Introducing the DAOFunds Smart Contract!

Dear Community,

we are happy to announce an important milestone in our quest to make the Hydra DAO more capable and independent. Introducing the DAOFunds Smart Contract, enabling real-time payments, perpetual contracts, dynamic budgets and other modular capabilities.

The DAOFunds smart contracts will join the growing toolset of the Hydra DAO and faciliate the payments of expenditures approved by the community. They have several advantages over conventional payments, which will be elaborated in this article.

Eliminating Bulk Payments

DAO payments are usually made in HYDRA coins, while most service providers or grant receivers need to convert them into stablecoins or fiat currencies to pay for expenditures. This creates an anticipation effect by traders and community members, who bet on short-term volatility during the liquidation process.

Although we have not seen this occur in the first two payments of the monthly marketing budget, the anticipation on its own can already trigger speculative selling. As a result, the relatively small impact of liquidations can be amplified by the behaviour of market participants who want to profit from the event, regardless of whether it materializes or not.

This is where the DAOFunds smart contracts come into play, with their real-time payment capability. They are designed to mitigate anticipation effects by allowing for a gradual payout of the budget over prolonged time periods. For example, instead of a single-time bulk payment, the budget will be spread over a 30-day time period where receipients can withdraw the accumulating balance in multiple tranches.

The DAOFunds smart contract is designed to mitigate anticipation effects by allowing for a gradual payout over prolonged time periods.

In particular, the contract will accrue the balance gradually on a second by second basis. This way the receipient will know exactly how much balance will be ready to withdraw at a given time period and can therefore plan expenditures accordingly.

The accrual happens in fiat and is converted into HYDRA at time of withdrawal. In the example of marketing agencies, which operate based on approved USD budgets, the accrual will happen in USD equivalent. Upon claiming of the accumulated balance, the smart contract will dynamically calculate the HYDRA amount that matches the accumulated USD value and release the corresponding amount.

This mechanism protects DAO contractors from price volatility risk. It also adds a significant trustless layer as a next vital step of the Hydra DAO advancement.

Increased Transparency

The introduction of the DAOFunds smart contract will also make the entire process much more transparent, as everyone will be able to track easily the payment history in all of its granularity directly on the explorer.

This will further enhance the trust into the system and ensure that there is a clear accountability to the DAO and its treasury.

Perpetual Payments

Another cool feature of the DAOFunds contract is the capability of performing perpetual payments in the form of indefinite contracts to elected DAO contributors. Thanks to this, the DAO can “hire” professionals, DAO operational members or program managers and continuously settle with them.

The high-level purpose of the DAOFunds Contract is to enable critical operations in terms of expansion, marketing and development — becoming an invariable part of the HYDRA ecosystem. Similar to how stakers are continuously rewarded for supporting the security of the network, key activities related to growth and adoption will also be equipped with a trustless bridge to emitted HYDRA.

Modular Approach

The DAOFunds contract is designed in a way that allows for the modular extension towards various use cases. As we expect the requirements and complexity of the DAO to increase in the future, it is important to have the capability of adding new features and modules to the toolset.

For example one opportunity would be to build on top of the DAOFunds contract and unlock a more dynamic system, where DAO members can change their votes for allocations in real-time, whenever they see fit and without having to wait for the end of a given period.

This would introduce the capability of very tight feedback loops and quick reaction times as the real-time budgets of contractors could instantly be adjusted by the new preference of the DAO member.

These and other opportunities make us very excited about the future of the Hydra DAO, especially in combination with the upcoming HydraGon migration. The new smart contracts are expected to go live in the coming days!

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HYDRA is a proof-of-stake blockchain optimized for real-world businesses. It tackles some of the most profound and challenging issues with existing blockchain economies and introduces a truly shared economy with fair treatment to all network participants.