blades go over the top and once as they go across the bottom). This allows you to get more pressure ratio (thrust), than you normally could with this low a blade speed. With a prop, the inner parts of the prop, because of the low velocity, aren't doing much, so in terms of static thrust per unit area it may not be that bad. It is going to have lot of drag in forward flight, but for static lifting it might not be bad. I'd think a ducted fan would be better in terms of pounds of lift per unit area, but this concept may package better for a VTOL vehicle. As I said, the biggest drawback and limit to the concept is that the blades are in bending. Helicopters use centrifgal force to stiffen the blade, but this design can't take advantage of that concept. It may or may not be a workable idea, you would have to run a lot of numbers to see if it makes sense. Weight of the blades and the resultant bending loads, traded against the strength of the material is the key.
Maybe they're considering Shape Change Airfoil Technology. If it can work for high-speed/high-temp compressor blades it will certaining work on a low-stressed application such as the D-Dalus. Here's one example: http://gltrs.grc.nasa.gov/reports/2005/CR-2005-213971.pdf
Also forgot to mention that while there is drag over the full rotation, the airfoils are only working for about half the time. That is, if you look at it on edge, the blades going up and down aren't doing any work, they are just creating drag. The blades moving across the top and bottom are working, but if you look at it in 90 degree segments, the blades in the system are only working half the time. Hard to figure that it is a real efficient system.
