Smart Contract Audit Token ISPO Overview
Start Date: July 4, 2022
End Date: Until Distributed (or sooner if unsuccessful)
Pool Ticker: AUDIT
Pool ID: 0a8dfe076b9c31aabc1aca643c94767a65f4cdf01a2fe4fa34019e3a
Pool Tool: https://pooltool.io/pool/0a8dfe076b9c31aabc1aca643c94767a65f4cdf01a2fe4fa34019e3a/epochs
Margin: 99%
Tokens Available: 15% of Supply (150 Million Tokens)
Token Policy: f2fe9aafd2e5b3b00e2949a96d44a84d9f4d818d63945010a466a4ae
Fingerprint: asset1h2qa2evcnwpchh349pdxu3q6e8f4unulq2nzg2
Tokens per ADA: .04 AUDIT Tokens per ADA delegated per Epoch (e.g. 1000 ADA delegated would earn 40 AUDIT tokens per Epoch.
Bonus: Anyone who stakes for 3 months or longer will receive a 50% bonus (e.g. 100,000 AUDIT tokens earned, 50,000 tokens given as a bonus if stake was 3 months or longer).
Distribution Period: We are currently working to finalize our distribution method. We plan to make the tokens earned available as soon as this is finalized. The bonus tokens earned will only be available after the ISPO has ended.
# Of Pools: We will be using a single pool throughout the ISPO. ISPOs have the potential to disrupt the ecosystem and increase centralization. To try and minimize this, we plan to only run a single stake pool throughout the ISPO.
Rewards Tracker: We are currently working to get this up and running. Will give an update when it is available.
Intro
Many people believe that ISPOs are risk-free. This is not true. They require you to give up your ADA rewards which arguably have well-defined value for our own governance tokens which should be seen as having no value. We are building a DAO that aims to improve the Cardano ecosystem by providing an independent and conflict-free source of audit, building useful tools, and helping people perform and promote project research. Our governance token (AUDIT) gives you a voice in this organization. So if this sounds like something you are interested in participating in and supporting, then please consider participating in our ISPO. If you are speculating and hoping to receive a token that will give you any sort of returns, then you should not participate in the ISPO.
ISPO Goal
We are attempting to raise 1.5 Million ADA through the ISPO. With a fully saturated pool from day one, this would run for approximately 6 months. It is unlikely that the pool would be fully saturated from day one, which means it would likely take longer than 6 months. How much longer is difficult to predict without knowing how much interest there will be or how long it would take to become saturated, if at all. If the ISPO is running considerably longer than expected and not raising enough ADA to justify keeping it open, we may close it early before all tokens have been distributed.
Why we are Raising Funds
The ADA raised through the ISPO will be used to provide liquidity to DEXs. The fees that are earned from providing liquidity will be used to fund audits that are voted on by our token holders (see how it’s funded section of whitepaper for more information). The target of 1.5 million was selected as we expect that to be a sufficient amount of liquidity for the foreseeable future (would put our token in the top 10 on Minswap in terms of liquidity which have seemed sufficient for other tokens listed there). The ADA that is raised in the ISPO will be in a wallet controlled by the Dev team. We are currently unable to have the funds automatically deposited into the multi-sig wallet. The funds will be transferred every epoch from the ISPO wallet to the multi-sig wallet controlled by the DAO.
The multi-sig wallet we are using, RoundTable, cannot currently be used to provide liquidity directly. Therefore, ADA will be transferred from the multi-sig to one of the signers wallets, who will then provide liquidity to a DEX and deposit the LP tokens back into the multi-sig wallet. The only DEX we have plans to LP to currently is GeniusYield, but we are unsure of when that will be released and its possible we may be ready to LP before it is. If we are, then we will take a vote on which DEX to LP to that is currently available.
