The backbone of blockchain is innovation. Blockchain does everything to rid the middleman. The manager. And decentralized autonomous organization (DAO) expeditious.
It may have been the reason why Ethereum forked in the first place but the scene has grown by leaps and bounds. At the center of a DAO is to eliminate the manager by basing decisions on the blockchain. This means there is decentralization and the community members have to say through popular vote.
DAO automates the management and all executing conditions are pre-written on code. The idea of such self-executing management was made possible in Ethereum and it isn’t surprising that most are found in Ethereum.
DAOs establish companies that manage themselves without hierarchical management.
Decentralized Autonomous Organization (DAO)
For a successful DAO, there must be strictly adhered rules. Once their rules are defined, they are ported over to a smart contract which then works autonomously, self-executing as specified.
Thereafter, DAO enters the funding phase—gifting the DAO property and investors vote to determine when called on the direction of their virtual company.
Funding paves way for deployment resulting in a completely transparent and open-source blockchain-based company whose operations are immutable and incorruptible.
Smart contracts fuel the system and investors have voting rights where consensus leads to tweaks on the open-source code or addition of more assets and so forth.
A well-executed forth means a person anywhere in the world can invest or receive money for their proposals or needs. And Dxdao exemplifies how a DAO should operate.
What is Dxdao?
The successful project describes itself as a sovereign collective of people keen on seeing the Ethereum financial ecosystem flourish.
The Dxdao has total control of the on-chain and permissionless DutchX trading protocol, a DEX where anybody can list a token, as a starting point. DutchX uses the Dutch auction principle.
As a Gnosis-lead initiative, it was launched in May 2019, it has over 400 unique stakeholder addresses, operating with their eyes focused on the price: open finance, or DeFi.
DeFi is an emerging field that has generated buzz in the crypto world. The goal of DeFi is to port over financial operations in the traditional market to the blockchain enabling trustless lending, borrowing, and exchanging of digital assets. Most DeFi dApps are active in Ethereum. At the time of writing, over $4.4 billion of ETH was locked by different applications as CDP collateral.
Dxdao currently owns over $10,000 worth of an array of valuable digital currencies including ETH, DMM, and more. However, they plan to diversify its revenue by launching services from the eight ENS services under their control. They have already launched mesa.eth.link as a front end of the Gnosis protocol DEX. Moreover, Dxdao is working on a privacy-centric DeFi dashboard.
Dxdao develops, governs, and grows DeFi protocols and products. Since they are also involved in maintaining the DutchX trading protocol, governing the DMM, and developing the mix.eth—a private and secure portfolio tracker, a public OpenRaise campaign was recently approved to bootstrap these concurrently efforts.
With over 400 “reputation holders”, this DAO is governed squarely by the community. There is no middle man.
Its ecosystem is oiled by DXD, an ERC-20 compliant token of which its owners have an economic claim of Dxdao revenue. Herein, the proportion of Reputation relative to the collective Dxdao reputation determines its weight. The higher, the stronger the voting power.
DXD versus the Reputation Token
A strict distinction must be made between DXD and Reputation. The latter is a governance mechanism that controls Dxdao. It is non-transferable and is attached to a staker’s Ethereum address.
Owners of Reputation have an implicit duty, a right to govern, and direct the collective.
Also, Gnosis Limited is not part of Dxdao (they stepped back from the project in July 2019) and is open for contribution from all.
Voting power is based on the participants staking ETH or ERC-20 tokens, trading on the DutchX exchange, or bidding on GEN—which is a DAOstack token. ERC-20 tokens eligible for bidding are those already listed at the DutchX exchange like DAI, LRC, and others.
Depending on the amount locked (30 days), a user’s reputation will be assigned proportionally to the amount others stake, bid, register Magnolia tokens (MGN), or increase awareness of Dxdao through social media.
Voting on proposals is through the platform’s DAOstack’s alchemy interface and holographic consensus designed to process high volumes of the decision while safeguarding against proposals or values that go against the majority. This way, there is a balance between efficiency and resilience. In some cases, proposals can pass by a general majority but in other cases, an absolute majority is needed. Nevertheless, Dxdao coalesces around ideas and strikes to achieve rough consensus through off-chain means like weekly calls and other means.
