2⁴ × 2⁴ × 2⁴ = 4096 Shades!
Using counters and some glue logic you can make a LED show various colors.
Each counter holds 4 bits, and there are 8 possible colors.
First counter is responsible for the ÷4 clock division, the divided clock is given to a second counter which does the clock gating of the main clock and serves it to each DACs in a sequential fashion..
The DACs are selected in the following pattern:
+-------------------------------------------------------------+
| Sr. | DAC-2 | DAC-1 | DAC-0 | Color |
+-------------------------------------------------------------+
0 0 0 0 Black
1 0 0 1 Red
2 0 1 0 Green
3 0 1 1 Yellow
4 1 0 0 Blue
5 1 0 1 Magenta
6 1 1 0 Cyan
7 1 1 1 White
+-------------------------------------------------------------+