Introduction to XDAO V2

XDAO
XDAO
Oct 29, 2021 · 7 min read

It has been more than 6 months since the first version of XDAO was created and launched. Thanks to our developers, community and projects that are already using XDAO, we made a lot of improvements, new features, and now we are ready to announce that our XDAO V2 will be released in the middle of December!

We redesigned everything from contracts to UI. We took a closer look at the concept of decentralized autonomous organizations and finally came up with the ideal DAO template. DAOs created on our platform are easy to manage, require no coding skills, and yet remain very flexible and unique to the user. V2 contracts were audited by two companies: Hacken and Pessimistic. Both companies confirmed that the contracts are completely secure. Pessimistic also confirmed that the economic model is strong and no vulnerabilities were found.

Here is the conclusion from Pessimistic:

Here is the conclusion from Hacken:

Now is the time to proceed to an overview of XDAO V2. Here we will try to reflect as briefly as possible the key modifications and features of the new version:

  1. Launch on Ethereum
  2. Off-chain voting
  3. Division of DAO tokens into two types:

3.1. Governance Tokens for voting

3.2. Liquidity Provider tokens for investments

4. DAO customization with modules

5. Web3 extension

6. $XDAO token and its role in the project

Launch On Ethereum

We intend to launch XDAO on the Ethereum network first, and later on Binance Smart Chain and Polygon. Existing projects on V1 will be able to easily migrate their organizations to the second version. A fully comprehensive migration guide will be provided by us.

Our developers, under the guidance of our CTO, also took care of making XDAO testing even more convenient. We have connected the Rinkeby testnet where XDAO will be maintained and updated along with the Mainnet version. This will be very handy for testing XDAO functionality and for defining a DAO model that can later be mirrored in Mainnet. Moreover, switching between networks becomes possible with only one click of a mouse.

Off-chain Voting

Off-chain voting is something that has not been previously implemented by any project in a perfect way. We are competing for the title of the first DAO builder to successfully implement it. In simple terms, off-chain voting is not recorded on the blockchain until the vote is activated, followed by one or many functions (swap(), transfer(), etc.). Unlike fully on-chain approach, off-chain voting is absolutely free for DAO members which initiate and vote. Gas fees are only paid by executor to actually run a function and record this information on the blockchain. Our main feature for this is gas compensation, when a DAO is reimbursing executor for his gas expenses (read more in “Modules” section).

XDAO Tokens

The DAO token division is one of the most important updates we have made. In V1, a DAO was only provided with one token type which was responsible for making governing decisions but could not reflect the value of an asset (price of a token did not depend on the project’s TVL). In V2, we separated the token functionality into two: ‘voting rights’ and ‘investment in a DAO’, and named them GT and LP tokens accordingly.

Governance Token

Governance Tokens (GTs) are required to be held by all DAOs and represent the voting power of a DAO governing member. GTs will not have a price, and it will not be possible to simply transfer them to someone else. They act exclusively as voting rights and are minted at the time of the DAO creation.

We have often heard from DeFi, NFT and GameFi projects: “Will it be possible to integrate your native token or NFT as a GT?”

Our answer for V2: “Yes, there will be such an opportunity!”.

Any token format can be tied to the governing functionality (GT tokens), giving the right to vote in a DAO with such simple strategy: 1 token = 1 vote.

In order to ensure maximum honesty of voting and prevent possible manipulations with tokens (i.e. to quickly change your own voting power), the user will need to exchange project’s native token for GTs with the possibility to exchange them back at any time. The user sends his/her tokens and, in return, receives GTs at a rate of 1 to 1. Then the user will be able to take part in voting and, if necessary, makes a reverse swap.

Our modular system allows you to configure both the swap rate and the period of token lockup, depending on the tokenomics and the economic/management strategy of the company.

Any custom token or NFT can be tied to the governing functionality (GT tokens), where 1 token is equal to 1 voting power.

Liquidity Provider Token

Things get more interesting with the introduction of the Liquidity Provider Token (LP). This token did not exist in V1. We carefully approached the development of this token, its role in the project and came to a conclusion that this token plays a key role in XDAO: it allows DAOs to earn on a blockchain, attract investments with an option of dividend distribution (!), conduct a private or public sales (similar to IDO and Launchpad).

LP tokens will not be issued at the moment of DAO creation. Instead, they will be minted when a DAO needs them and only if it is approved through a vote. It is the LP token that reflects the DAO’s assets under management (DAO AUM), that is, the LP price will be dynamic and change over time.

It is not necessary to have GTs of the company / project on your balance in order to buy its LP tokens. In other words, you do not need to have voting rights in the DAO to be an investor and participate in profit sharing. We have created a special section called “Invest” where anyone looking to invest can see which companies are offering their LPs for sale. Thus, XDAO becomes not only a DAO constructor, but also a full-fledged platfrom to meet people with projects.

XDAO V2 invest page
The Invest page

Modules

Would you be surprised if we said that we are not using the upgradable proxy at all? In fact, there are certain risks and unpredictable consequences when the contracts are modifiable (remember what happened to Compound?). Moreover, upgradable contracts are something that we would call an ‘old school’. We, on the other hand, created something unique and a lot more reliable: Modules.

We understand, that when a project is forming a DAO for the first time, they are not entirely sure what rules or features will actually be needed. Thus, we simplified the initial process of DAO creation and made it possible to expand the DAO functionality in the future as the need arises. After all, management of a DAO largely depends on the purpose, model, number of participants at the time of DAO creation and a potential number of members in the future.

We know that all DAOs are 100% the same in one way: they have at least 1 member and this member must have GT tokens. All DAOs on our platform are created this way, and this is why it takes no longer than 10 minutes to create one. Any additional features could be easily added through the connection to modules.

It takes only 10 minutes to create a DAO on XDAO. Any feature is accessible through DAO Modules.

Our modules will be stored in a place called ‘DAO Modules’. DAO Modules conceptually can be compared to the App Store: “An iPhone only gives you the basic functionality. Everything else you need can be downloaded separately.”

In XDAO, everything you need for better management of your DAO can be connected through DAO Modules. For example, a Telegram chatbot to notify of new votes, activation of vesting for LP tokens, etc. We are also looking into the prospect of adding custom modules to make our DAO builder even more versatile.

DAO Modules page

Web3 Extension

And finally, the last important tool that will significantly speed up your DAO is an extension for Wallet Connect. This extension will help to travel the Web3 world on behalf of the DAO and create any votes (whether it be participation in IDO, purchase of NFT or swap tokens on any DEX). We took XPLUG from the first version, refactored it and will release it officially via Wallet Connect on a desktop and mobile.

$XDAO Token

XDAO token is a standard ERC-20 token that will be used to pay for DAO Modules and monthly subscription for the service. All DAOs on V1 with significant activities and capital turnover will be awarded with $XDAO tokens right after an official launch. We will soon reveal more about our tokenomics.

Conclusion

Thank you for reading our article! We hope this brief but informative review was helpful for you to understand the core concepts and updates of XDAO V2. In next articles we will describe each of the concepts in more details, so make sure you are subscribed to our Medium blog. To see our deadlines, please, refer to our ROADMAP and don’t forget to clap if you found this article interesting!

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