Author: Typto, LoliFox, Poria
Release date: 07082024
introduce
aim of design
The purpose of the DAOSquare Incubator governance and economic module is to distribute ownership and governance rights of DAOSquare Incubator to relevant business participants based on the product value provided by DAOSquare Incubator, provide economic compensation to the entire DAOSquare Incubator system maintainers, thereby encouraging more users to use DAOSquare Incubator to become participants, encourage more system maintainers to ensure the security of the system, and provide more promotional suggestions and measures for DAOSquare Incubator, thereby promoting the development of DAOSquare Incubator.
Why Governomy
DAOSquare Incubator is an on-chain infrastructure and open market focused on on-chain venture capital (Venture DAO). With the advantages of blockchain, people can easily and securely establish and invest in Venture DAOs around the world.
DAOSquare Incubator is a commercial product with profit needs. Therefore, in addition to building excellent products, economics is also an important matter, and governance should also focus on the economy. At the same time, the compatibility of economy and governance is particularly prominent in the field of Crypto, and it is also a basic principle. It is not only the key to whether a product, community, and ecology are healthy and sustainable, but it even determines the lifeblood of products, communities, and ecology. On the other hand, the economy can also be a driving factor in governance. Appropriate economic strategies can help achieve governance. Therefore, in DAOSquare Incubator, we designed governance and economy in one module and called it Governomy.
It should be noted that the economy is not a simple incentive. Just like the national economy, it is systematic, including how products, communities, and ecosystems profit from their businesses, how to distribute profits, how to formulate economic strategies, and other matters to promote their business development and ensure the structural stability of products, communities, and ecosystems.
Governomy is the brain of DAOSquare Incubator. It aggregates the wisdom of community members and maintains and optimizes DAOSquare Incubator's protocol code, financial revenue and expenditure, economic strategy, operational strategy and other matters in the form of collective decision-making.
Design Principles
Architecture
In simple terms, DAOSquare Incubator generates income through Venture DAO investment, namely protocol fees (DAOSquare Incubator on the left in the figure below), and Governomy adjusts and distributes these income to Compensation Pool, Treasury, Buyback & burn Pool (Governomy in the figure below) through economic parameters, and distributes RICE Reward to Venture DAOs of DAOSquare Incubator. Users of DAOSquare Incubator (participants of Venture DAO) obtain RICE Reward by investing in protocol fees, and RICE investors in the secondary market obtain RICE by purchasing (Sec Market on the right in the figure below). These RICE holders can become goRICE holders by Locking RICE, thereby having absolute control over DAOSquare Incubator and Governomy, such as adjusting economic and governance parameters, initiating operating strategies, upgrading contracts, etc.
Figma link: https://www.figma.com/board/deqvg6sMb2iONEguPDOVwJ/DAOSquare-Incubator-Governomy---Architecture?node-id=0-1&t=kMUchbqkfj9dIw7q-1
Workflow
The following diagram shows the complete business flow of Governomy.
Figma link: https://www.figma.com/board/d2pHZrtaAJXN5AxKPNrHRD/DAOSquare-Incubator-Governomy---Workflow?node-id=0-1&t=jgshj0SLG81U8VH8-1
Basic Workflow
DAOSquare Incubator users incur protocol fees when investing using DAOSquare Incubator.
The protocol fee is allocated to the Treasury, Compensation Pool and Buyback & Burn Pool.
goRICE holders make collective decisions about how to use the Treasury’s funds.
goRICE holders can receive compensation in the Compensation Pool.
Funds from the Buyback & Burn Pool are used to repurchase and destroy RICE.
The amount of RICE rewards for DAOSquare Incubator users is calculated based on the number of repurchases, and RICE is extracted from the RICE Reward Pool and transferred to the RICE Claim Pool for DAOSquare Incubator users to claim their rewards.
DAOSquare Incubator users and secondary market RICE investors become goRCIE holders by locking up RICE and have ownership and governance rights over DAOSquare Incubator.
goRICE holders adjust Governomy parameters, DAOSquare Incubator parameters, and upgrade contracts to maximize their personal interests.
