DAO Maker
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DAO Maker

Presenting the rSHO: Refundable Strong Holder Offering

In line with our mission to make venture opportunities more accessible, by making them risk-capped, we are introducing a critical update to the SHO model.

First, What is a Strong Holder Offering (SHO)?

A Strong Holder Offering is a fundraising service for public rounds. It uses chain analysis, proprietary user activity data sets, and a set of assessment parameters to detect which allocation applicants are the best fit for a project.

Public sales have increasingly become a means to attract and retain communities by incentivizing them with a precious unlocked supply of tokens.

SHOs manage the allocation of a project’s most unlocked tokens. They are designed to seed communities that add value, in alignment with how the project team perceives value.

A SHO allows a project to build a community with the ‘precise’ type of holders the team wants.

As an example, a SHO can allow a project to select through their allocation applicants for only people that have:

  • held a certain competitor token for at least 3 months
  • are active LPs on decentralized exchanges
  • have transactional volume exceeding $1M in the last 30 days
  • have held at least $10,000 worth of a specific token for 1 year

The above list is just a set of examples. Projects can choose, as they desire, other parameters, straining for applicants that have provable interest in relevant products in the past, showcase positive holding/LP habits, and have a track record of participation in project events.

A SHO is the first and only solution for building custom communities, based on a project team’s desired community characteristics.

To add to that, tens of thousands of cryptocurrency holders, that are active token sale participants, already hold a verified account on the DAO Maker platform. A SHO natively comes with a massive target market for assessing public sale applicants that may fit a project’s desired community characteristics.

Balancing the Scale with Refund Options

The above segment highlights how a Strong Holder Offering is a great resource for projects, enabling them to seed a community with exactly the kind of public sale buyers they want.

Till now, a SHO placed all the benefits in the project’s side, giving them the opportunity to locate and onboard high-quality retail. However, the high-quality retail do not get much in return.

This means either DAO Maker has to either:

  • excessively scrutinize the projects that launch a SHO, meaning only a handful of projects can use the service in a year
  • enable a protection system for the SHO participants

The latter is (i) a lot more scalable, and also (ii) adds a new layer of benefits to the high-quality SHO participants that the project desires.

Adding refunds as a clause in a Strong Holder Offering makes sure only quality projects even bother applying as poor performers or uncommitted teams would end up giving a refund. Still, the uncommitted teams that do apply for a Strong Holder Offering are held accountable as SHO participants have little at risk for they can exercise their refund option.

The Strong Holder Offering (SHO) has been updated and is now the refundable Strong Holder Offering (rSHO).

With this update to the SHO model, DAO Maker is ready to offer a more consistent SHO pipeline. In fact, the first three rSHOs are already finalized, with the first ready to be announced next week.

In case that project maintain its value at 400% of the price of the token at initial SHO token sale price for more than 4 months after the initial SHO sale the refunds are canceled.

Integration of the DAO Token Reward Pool

In an earlier article, we covered that the DAO Token Reward Pool is designed such that it attracts more projects to the DAO Maker ecosystem. This is possible because the reward pool distributes fees in the form of tokens.

Which tokens?

Tokens of projects in the DAO Maker ecosystem. Funds collected in the DAO Reward Pool are used to buy tokens on the market. Stakers decide which tokens the Pool’s funds should buy, and these tokens are then distributed to them.

This means the Reward Pool helps ecosystem projects with both secondary market liquidity and large-scale exposure. At the same time, ecosystem products fuel the reward pool’s funds. In the case of rSHOs, successful a portion of raised funds are funneled to the Pool.

Infographic Explanation

There are two stages of a refundable Strong Holder Offering:

  • Sale
  • Outcome

The outcome of any rSHO is a success or failure. The project that used the rSHO either maintains enough interest that its token remains desirable and no one wants a refund, or the project does not maintain interest and people demand a refund.

In a rSHO, 80% of the funds are held aside for a period of time (milestone date), to ensure refunds. Once the milestone date is reached, the project may have to either issue a refund or claim the rest of its raised funds.

Failure: If the project fails to maintain interest till the milestone date, it has to issue a refund. The SHO participants receive 80% of their funds back and they have to return the tokens they purchased. The reclaimed tokens are burned, providing support to the project’s secondary market.

Success: If the project maintains interest till the milestone date, it does not need to issue a refund and receives the rest of its raised funds, minus a fee.

The rSHO fee, in case of a successful project, is 20%. These funds are used to buy the project’s tokens on the market, and those tokens are added to the Reward Pool.

The fee rate is great given that the project accessed (a) powerful technology without any upfront fee, (b) acquired a community it had sought without any upfront fee, (c) the fee is used to create secondary market support for the token, and (d) the project that held a rSHO received wide support from the DAO community as the project’s success ensures they all receive tokens.

Further, given how the reward pool works (0.5% of reward additions are distributed per day), the project’s tokens are distributed over time, ensuring it remains in front of the community’s interest for an extended period of time.

It is for this reason that without even making any sales push for the rSHO, projects that have requested a collaboration with us have consistently agreed to host a refundable Strong Holder Offering.

The first rSHO will be announced next week: Stay Tuned!

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Twitter: https://twitter.com/thedaomaker



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