Distributed Capital Formation with OpenRaise
Introducing OpenRaise
The rise of ICOs in 2017 established crypto’s potential to radically democratize capital formation. But the ensuing chaos– from pump and dumps to exit scams– also demonstrated the need for accountability. Since then, new token models like DAICOs and bonding curves have emerged as promising alternatives.
OpenRaise is an effort to bring these models to life by enabling organizations to run accountable fundraising campaigns. The first release utilizes Fairmint’s bonding curve contracts and the DAOstack governance framework to bring the entire lifecycle of fundraising, allocation, and return realization on-chain. The remainder of this article will walk through the OpenRaise frontend and its first user: DXdao.
DXdao <> OpenRaise
DXdao is a decentralized community that develops, governs, and grows DeFi protocols and products. Its initial members were seeded through a 1 month process where over $20M in ETH and other tokens were staked and 400+ addresses received Reputation.
Since then, DXdao has been advancing critical DeFi infrastructure like Mesa.eth, a recently launched frontend to the Gnosis Protocol, and Omen.eth, a soon-to-launch prediction market platform. The DXdao is also involved in developing Mix.eth, governing DMM, and maintaining the DutchX trading protocol. In order to bootstrap these efforts and broaden its stakeholder base, the DXdao recently voted to launch a public OpenRaise campaign.
So how does it work?
You can follow along by opening the app here. I will run through the basic steps and provide additional background on what’s going on behind the scenes.
Let’s go over the layout. What you see in front of you is the algorithmic price curve of the DXD token. At the top, you can see real-time statistics of the campaign. To the right is a tool for buying or selling DXD for ETH, as you would see in many exchange layouts.
Worth mentioning: this is a curve-bonded token, which means that buys mint new tokens and sells burn tokens. Until around the 5000 DXD supply mark, DXD retains the same buy and sell price. After this kickstarter phase, DXD will be priced automatically according to the curve. [UPDATE: DXdao completed its kickstarter phase of 250 ETH less than 24 hours after launch]
But why do we need liquidity, and why 10%?
10% of the ETH used to buy DXD is held in reserve to facilitate DXD redemptions. This allows the DXdao to utilize 90% of invested funds to grow its ventures, while providing a liquidity backstop for token holders who wish to exit. Outside of the reserve, it is also possible for secondary markets to emerge to service liquidity demand. Click here to learn more about the curve mechanics and parameters.
In just the push of a button, you can connect your Ethereum wallet to the app and buy/sell DXD for ETH as you see fit.
To purchase DXD, simply input the amount of ETH you wish to invest, and the exchange tool will calculate how much DXD you would receive in exchange.
Below the chart, you will see a detailed history of the latest trades. To monitor how DXdao is spending the funds, you would have to check the governance UI on the Alchemy app.
Here you can see a history of all of the DXdao’s proposals. In this way, investors can monitor how the DXdao is using its funds in real-time, and assess for themselves whether it is on track to deliver on revenue-generating and utility-enhancing initiatives.
Hopefully the user experience becomes intuitive as you open and tinker with it yourself. You may start to see how far the DeFi landscape stretches. The time draws near for new standards of decentralization in DeFi and the next era of digital asset offerings. DXdao at its core is composed of people recognized not by the letter “C” in their title, but by the merit achieved and engraved in their hexadecimal identities.
As always with blockchain-related content, do not take this as investment advice, and please do your own research before getting involved in any capacity.
OpenRaise was developed as a collaborative effort by LevelK and dOrg. LevelK and dOrg only provided technology development services and were not in any way involved with the launching or operation of the campaign itself. If you are interested in applying the OpenRaise framework for your project, reach out to @ingalandia on Twitter.
For further questions regarding DXdao’s campaign:
This article is for informational purposes only. Please seek independent legal and financial advice in your jurisdiction before making any investment decisions.