Multi-Sig Wallet
As mentioned above, we will be utilizing ADAO’s multi-sig wallet, Roundtable, to secure tokens and ADA that belong to the DAO. We are doing this to give confidence and assurance to everyone who is participating in the ISPO or holding our AUDIT token. Raising funds from an ISPO that the dev team is in sole control of presents a risk to all other members of the DAO. What if the devs decide to just walk away at some point? We would not do that, but we don’t want everyone to just take our word for it. So to give confidence this will not happen, we utilize a multi-sig wallet that requires signatures from community members in order to move funds.
We will have 4 signers for the wallet. One will be Eric from the Dev team, @SmartCATMod from the mod team, and we have elected 2 people from the community. Anyone from our discord was able to nominate themselves for the position and then we held a vote to select them. There are 4 signers total and 3 signatures will be required to move funds. All AUDIT tokens other than the dev team allocation and the amount for the ISPO will go into it and then all funds earned from ISPO will be transferred into it (minus a 30% withholding for taxes). Signers will be for a 6 month period and then after that, everyone can vote on who the next signers will be. The 2 community members who were chosen will receive 50,000 AUDIT tokens each from the participation allocation after successfully completing the 6 month service.
Key Risks
Community members must forgo their ADA to support an ISPO and are given project tokens in return. This is inherently risky since ADA has clear and well-accepted value and our AUDIT token does not. We wanted to share what we perceive as being the biggest risk to the project and participation in the ISPO. Please note that this list may not be comprehensive or cover every possibility.
Risk 1 — That the ISPO is unsuccessful and we do not raise much funds: The ADA raised will be used to provide liquidity to DEXs and the fees generated from that will be used to fund smart contract audits. Either by hiring experienced 3rd parties to audit on our behalf or to fund buy bounty contests (whichever the token holders decide). If we do not have many delegators to the ISPO then we will not mint many blocks and would not generate a lot of ADA to fund audits. If this was the case we would have to try and fund audits with AUDIT tokens instead of ADA which the average person may be less interested in.
Risk 2 — Low trading volume: Providing liquidity to DEXs to fund audits is attractive because it potentially creates a non-depleting source of funding. If people are continuously buying and selling tokens then fees can continue being generated for as long as that happens. But if there is not much buying and selling activity, then there would not be many fees collected. This means that if there was continuous low trading volume then only a low number of audits could be funded. If this was the case then either the ADA generated from the ISPO would have to directly go to funding audits, which would eventually deplete the treasury, or you would have to try and fund audits with AUDIT tokens which people may not have much interest in if volume was low.
Risk 3 — Large Sell Pressure: We will be providing liquidity to DEXs. If there is far more selling than buying, it could drain most of the ADA from the pair and leave us with mostly AUDIT tokens.
Risk 4 — New/Unproven Business Model: An organization like this is a new concept which can be risky. We have not seen something like this play out before and cannot learn from what others have done successfully or from others failures. We believe that it makes sense in theory but cannot guarantee how it will work in practice.
Risk 5 — Lack of community Interest: An organization like this is only strong and meaningful if there is participation in it from the community. If people are not interested in what we are doing or lose interest than it makes the longevity of the organization uncertain.
Risk 6 — ISPO Oversaturation: As mentioned above, we plan to only hold 1 stake pool throughout the ISPO. This presents a potential risk, if the pool were to become vastly oversaturated, then it would reduce the amount of ADA we could raise. We do not expect there to be so much delegation that this would become an issue. If the pool does become so saturated that it does not look like we will come close to our target, we would have to consider opening at most, a second pool.
Risk 7 — ISPO Centralization: Tokens are distributed at a fixed rate per ADA delegated. This means that if a whale chose to delegate which accounted for the majority of the pool, they would earn a significant amount of AUDIT tokens. This can be dangerous, as having a single holder own a huge percentage of the supply allows them to dictate the DAOs operations for the foreseeable future. This does not seem very likely, but if it did seem like we had one or two whales making up the majority of the ISPO which would earn a significant proportion of tokens, we reserve the right to end the ISPO early or pause it and weigh our options.
