Ze.Fi & Foundry DAO: AMA Recap

Noctis Caelum
Ze.Fi | زي.فاي
14 min readDec 1, 2020

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Welcome to the #ZeFi AMA with Foundry DAO!


So, today we have Schalk and Logan from Foundry DAO here with us today. As the name suggests, Foundry is going to be a DAO where decisions are taken by community members (or rather token holders), with an aim of both attracting and funding projects that increase financial liberty for all (through tools that allow those who laboured to keep the products of their effort) AND to use projects and investments to drive value to the DAO’s ow $FRY token. Does that sound about right as a quick overview?

Yes, that’s a pretty good summary! I’d only add that the projects Foundry pursues would need to be profitable as well as focused on liberty
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Well then let’s start at the beginning; how long have you guys been involved in the blockchain space, what drew you in, and what are the backgrounds of the Foundry team?

Logan: About 7 years ago, I was about to finish a degree in engineering when I heard about Bitcoin. I got so sucked in that I failed that semester, then just never went back — it felt risky at the time to give that up, but it was definitely worth it. Then around devcon2 I wrote my first smart contract (a burnable payment, game theorists may find that interesting, see https://medium.com/@coinop.logan/toasted-money-part-2-b5dfd0b1e946). Since then I’ve been heavily involved in the “full stack” of dapp design, with a specific focus on simple but game theoretically sound systems.

That burnable payment btw, was the predecessor to what is now DAIHard

Schalk:
I first heard about Bitcoin back in late 2009 and then very arrogantly dismissed it as not really innovative. 🙈

Lukcily 1.5 years later I ran across it again and did some early GPU mining.

Then in 2014 I had the opportunity to interview a 19yo Vitalik about Ethereum. https://www.youtube.com/watch?v=Cw27x_xAPmI&t=5s&ab_channel=SchalkDormehl

Then after the 2017 rally I was in the fortunate position to help start an Ethereum wallet company (Aardbanq) where I was a solidity developer for almost 2 years. (I’d been in IT since 2003 before that)
I met Logan in late 2017 and we collaborated to build DAIHard.exchange
You really like fire-themed branding, it seems

Haha yeah! Well I really think that burning is an incredibly simple and powerful game theoretical mechanism. And that turned into a sort of branding decision

And that provides us with a good segue to talk about DAIhard, because, as I understand it, there are currently 2 projects associated with Foundry DAO, DAIhard being one of them. Can you explain in a bit more detail what the exact relation is between the two (or rather, 3) projects?

DAIHard you could say was the first project Team Toast worked on, although it was only later we gave ourselves that name. Its primary purpose is to allow anyone anywhere to trade cash for crypto, without needing KYC, even in jurisdictions where it’s illegal. It does this by relying on game theory to incentivize the users to play nice (and punish bad actors) and not relying on direct integration from any banking or legal system

I am super interested in hearing more about the burnable payment system, something that rings the bells, is what SXP was trying to do, and they don’t seem to have succeeded yet. What is DaiHard? Tell us a bit more about it


Happy to! I’ll first include this link though — mainly for the graphics of the game tree: https://medium.com/@coinop.logan/daihard-game-theory-21a456ef224e

Interesting, and has that game theory worked out in terms of keeping customers on all sides of the transaction honest, or have there been some unscrupulous ne’er-do-wells taking advantage?


We are going to find out hopefully soon, as the scope of what DAIHard enabled became clear, it became clear to us that before we could market it with the gusto it deserves, it would need to be housed in a DAO. It would just be too much of a liability lure otherwise.

So to answer the question more directly we haven’t yet seen use and therefore no abuse.
The premise behind DAIHard (and burnable payments in general) is not that users are protected/insured against loss in the case of an attempted scam — but rather that any attempted scam does not profit and is in fact punished. This is because the buyer can always at the last minute simply burn what is in the payment, instead of releasing it. This makes the buyer the judge, jury, and executioner of the trade, giving the buyer a lot of confidence. And yet because the buyer can’t actually get a refund — he can only burn — the seller doesn’t have to worry about the buyer lying just to get the money back
-> “We are going to find out..” Actually, not so true

The full, user-facing thing called DAIHard hasn’t had much exposure, so we haven’t been able to test its specific game theory. But the game theory of the underlying burnable payment concept has been tested a bit — publicly, on mainnet, with real funds. Here’s two articles I wrote on this:

https://medium.com/@coinop.logan/toasted-money-4fb07492acf3

https://medium.com/@coinop.logan/toasted-money-part-2-b5dfd0b1e946

So that’s one of the project currently associated with Foundry DAO, how about Smokesignal?
SmokeSignal is something we’re more excited about today, because it’s more topical and urgent. It’s a platform for radical free speech. It uses Ethereum to allow users to permanently post any text they want, and this can never be censored — not even by us or by Foundry.

