DAO Token Reward Pool — Explained
Three years of work make sure that the DAO token launches with an active reward pool from day 1. The reward pool distributes funds to stakers, entices projects to join the ecosystem, and helps create a decentralized accelerator.
Participation and Voting
Every day, the reward pool distributes 0.5% of its holding to stakers. Staking DAO tokens is the foundation for unlocking the token’s utilities.
Stakers will receive rewards for being a participant in the ecosystem governance. They will also unlock loyalty incentives like cashback, ability to sponsor lending markets, and ability to vote on key ecosystem events.
One category that fits into ecosystem events is the usage of the reward pool. The DAO Maker product portfolio generates fees in the form of both tokens and stablecoins. While acquired tokens are directly added to the reward pool, stablecoins will be used to purchase the tokens of projects in the DAO Maker ecosystem.
To be a part of the DAO Maker ecosystem, projects use either:
- Funding Products: DYCO; rSHO; Venture Bond
- Technological Products: dTeams; Social Mining; YieldShield
- Enterprise Services: Compliance; Chain Analysis; Node Launch
The usage of above-listed products is the de facto means of being a part of the ecosystem. The ecosystem governance, which is led by the stakers through proposals and votes, can decide to include additional means of being considered a part of the ecosystem, i.e. a project becoming a staker.
A Blackhole for Ecosystem Growth
The vast portion of the projects in this space are either micro caps or small caps. They each possess hundreds or thousands of holders, but they are at a development stage that makes sudden high liquidity events milestone moments for them.
The reward pool provides such liquidity events, but only to those projects that use at least one DAO Maker product. This creates a strong incentive for:
- new micro/small development to raise through one of DAO Maker’s fundraising products
- existing developments to use one of DAO Maker’s technology or enterprise products
The launch of Social Mining Express plays a key role in turning the reward pool into a blackhole of ecosystem growth.
The hundreds of small cap developments that are already listed and have a collective mass of hundreds of thousands of users will be able to use Social Mining Express, a limited-feature and branded version of the software.
Social Mining Atlas and dTeams cost a subscription and volume fee, and are white label offerings. This means DAO Maker’s brand is not showcased on them.
Express, instead, is hosted on DAO Maker’s domain and any account sign-ups are to the central platform rather than to a distinct community Hub. Small caps that adopt Express will get a limited version of a technology that is used by some of the biggest projects in the space, as-well-as liquidity support from the reward pool.
In return, their users will be onboarded to the DAO Maker, creating a rapid growth funnel for the platform’s base of venture investors.
Attracting the Votes
Which ecosystem tokens gets to benefit from the reward pool is decided by stakers through votes. The projects that stakers decide to support is naturally dependent on the delivery of teams. They will want to fill the reward pool with high potential tokens as it will potentially grow the reward pool even more.
Therefore, small caps that join the ecosystem will have to showcase great delivery. This will ensure DAO stakers’ votes.
A bonus value-add for projects is that, once a token enters the reward pool, it becomes a distribution to all stakers, meaning once a project enters the reward pool, it potentially multiplies its own community of holders, while also earning incredible exposure.
Growth that Fuels Growth
As more projects join the ecosystem in order to benefit from the reward pool, the DAO token’s ecosystem grows as each new project brings a base of new users. These users have fluid access to platform products and services, and they can:
- play a role in growing the reward pool
- offer value-add to the DAO token
- be a qualified target audience for other projects that seek exposure
Their entry leads to greater ecosystem value, attracting more projects that bring their own user base. Onwards the network effect expands.
Responsibility Led by Self-Interest
It’s in the best interest of DAO stakers to select ecosystem projects that are delivering results and to avoid making arbitrary votes. There will be a high opportunity cost on not selecting high-potential developments and a direct cost for selecting ones that are falling off track. It will be in the stakers’ self-interest to select quality.
This ensures the reward pool also makes the ecosystem a magnet for quality. The liquidity support provided by it won’t be decided by mere odds, but by merit assessed by the crowd.
The effects of the reward pool’s growth blackhole will be meanginful from the get-go. The existing product portfolio will ensure the reward pool gives stakers a ready amount of stablecoins to direct with their voting.
A Split Between Reward Pool and Lasting Token Support
The fees from the current and in-development products will be split between deposits to the reward pool and secondary market support.
Focusing entirely on reducing token circulation places no cost of idle tokens. Deposits to the reward pool make sure there’s a desirable staking APY, which can only be achieved by not keeping tokens idle. It’s a non-inflationary toll on passivity. Specifically, the staking APY is generated not through more DAO tokens, but through product portfolio value.
On the other hand, supporting only the reward pool can ironically be a barrier to growing volume of staked tokens. Diverting resources to also secondary market support builds confidence in the token liquidity, which in turn gives confidence to stakers that are willing to commit for the long run.
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