Compiled by: Yuliya, PANews
After the success of the DAO fundraising platform Daos.fun initiated by ai16z, a new platform claiming to be revolutionary, Daos.World, has recently attracted widespread attention. This platform is simultaneously deployed in the Base and Solana (daos.fun) ecosystems, pioneering a new paradigm for decentralized investment management through its operational model and mechanisms. This article will analyze the characteristics, potential, and risk points of this emerging platform from multiple dimensions, including platform architecture, operational mechanisms, and participation methods.
Core Architecture of the Platform
Daos.World adopts a three-layer architecture system:
Capital Management Aspect: The platform achieves fund custody through smart contracts, ensuring fund security and operational transparency. All funds are held by smart contracts to ensure assets are not subject to centralized control.
Token Economics Aspect: The platform issues a total of 1.1 billion ERC20 tokens, of which 1 billion are allocated to fundraising participants, and 100 million are used to establish a Uniswap V3 liquidity pool, creating a complete token ecosystem. The liquidity pool has price lower limit protection to ensure that the value of assets within the pool does not fall below the amount of ETH raised, providing investors with basic security.
Governance Aspect: The platform introduces a fund maturity mechanism, whereby all trading activities will be suspended at the fund's maturity, and the assets in the fund pool will be distributed to investors according to their token holding ratios. At the same time, fund managers have flexible management authority to extend the fund's maturity date, ensuring that investors' rights are protected under specific circumstances.
Operational Mechanism
The platform's operational process is designed to be simple and efficient, mainly divided into the following steps:
1. Fundraising and Capital Management: Raise ETH as initial capital for the fund through a pre-sale, with all funds entering a treasury controlled by DAO managers, who have full autonomy to execute trades and investment operations based on market conditions.
2. Liquidity Pool Design: Following Uniswap V3's launch, a one-sided liquidity pool design is adopted, meaning the liquidity pool only contains fund tokens, ensuring the effectiveness of the price discovery mechanism. Token trading occurs through this liquidity pool, and the platform charges a 1% transaction fee, with 0.4% allocated to the fund manager and 0.6% retained by the platform. Fund trading activities will influence the 'true' price of tokens, thereby assisting traders in making more informed investment decisions.
3. Transaction Fees and Incentive Mechanism: Fund managers receive a 0.4% fee from token trading volumes, while the platform charges 0.6%. Additionally, fund managers may receive extra profit sharing at the fund's maturity, depending on the fund's performance.
4. Liquidity Pool Lower Limit Protection: The design of the liquidity pool includes price lower limit protection, ensuring that the total value of assets within the pool does not fall below the initially raised amount of ETH, preventing significant asset devaluation due to market volatility.
Participation Methods
The platform has designed differentiated yield schemes for different types of participants:
Fund Manager: Fund managers can earn returns not only through transaction fees but also through additional profit sharing at the fund's maturity.
Early Investors: Gain lower-risk investment opportunities through pre-sales, where participants receive corresponding token shares based on the amount of ETH raised. Additionally, investors can choose to participate in liquidity provision to earn extra returns.
Liquidity Providers (LP): Due to limited initial liquidity on the platform, liquidity providers (LP) may receive substantial annual yields, potentially exceeding 1000%. However, LPs need to be aware of the risks posed by market volatility, which may affect the timing of trades and yields in the liquidity pool.
Technological Innovation
From a technical perspective, the platform employs smart contracts for fund custody, with the fund manager executing investment operations through the onlyOwner execute() function, allowing for the invocation of other smart contracts to implement DeFi strategies. Uniswap V3 liquidity NFTs are kept locked until the fund matures, ensuring liquidity stability. The emergency exit function serves as an early safety mechanism for the platform, capable of being triggered during the fundraising period to prevent fund losses. Once the pre-sale ends and the tokens go live, the platform will be unable to intervene in fund flows, necessitating that the platform improves its safety mechanisms after further stabilization.
The platform also supports fund managers in invoking various smart contracts on the blockchain based on market conditions, providing a broad space for implementing DeFi strategies. This includes, but is not limited to, leveraged trading, cross-protocol arbitrage, yield farming, etc., expanding the possibilities and flexibility of investments, enabling fund managers to quickly adjust investment strategies based on market changes, and enhancing investment efficiency.
Risks and Prospects
Despite the platform demonstrating good development prospects, investors still need to be cautious of multiple risk factors:
Investment Decision Risks for Fund Managers: The investment decisions made by fund managers may carry significant risks, especially when selecting immature or poorly performing assets. For instance, if a fund manager invests funds into high-risk assets like Meme coins that have seen significant declines, it may lead to the fund's underlying value dropping to zero and the token devaluing.
Potential Technical Risks of Smart Contracts: Although the platform's smart contracts have been audited, they may still contain unknown vulnerabilities or technical defects, requiring investors to exercise caution when participating.
Liquidity Risks from Market Volatility: Due to low initial liquidity on the platform, market fluctuations may significantly impact the price of tokens and timing of trades. Liquidity providers (LP) need to bear the risks posed by market volatility.
Nevertheless, the platform effectively addresses many issues faced by traditional Meme coins through innovative mechanisms, particularly in ensuring underlying value and preventing targeted attacks upon listing. In the future, as the platform continues to improve and the ecosystem expands, it is expected to provide more mature solutions for decentralized fund management.
Emergency Exit Function
The platform's smart contract includes an emergency exit function, which becomes effective during the fundraising period to protect funds in case of contract vulnerabilities or other anomalies. This mechanism ensures investors can exit safely if issues arise; however, it is important to note that this feature will no longer be applicable after the pre-sale ends. Therefore, investors must pay attention to the platform's security during the contract's validity period. As the platform matures and develops further, this feature may be gradually improved to enhance overall security.
Summary
Daos.World represents an innovative attempt at decentralized fund management, achieving a balance of efficiency, safety, and flexibility through a carefully designed mechanism. The platform offers various profit opportunities for cryptocurrency investors through unique token economics, flexible fund management, and diversified yield mechanisms. However, investors should fully understand the platform's operational mechanisms, weigh various risk factors, and invest rationally before participating.
Original text: Amir Ormu, AzFlin, VNekriach