Risk 7 — Falling Price of ADA: This is one we have been seeing a lot of lately. Projects hit their targets and then the price of ADA falls and they say they cannot continue. The price of ADA has been on a steady decline since 2021, and it is possible that it could continue falling lower. This can be a big concern for many projects and it's possible it could impact us negatively. There are a few mitigating factors though.
A lot of what we are doing is not very capital intensive and we are still able to provide value in certain areas without having a ton of funding. We have people who are building our platform, upgrading our tool, etc who have already been compensated. We have a growing community who are incentivized to help or contribute with AUDIT tokens. And the money we are collecting is going to providing liquidity which we will earn fees from and use to fund audits. A lack of trading activity would likely be more impactful than a change in ADAs price (covered above).
We also always have the option of holding off on running community driven smart contract audits until we have the proper funding for them and can focus on DYOR Reports or other initiatives in the mean time. So while the falling price of ADA is something to pay attention to and could impact us in ways we are unable to foresee right now, the chance of it causing us to disband for that reason seems low.
Note: I will repeat, this list may not be comprehensive. We do not have a crystal ball and this is our best assessment of the biggest risks we face going forward. We will add to the list if we think of anything else that is relevant. If any issues arise or circumstances change that put the project at risk, we will communicate them as soon as possible.
Dev Token Disclosures
The dev team has been allocated AUDIT tokens for the work they have done on the project and will continue to do. We feel information about the dev teams token allocation is relevant to anyone who will be participating in the ISPO and receiving AUDIT tokens, and therefore we wish to share some key details about it.
1. Vesting Schedule Disclosure
Understanding how many tokens the Dev team has been allocated and when those tokens become available is important to our project’s supporters. The below table breaks down the Dev team’s allocation and when they vest. As you can see, 25% is released per year over a 3 year period, beginning with the date of the ISPO.
2. Dev Team Sales Disclosures
I created a poll on Twitter around this question, and while the majority of people said they would appreciate if Dev Teams were transparent with plans to sell tokens, there were many comments from people that this would impact trading. Because of this we wanted to elaborate a bit on why we think this makes sense.
What is one of the most common concerns you hear from community members about a dev team? Will they do a rug pull? A rug pull is essentially draining all the liquidity from an exchange which crashes the price. How do you mitigate that risk? You can vest tokens so they don’t get them all at once. You can make their wallet address public so that people can track their movements (which is reactive, not proactive), or you can have them announce anytime they plan to make a sale.
If teams are announcing they will sell reasonable amounts of tokens for reasonable reasons (e.g. selling a small amount for personal expenses), that should not scare the market into panic selling. But it does signal to their supporters that they plan to be responsible with their token allocation by being transparent and not selling in a way that will crash the market. With token holders confident that the team is not dumping massive amounts of tokens in secret, it can draw more people to have faith in and support that project. Obviously, if teams are announcing they plan to sell large amounts to crash the price for some type of personal gain, that is fraudulent and market manipulation. But we believe that being transparent with team activity is a good way to build trust.
In the spirit of this, the Dev team (Eric, Juan, Mike, Jimmy) have agreed to disclose on our Discord at least a day ahead of time if we plan to sell tokens. Hopefully, this helps build trust between the team and their community and allows everyone to operate with the same set of information. Also, please note that this is something that we all agreed on, but it is to be done on the honor system and we have no mechanism in place to track each other or police one another. Community members can use the wallet addresses to track and ensure everyone is following it (see below).
3. Dev Team Wallet Address Disclosure
Trust but verify is an important concept. Announcing ahead of time if we plan to sell is a great step, but without being able to confirm, it is hard to take anyone’s word for it. Below is each of the dev teams wallets where the tokens have been transferred so that they can be monitored by the community.