Reputation is owned by Ethereum addresses that collectively control the set of smart contracts and the projects that administers it.
Besides, ownership of DXD means owners have access to a future suite of services offered by the DAO. Additionally, there are other premium features that owners are entitled to like gasless transactions, feeless anonymizing of digital assets, and lower fees when transacting of DeFi protocols.
Dxdao partners include ConsenSys, Gnosis, Maker, DMM, Loopring, and more are expected.
Dxdao Tokenomics and Distribution
Aforementioned, DXD is the ERC-20 economic token. Owners of this token mean they can gain depending on the success of the DAO.
DXD is offered through a continuous fundraiser. Simply, buyers of DXD are funding the effort of Dxdao for a right to future cash flow.
The only accepted coin is ETH.
DXD will be distributed according to a positive and linear bonding curve (which acts as an automated market maker and governed by the algorithm fused into the project’s smart contract).
But there is an initial Kickstarter period where DXD will be sold for the same price before the curve slants positive. The Kickstarter period was concluded in May 2020. The 250 ETH was raised (5,040 DXD tokens sold) in less than 24 hours.
The bonding curve was set that once 12,000 DXD are sold, the Dxdao would have received $300,000 worth of ETH. 10 percent of this will be set aside for liquidity as reserve percentage (for sellers wishing to liquidate their DXD).
The reserve will be increased over time since 10 percent of the revenue generated will be used to supplement those in the reserve in the next five years.
Gradually, this will increase the value of all outstanding bonding curve tokens. As per the curve, newly generated tokens are more expensive than the previous batch. Owners can sell DXD as per dictates of the bonding curve though at a lower rate.
In total, there will be 100,000 DXD of which Dxdao will vest monthly over 3 years.
DXD Markets and ROI
At spot rates, DXD is trading at $149, adding 64 percent in the last trading month translating to a market cap of $3.7 million. Its all-time high was reached on Aug 9 when prices soared to $182. DXD all-time low stands at $24.
Uniswap is the most dominant DXD exchange with a 68 percent market share. Others are IDEX and Balancer where all are paired against ETH.
Short Term Catalysts
- There is a lot at stake for Dxdao. There are fewer than 2,000 unique address holders of DXD tokens. This is despite what the project presents and what they seek to resolve.
- With a bonding curve and the Kickstarter period complete, it is expected that as demand for DXD rises so will the value of token holders. The earlier one invests, the more their ROI within the short period. Dxdao only seeks to raise $300k worth of ETH. $10k of those will be used for liquidity.
- At $3.7 million and each token changing hands at $149, it is by all measure undervalued. This means there is a chance for further upsides as tokens will continue being generated as per the dictates of the bonding curve.
- More exchanges plan to list DXD. Voting is ongoing for a possible listing at KuCoin. Other exchanges may follow even if DXD is designed primarily to oil the DeFi ecosystem.
- Dxdao is supported by other big projects including ConsenSys and Gnosis. The idea of a super-scalable DAO of which was implemented through Dxdao was Gnosis’ original idea.
- All revenue generated from the DAO’s projects including Mix.eth, Omen.eth (a decentralized prediction platform built on Gnosis conditional token system), Mesa.eth (which is a critical DeFi infrastructure), goes to DXD holders. These three projects, if they pick up will end up generating decent revenue for the DAO and by extension, DXD holders.
Long Term Catalysts
- The eventual launching of mix.eth introduces a DeFi service with mixers incorporating Loopring’s zkRollUp DEX protocol. This means there is anonymity and exactly what DeFi investors want from a usually transparent ledger. Overly, this drives utility for DXD.
- DAO is still very green but a critical cog to keep for DeFi. As the nascent field picks up so will space’s significance. ConsenSys is backing the project and expects Dxdao to be the largest in the world.
- The DutchX trading protocol, a donation of the project’s progenitor can be integrated into or with other protocols. The more the adoption, or use in other projects, the higher the demand for DXD.
- Dxdao plans to fork Uniswap V2, creating DXswap.eth to make the DeFi ecosystem more robust. A successful DXswap.eth translates to more revenue, pumping DXD.