And how does the DAO enter into that?


For both DAIHard and SmokeSignal, these are products that direct their profit streams to the Foundry Treasury, and which we expect Foundry to maintain once it is autonomous
Here’s more (as a SmokeSignal post) on the use cases of SmokeSignal: https://smokesignal.eth.link/#/context/re?block=9956175&hash=0x005217c20d13cb47dee70a55b7f705044ac67789036133ff6944340b1f937d2a
See, we ended up working on Foundry because we found that the projects we felt it was important to work on… were also projects we were afraid to attach our names to as fragile humans against angry governments. Foundry can take these and other bold projects further, and with less fear, than we can.

I think it goes without saying that if you position something as permanent and uncensorable, it does also seem to open the floodgates for a lot of content that many would or could find morally or legally objectionable, not just from a political perspective. Is this a concern for endorsing such a platform?

There are two questions there (at least!) : legal risk and ethical objections.

Legally, my previous message becomes immediately relevant: Foundry is built to be able to ignore legal risk.

Ethically, it’s our firm belief that the future is a place in which free speech is not only necessary, it’s also inevitable. We have to be brave and enter this new world willingly, even if it comes at the cost of ugliness coming more to the surface than we’re used to.

-> Well, a long time ago, just as Ethereum launched, someone make a project called “boobs on the blockchain”, which was meant to convey the dangers of a permanent ledger. He basically just posted mammories from renaissance art there.

The thing is Ethereum has been live for 5 years, and has had the capacity to do very dark things. Yet, that is just consistently not what it’s used for.

SmokeSignal is entirely public and irrevocable, I think anyone who posts something truly dark is unlikely as they would do that in private channels to minimize the chances of being identified or targeted

And you say both of these projects are set up to generate profits for the DAO, could you explain how they would generate revenues to do so?

Currently, SmokeSignal has a “donate” checkbox, default-checked, that takes an extra 1% of what the user burns to post (burning increases a post’s visibility). So far, all uses except for one have left that checkbox checked. That 1% then goes straight to the Foundry Treasury.

We may change SmokeSignal’s profit model in the future though, possibly with some tokenomics like requiring the user burn $FRY

-> So DAIHard takes a 1% fee for facilitating the trade. It only takes the fee if the trade was successful. That 1% fee is directed to a specified address. That address could be the Foundry Treasury account, or it could be a special purpose account which buys and burns Foundry tokens ($FRY).

All future project Foundry funds will likely have the expectation that the smart contracts will be deployed to benefit the Foundry ecosystem and $FRY value positively.

To be clear, right now both products point at the Treasury, but this could be changed in the future to do something more tokenomics-ish

So in that sense, it doesn’t necessarily rely on projects actually being profitable, so much as them just generating some form of revenue or income?

We see a lot of projects in crypto and blockchain crash and burn pretty quickly, so would it be possible that the wisdom of crowds in the DAO just gets it wrong, a project fails, or a malicious actor rugs, and thereby the value of $FRY is reduced?

Well that depends on the exact definition of profit in this instance. Any product needs maintenance and needs to be changed as time goes by. If Foundry is no longer intellegent enough as a DAO to maintain it’s products, then their revenues will dry up and Foundry will grind to a halt.

I don’t think the projects Foundry builds will generally have their own token, so in that sense the projects themselves can’t be rugpulled
But yes, I agree with Schalk’s answer to the heart of your question. Basically, we expect (and need) Foundry to be intelligent enough to pursue projects that actually end up profitable — meaning the cost Foundry puts in is paid back and then some by the revenue it brings in. If that fails, then Foundry fails.

-> “We see a lot of projects…”

Most Defi projects today are essentially just a “curve” of some sort. A game whereby we hope we’re not the last guy in or the last guy out.

One of my personal goals with Foundry’s intelligence is to not make it a hedge fund but a venture fund. If all it votes on is if the treasury should hold YFI or IYF, then it’s failed in my opinion.

Foundry is meant to risk money on teams who build interesting, “dangerous” world liberating tech. So it’s a VC fund and not a Hedge fund. There are other risks in this model than getting rugged.

I mean the DAO could choose to support and fund a project, based on the proposals a project presents, but if the project was just a charade formulated by charlatans, could that have any impact on the value of the FRY token? Does FRY require the DAO to get all their decisions right in order to accrue value?

Hmm okay, let me model Foundry as an agent, because that’s what a DAO should be at the end of the day. If this doesn’t answer the question let me know.

It sounds like you’re asking, what if Foundry basically pursues a project that sounds good, just to pump the price of FRY — even if the project actually isn’t a good idea. Then you might have Foundry spend big chunks of the Treasury on projects that lead to FRY pumping but no real profit.

