Read about governance NFTs and the basics of Tonpound DAO
The terms “DAO” and “governance” are often used only as catchy marketing terms in the context of crypto startups. Contrary to this, we at Tonpound do not take these ideas lightly and have integrated the principles of decentralization at the core of the protocol.
This article gives an overview of Tonpound DAO and its main component — the governance NFT (gNFT) system. We also encourage everyone to participate in upcoming airdrops to receive TPI (Tonpound Participation Index) and become one of the first to join the Tonpound DAO.
Tonpound DAO
The Tonpound DAO is the community of gNFT holders who actively participate in the life and development of the protocol. DAO members vote on current issues or future plans after discussing them in a closed chat and together with the Tonpound community.
By exercising their voting power, gNFT holders can change protocol parameters, for example, the size of interest rates on Tonpound Markets or liquidation thresholds. The DAO members can also vote on adding new assets to supported collaterals or even integrating new blockchains to Tonpound.
At the project launch, Tonpound will be maintained only by its developer team. In two years, however, the Tonpound DAO will become fully operational with voting powers transfered to all gNFT holders.
The decentralization of power from the developers to the community will be achieved by making users burn the TPI token to upgrade their gNFTs. To get TPI, in turn, users will have to win in community airdrops or earn it as LP rewards.
As a result, a lot of future gNFT holders will be comprised not only of people who happened to buy TPI (or later a gNFT) from the market but also of active Tonpound users and early supporters.
Governance NFTs
Governance NFTs are ERC-721 tokens that serve as the main functional unit of the Tonpound DAO. Holding a gNFT gives you access to the DAO and grants its benefits such as voting rights and protocol rewards.
gNFT structure
Designed in a unique style, a gNFT can represent a gem of 3 possible types: a topaz, an emerald or a diamond. The better the type, the more benefits its holder receives.
All types of gNFTs have 12 segments that can be opened (“collected”) by burning TPI. The first 6 segments make up the core of a gNFT, while the last 6 constitute its facets. While gNFTs can be traded with no or just few segments opened, users get access to Tonpound DAO and its benefits only by holding at least one complete gNFT.
Minting and Upgrading
To mint a new gNFT, users must hold at least $100 worth of liquidity on Tonpound. The liquidity is not subject to any locks and the mint itself is free except the usual Ethereum gas fees. Upon the mint, new users receive an “empty” topaz gNFT with all 12 segments closed.
The segments can be opened only by burning TPI. The amount of TPI needed is constantly re-calculated based on the circulating supply of the TPI. In short, the more TPI is on the market, the higher the price for opening a segment is.
After opening all 12 segments, the topaz gNFT becomes fully functional and can be further used to create an emerald or diamond gNFT. Please note that users must still provide at least $100 worth of liquidity on Tonpound to collect their full gNFT.
Crafting high tier gNFTs
Once users hold at least 10 complete topazes on the wallet, they can mint one empty emerald. For minting a diamond, 10 complete topazes and at least 1 complete emerald are required.
The upgrading process for emeralds and diamonds are identical — users must burn TPI to open 12 segments before completing a gNFT. The prices for opening emerald and diamond segments are, however, considerably higher than for topazes.
In return, the benefits of crafting a higher tier gNFT outweigh the extra TPI costs. For example, one gets more protocol rewards by holding 10 topazes and 1 emerald than only 20 topazes.
Topazes or emeralds used for creating a gNFT of a higher tier are not burned and remain on the wallet. However, they become “marked” and cannot be used for the same crafting procedure again to prevent the multi-account abuse.
Voting and Rewards
Governance NFTs provide several key functions:
- Grant membership in Tonpound DAO, including access to closed DAO chats.
- Represent voting power in Tonpound’s governance (topaz — 1 vote, emerald — 2 votes, diamond — 3 votes).
- Make their holders eligible to various benefits when using Tonpound. For instance, the protocol rewards are distributed to all gNFT holders with the following multipliers: topaz x1, emerald x11, diamond x120.
The fee rewards for gNFT holders will start to accumulate from the protocol launch but can be claimed only in 1 year due to the vesting schedule.
Conclusion
The Tonpound team has implemented an innovative system of transferring power from developers to a decentralized community over time. The process of earning TPI as airdrop and then burning it for collecting the gNFTs will stimulate users to promote Tonpound on social media and provide liquidity to Markets.
Several mechanisms ensure a competitive but gradual and balanced process of forming the Tonpound DAO:
- The vested distribution of TPI as airdrop & LP rewards.
- The process of upgrading gNFTs together with the dynamic segment pricing.
- Three gNFT tiers (topaz, emerald, diamond) with distinct benefits.
Finally, the cost of obtaining a topaz gNFT should remain relatively low and can be completely covered by getting one airdrop allocation. This potentially opens access to the Tonpound DAO for every player on the market.
Whether you invest your effort in winning an airdrop or providing liquidity for Tonpound, we believe that supporting our project early will prove itself worthy and profitable for everyone participating!
Follow our social media to stay up-to-date with the Tonpound’s story:
Website: Tonpound.com
Twitter: twitter.com/Tonpound_com
Telegram announcements: t.me/Tonpound_announcement
Telegram chat: t.me/Tonpound_chat
Discord: discord.gg/Tonpound
Medium: medium.com/@Tonpound.com
Gitbook: tonpound.gitbook.io/
