Introducing the YGG DAO and SubDAO

In this article we provide an explanation of what a DAO is, what the YGG DAO will do, and what subDAOs are all about. We explain them in the context of real use cases and how they will apply to Yield Guild Games.

What is a DAO?

Imagine a borderless organization that is owned by its members, and instead of having a real-world presence, all its operations are digitized. Business decisions are voted upon in a democratic fashion, and as they are enacted by the blockchain, it is impossible for these pre-programmed rules to be broken or altered. These are some of the core qualities of what make DAOs special.

But what is a DAO, exactly? Short for decentralized autonomous organization, a DAO is an open-source, blockchain-based protocol with rules enforced by smart contracts. DAOs can have several purposes, but their main function is to provide an automated way to carry out governance decisions voted on by its members.

In effect, a DAO is like an automated institution, driven by a specific purpose. A big difference between DAOs and traditional organizational structures is that DAOs are guided by distributed leadership rather than the traditional topdown system. A DAO’s activities transpire without respect to borders, are open to all for participation, and are entirely transparent through the blockchain.

Are there any functioning DAOs already out there?

One of the longest running and most successful examples of a DAO is MakerDAO (MKR), an organization which is responsible for balancing assets to keep the price of the Dai stablecoin (DAI) pegged to the US dollar.

Outside of Maker, DAOs were more or less a novelty and remained relatively unpopular among crypto investors until the explosion of the decentralized finance (DeFi) movement in mid 2020. It was around this time that Compound Finance began issuing interest payments in COMP token alongside typical interest payments. This led to the concept of yield farming through which investors attempt to maximize the value of their interest payments by shifting their assets between DeFi platforms.

Like Yield Guild and several other blockchain platforms related to DeFi, Compound is currently in the process of automating its operations through a DAO of its own, soon handing over control of the platform to its users.

Views on blockchain-based automation, once regarded as too impractical a concept, have since evolved to incorporate advances in smart contract development and security. Leading examples like Maker prove that DAOs not only work but can serve as building blocks for the crypto economy.

How will the YGG DAO work?

The YGG DAO will be based on smart contracts built on the Ethereum blockchain. Smart contracts will be used to automate the functions of the guild including reward issuance, and eventually, advanced functions like NFT rentals.

The DAO’s assets (tokens, NFTs, virtual land parcels) are managed by the YGG Treasury, which is currently overseen by Yield Guild’s three co-founders. Assets can only be moved from the treasury when two of the three co-founders sign off on a transaction. In the future, transactions like this will be proposed by DAO participants with the course of action determined by a vote.

“YGG DAO is the mother entity that owns significant stakes in different subsidiaries that are earning yield and have assets.” — Gabby Dizon, co-founder, Yield Guild Games.

To kickstart the DAO’s launch, Yield Guild is issuing a governance token named YGG. The YGG token will be available for purchase via a public sale on the MISO platform by SushiSwap, beginning on July 27th at 10pm ET and running for a sale duration of 48hrs unless tokens sell out sooner.

Holders of the YGG token will be allowed to vote on decisions related to the guild’s business and governance, as well as to participate in special DAO-related activities.

Governance issues to be voted upon by YGG DAO members will revolve around:

• Technology implementations
• Products and projects
• Token distribution
• Governance structure

When grouped by holder type, the YGG DAO will consist of five main categories of token holders:

• Founders
• Advisors
• Treasury
• Investors
• Community

While each of these groups plays an important role in the Yield Guild ecosystem, the community will always be the primary focus of the YGG DAO. Up to 45% of all YGG tokens have been designated for distribution among community members through a variety of means.

Some of the many opportunities in which guild members will have a chance to earn YGG tokens include:

• Airdrops
• Bonus rewards for game winners
• Level-up and loyalty rewards
• Rewards for contributions to DAO management
• Staking rewards

The YGG DAO’s success ultimately depends on its ability to offer an effective reward system. The system must incentivize members to use their abilities in a way that benefits the DAO while also remaining able to adapt to changes in technology and market trends. To better equip YGG DAO to do this, Yield Guild introduces the concept of subDAOs.

What is a SubDAO?

A subDAO is akin to a specialized, miniature economy that interacts with a larger, all-inclusive economy, which is the DAO itself. Each YGG subDAO is customized to focus on the specific activities and assets of a particular game. For example, there will be a subDAO dedicated to players of Axie Infinity, a subDAO dedicated to players of League of Kingdoms, and so on.

SubDAOs have their own rules and conditions but still contribute earnings to the DAO itself. They can also borrow NFTs and other assets from the YGG Treasury in order to increase their level of contributions from gameplay.

Each game is paired with a community lead who is passionate about that game, along with its own wallet and subDAO token. SubDAO token holders can vote on governance issues specific to that subDAO, allowing them to have a say in how it operates. This gives guild members the chance to run an organization within an organization while opening a huge assortment of possibilities for income and growth.

For example, members of the same subDAO can plan quests or raids on other guilds, decide on purchases of land or in-game items, and be rewarded with badges for ranking up to new levels within the guild. SubDAO members will be rewarded according to their level and efforts, and will be able to earn specific NFT achievements for their contributions.

YGG is therefore a DAO composed of subDAOs, each contributing in its own way. SubDAOs will allow the guild to operate more efficiently by localizing its operations and streamlining processes that might vary from game-to-game. By encouraging players of the same game to work with one another, SubDAOs also serve to create a more localized sense of community within the much broader YGG community.

An example of a subDAO can be found in the YGGLOK token. After Yield Guild purchased significant assets within the League of Kingdoms game, they tokenized this collection of assets by creating the YGGLOK token. Holders of this token not only receive access to the yields generated by the tokenized assets but can also vote on subDAO specific issues. Giving subDAO participants a say in these issues will help optimize their productivity during gameplay, thus allowing them to earn more rewards for the guild and themselves as well.

For more information about YGG DAO, subDAOs and the specifics of the upcoming token sale on July 27th, read the whitepaper here.

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