For specific details about the workflow, please refer to the introduction of each unit (key participants, key objects, key actions, key parameter adjusters).
Key players
Key Objects
Note: All squares in the figure are objects.
Key Actions
Note: The quadrilaterals in the figure represent actions.
Key parameter adjusters
Note: The hexagons in the figure are regulators.
Additional information on the agreement fee
RICE Rewards Supplementary Information
Distribution Cycle
We simplify the calculation and distribution of RICE rewards through the Distribution Cycle design. Simply put, the RICE rewards generated in a Distribution Cycle need to be processed and distributed in the next Cycle after the end of the Cycle. For example:
Assume that Distribution Cycle#1generates 100,000 USDT protocol fees, the Buyback & Burn Pool is allocated 20,000 USDT (20%), and the RICE Release Scale is 200%.
The Buyback & Burn function is activated at the beginning of Distribution Cycle #2. GoRICE holders can trigger it before the end of Distribution Cycle#2to complete the buyback and burn of Distribution Cycle #1. At the same time, the amount of RICE rewards will be calculated according to the formula: Buyback Amount x RICE Release Scale, that is, 20,000 x 200% = 40,000 RICE. At the same time as the Buyback transaction is executed, 40,000 RICE will be transferred from the RICE Reward Pool to the RICE Claim Pool. Eligible protocol fee contributors in Distribution Cycle#1can claim RICE rewards before the end of Distribution Cycle #2.
A few points to note:
The later the Buyback is executed, the shorter the time for protocol fee contributors to receive RICE rewards.
The Buyback & Burn execution of a Distribution Cycle is valid until the end of the next Distribution Cycle. If it is not executed after the deadline, the funds in the Buyback & Burn Pool will be accumulated to the next Cycle. This also means that the RICE rewards in the Cycle are cleared, and the beneficiaries of the rewards in the next Cycle will receive additional distributions.
If the RICE rewards in the RICE Claim Pool are not claimed within a Distribution Cycle, they will be accumulated to the next Cycle, the claim weight of the original reward beneficiary will be cleared, and the reward beneficiary of the next Cycle will receive additional distribution.
RICE Locker
Venture DAO participants who receive RICE rewards, as well as RICE investors in the secondary market, can lock RICE through RICE Locker to become goRICE holders to obtain ownership of DAOSquare Incubator, as well as corresponding economic and governance rights.
RICE Locker provides four lock duration options: 90 days, 180 days, 270 days, and 360 days. Different durations have different goRICE redemption ratios, and the formula is as follows:
example:
goRICE has the following features:
Non-transferable. goRICE holders cannot transfer goRICE in their wallet to any address.
Decays linearly over time. For example, when you lock up 10,000 RICE for 12 months, you will get 10,000 goRICE. The 10,000 goRICE will decay linearly over the next 12 months, and at the end of the 12th month, the goRICE balance in your wallet will decay to 0.
goRICE Holder Rights
Governance
Governance content
The governance of DAOSquare Incubator consists of three parts: DAOSquare Incubator, Governomy, and Treasury.
Proposal and Voting
In Governomy, all governance content is proposed in the form of proposals and decided by voting. The voting results are all enforceable. For example, when a proposal to change the protocol fee ratio from 1.5% to 2% is passed, the protocol fee ratio parameter of DAOSquare Incubator Protocol will be changed to 2% without any manual modification (such as modification by developers).
Governomy uses the same voting system as DAOSquare Incubator. See the Voting System section of the product documentation for a detailed description of the system. The following are the parameters of the Governomy voting system:
The above parameters can be modified through Voting Mechanism proposals.
Key Proposal Constraints
When CompensationPool Balance > 0, the Distribution Token Adjustment proposal is not available.
When Buyback & Burn Pool Balance > 0, the Distribution Token Adjustment proposal is not available.
When RICE Reward Pool Balance >0, the RICE Burn Scale Adjustment proposal is not available.
When RICE Reward Pool Balance = 0, the RICE Release Scale Adjustment proposal is not available.
