BeamX DAO — the next step in Beam Decentralization
From November 2019 Beam took a major step towards decentralization by moving from a centralized company structure to Beam Foundation. Currently, following the release of the 6.0 Fierce Fermion version, Beam is getting ready for the next step — gradual delegation of the governance to BeamX DAO.
Beam 6.0 is a hard fork version that will be released in the middle of May and will become active on block 1280000, approximately on June 13th, 2021. The most important upgrade of this fork is the addition of a Beam Virtual Machine (BVM) as an infrastructure to create Smart Contracts (a.k.a. Shaders), thus making Beam into a full-featured confidential DeFi platform. Anyone can thus build and deploy new DeFi applications which include seamless integration into Beam Wallets, the ability to emit new Confidential Assets and support all existing DeFi use cases including AMM pools, lending, stable coin and many more.
Beam itself is planning on using the new infrastructure for building DeFi applications, starting with the BeamX DAO Core — a cornerstone of an on-chain BeamX DAO governance process.
Even though the concept of managing a Decentralized Autonomous Organization using blockchain has already been in existence for several years, only recently has it become common in governing DeFi projects. Most DAOs use a combination of off-chain and on-chain governance mechanisms using smart contracts to safely and transparently organize the process of decision-making for many different parts of а project or a protocol.
Beam has decided to transition to the DAO model for both the basic protocol level as well as the new Confidential DeFi applications platform. For that purpose Beam will establish BeamX DAO that will serve three key purposes:
- Governance of the Beam protocol and DeFi platform
- Management of the DeFi application ecosystem
- Distribution of BEAMX tokens.
BEAMX is the governance token for the BeamX DAO and can be obtained through participation in the DAO activities by either providing liquidity to the DeFi applications governed by the DAO or by participating in the governance process.
BEAMX token is issued as a Confidential Asset on top of Beam blockchain and has a fixed emission of 100,000,000 units (except for the ‘lender of last resort’ scenario). Token emission is managed by the BeamX DAO Core contract and the tokens are allocated according to the key needs of the DAO as can be seen in the diagram below:
As you can see, most of the tokens will be issued to liquidity providers, with some part reserved to development funds. The DAO has also raised initial funds to implement the basic functionality and essential applications from a closed group of accredited investors. Future investment rounds are possible and may be done by the DAO through a voting process, as described in detail in the next section.
The governance process will be thoroughly described in a separate document, and lots of details still need to be finalized, however the key elements can already be presented here. Anyone holding the BEAMX tokens can and should participate in the governance by staking the tokens in a voting contract on the Beam blockchain.
Voting will be performed in fixed periods, each having a clear list of proposals that will be finalized and published before the period starts. Proposals can be ‘regular’ or ‘special’. Regular proposals, such as for example the BRR (burn, reward, reserve) allocation that determines how the accumulated fee surplus is divided across different pools. Other, ‘special’ proposals might be submitted by the community in the form of an RFC, discussed and then raised to a vote.
To participate in the voting during a specific period, BEAMX tokens need to be staked before the period starts, and the amount of staked tokens is proportional to the voting power during the current period. One can not increase or decrease the voting power for the period that has already started, any change in the locked BEAMX will only affect the next voting period to avoid hijacking and other manipulations.
Those who actively vote for all proposals raised in the current voting period are entitled to receive additional BEAMX tokens as an incentive for their involvement in the DAO. Even though many projects allow delegation of the voting power, BeamX DAO will not support this in the first version. Of course, any additional features can always be added by a community vote through the submission of a ‘special’ proposal.
Confidential Decentralized Application Ecosystem
The key feature of the BeamX DAO is the ability to connect DeFi applications. As DAO stability and influence increases, new applications on BeamX Platform might find it mutually beneficial to join the existing DAO to gain user base, stability and liquidity, while in return give DAO voting rights in their governance process, Of course, the decision on whether to accept or reject the application is completely up to the DAO voters.
This dynamic approach is aimed to address the future-proofing of the DAO. Adding new applications will ensure that the DAO is always at the cutting edge of the industry and will not become obsolete in view of rapid market changes and innovation.
The fact that BEAMX holders have direct control over the protocol as well as of the DAO ecosystem reduces many of the systemic risks associated with the DeFi space.
BeamX DAO Core is the first of the series of Smart Contracts that will be deployed following the activation of Beam 6.0 Fierce Fermion Hard Fork in the middle of June 2021. The dedicated contract will enable promotional staking to allow current BEAM holders to obtain BEAMX and start participating in the voting process. It will also include the framework for the governance contract with a gradual transition from Beam Foundation to the DAO control.
The BeamX DAO Core contract will provide the ultimate transparency and visibility into all aspects of Beam blockchain development. The endgame goal is to transfer the process completely into the community’s hands, providing a sufficient level of stability has been achieved.
We strongly believe that BeamX DAO will unify and structure the governance process while at the same time allowing participation of a larger part of stakeholders and gaining broad alignment of interest between current BEAM holders, newcomers and application developers in a mutual goal of bringing Confidentiality to the world of DeFi.
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