- Eric addr1qxwcte8my4zfcppsyvlw4qzh87m436rmye3p60t9w6r0023pjkqlaqg0np9dvnv6f6j7drz0tz377yqqszmyvehjdguqzxqff3
- Juan addr1q8d85z5paxtr8khyksh3xjm4fhsn3pph6vupuec9y35333yrwu23dzv0eae4wudg9gjeu38zjc82k7juq8lnxytt7tfs7z453v
- Mike addr1qyntjakhq29a2vwk2a6uaym49qgvwpfw07qusttxmrldmfe4fl73ykh09az48juyuk7g9g2cj3hvjq6ernmdstt79jcs625wgt
- Jimmy addr1q99r57f3rfdn6wvck5pama4rlfg0dxsyj464k4q5zvymfl06dk2clhfmcx342wqllue7tgjddw2j6sua8jaed76kwhls80df34
4. Periodic Financial Disclosures
We will release a monthly summary that breaks down how much ADA has been collected in the ISPO, how much has been used to provide liquidity, fees earned through providing liquidity, and anything else that is relevant financially.
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Disclaimer
The information in this article is produced for educational and informational purposes only and is not intended to be used as a financial promotion. No information, data, or analysis presented are intended to form the basis of any investment decision. This is not investment advice, solicitation of any kind nor an endorsement. Nothing in this document should be construed as an offer or inducement to engage in any form of investing activity. This is not a prospectus, invitation, inducement, or proposal for investment, nor is it meant to be a sale or issuance of securities, interests, or assets. The information in this document is provided in good faith. Certain information set forth in this document includes forward-looking information regarding the future of the project, estimations, future events, projections, future plans and future developments. When presenting forward-looking information, such statements may be identified by, but not limited to speculative words and phrases such as “should”, “will”, “anticipate”, “expect”, “believe to”, ”expect”, “hope”, “plan” or words of similar intent and/or meaning. Forward-looking statements may also be included in any other publicly available Smart Contract Audit Token DAO LLC ( hereon known as SCATDAO) materials such as blog posts, interviews, social media posts, the SCATDAO.com website or any other location. SCATDAO expressly disclaims any and all responsibility, and Recipients expressly waive all claim for any direct or indirect loss or damages of any kind (whether foreseeable or not) arising directly or indirectly from (i) reliance on any information contained in this document or any information made available in connection with any further inquiries, (ii) any error, or inaccuracy in this website, (iii) any action resulting therefrom or (iv) usage or acquisition of products. The SCATDAO project token (AUDIT), are governance tokens and are only to enable token holders to undertake actions within the SCATDAO platform.
The SCATDAO project token (AUDIT) is not a currency and should not be considered one by holders. The SCATDAO project token (AUDIT) must not be held or earned as a reward by any individual resident and/or citizen of a country in which holding such tokens is illegal and/or in countries that consider such tokens securities. It is the readers responsibility to know the laws relevant to their legal jurisdiction and ensure they are compliant at all times. There are no guarantees that the SCATDAO project and/or platform will succeed financially. There is no inherent monetary value associated with the SCATDAO project token (AUDIT). If the SCATDAO project token (AUDIT) is subsequently listed on a centralized or decentralized exchange, then there is no guarantee that the SCATDAO project token (AUDIT) will rise in value nor have any value at all. This disclaimer applies notwithstanding any default, lack of care or negligence. SCATDAO reserves the right to amend, alter, or correct this document at any time without warning or incurring any duty or liability to any receiver. This document does not attach SCATDAO nor does it express any rights, obligations, conditions, performance, covenants, promises, or warranties on behalf of SCATDAO to the recipient, nor does it establish any relationship between SCATDAO and any Recipient or other party. The SCATDAO project reserves the right to require all platform participants submit verifiable identity and residence documentation at any time in order for the SCATDAO project to comply with Know Your Customer and Anti Money laundering responsibilities. This includes validation of identity & residence documentation with an authorized third party supplier, as well as ongoing monitoring.
The SCATDAO project is owned and operated in full by Smart Contract Audit Token DAO LLC, Registered in Wyoming under company number 2021–001033249. Registered office in: 30 N Gould St STE R, Sheridan, WY 82801 USA. Smart Contract Audit Token DAO LLC can be reached at any time by emailing SCATDAO@gmail.com.