FRY governors will likely have a waiting period to exit governance, so this is one way we’re addressing this kind of concern. If I vote on some proposal, I have to wait (say) 2 months before exiting. We’re still working out what that period should be.

Aha, that’s interesting, a mechanism to mitigate insta-dumping of fresh new tokens in other words?

Right. We’re still working out some of the Governance design — we’d love if anyone wants to read through the white paper and share some thoughts! https://github.com/team-toast/foundry-design/releases/latest/download/foundry-design.pdf

And as with any DAO, how do you (if at all possible) balance the individual token holder’s desire for short term value boost vs long-term project health?


We’re building tech from scratch. We believe we’ve found a way to implement economically feasible liquid democracy on Ethereum (which we’re very proud of).

So firstly, the governors will stuck in the governance contract for a long time (like 6 months) before they can withdraw. If they are shortsighted they will be exiting with low $FRY values after the price has adjusted for their misbehaviour.

Secondly, liquid democracy will hopefully form a sort of representative structure where people who have less information trust others who have more, more. So somewhere between representative democracy and direct democracy.

Also while we’re avoid quorums (they can seize up), we do want very high positive action vote rates, like 60%+ That way it will take a lot of unwise money to make an unwise decision.

I really enjoyed the conversation so far, and reading through the Foundry Forum, I saw hundreds of discussions! I am still trying to understand the profitability for FRY holders, and what you said make sense for sure, but still trying to chew the idea that these projects “need to be profitable”. As in, how do you define profitability?

For degens in Uniswap, this is several multiples over their intitials. For some others, it could be knowledge. Others prefer a long term value… etc

Who defines “profitability” in your DAO?

When we talk about something being “profitable” on Foundry media, we’re not assuming any tokenomics; we’re very simply talking about revenue (each project should have some income mechanism) minus cost (usually of building, iterating, and marketing). So if Foundry spends $10k in DAI to build, iterate, and market a product that returns $11k in revenue, that counts, that’s what we want. Foundry (and therefore $FRY holders) would then be in control of a Treasury worth $1k more, which would lead to a higher valuation of $FRY.

-> If you look at SmokeSignal for instance, it currently takes 1% of any burned or tipped amount and sends that to the treasury. Right now that isn’t a lot of money. If Foundry is successful in marketing SmokeSignal, then that 1% could be a significant amount. We are also discussing a means to get 100% of that value in Foundry while maintaining the game theory of SmokeSignal.

Similarily for DAIHard the 1% of the trade there, if it becomes a significant OTC platform for trading from the FIAT world to the Ethereum world, could be a very significant number.

So the profitability on a business level is, how much money do the projects generate vs what does Foundry have to spend to keep them alive and progressing. On a token level however the profit is more “how much money might Foundry generate” and is that amount reflected in the current token price?

The reason I am asking, is also connected to Skiz’s question about “instadumping”, because we did for example in Ze.Fi, have very interesting projects with great future plans, and so on… they didn’t manage to succeed in their uniswap launches, and hence this really made some members in our group, deal with these projects as a PnD type of thing. The projects failed, or still trying to recover from the failure they had. Do they still have great plans for the future? yes. Do they have an amazing product they are working on? yes. Are they profitable? This really depends on the individuals.

Crypto has been crazy enough that tokens with no actual value, and just coming as copycats, or belong to the “anti” movement. Anti everything. Where they just create someting that takes from some other projects’ successes, and really don’t bring any solution of any kind. These have been bringing “profitability” in that sense, to the degens………

-> “if you look at Smokesignal for instance…”
Now it makes sense! Thanks for the answer

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ZeCommunity Time!

Hello, really enjoyed the AMA so far, thx. Can you please say what you do to stop early whales from controlling the whole DAO and only supporting the projects they like? Is it one token one vote, or are there measures to stop the richest community members getting much more voice than others?


We do believe that ownership should induce control. So one token should equal one vote.

However; we are implementing Liquid Democracy, so a whale with less information about what to support and a long term view, would be rationally incentivised to delegate to someone with more information and time to do the research to make a long term profit.

Also another question, with the DAO able to support projects on “extreme free speech” side of things, will you try to get any CEX listings, or do you see $FRY as a token purely for Uniswap/DEXes?

There’s not much need to get listed on CEXs, other than the memetic/hype value, which we aren’t too concerned with pursuing just for its own sake. We also believe that if a project is high enough quality and does reasonable marketing, getting listed is something that will come along of its own accord.

Hello sir, this AMA was full of fire and very technical questions and even more technical answers but what about marketing?

In my long time in crypto I noticed great cryptocurrencies perform very badly because their developers are more into the technical side of things rather than media and marketing, and these play a huge role in the token’s development

Marketing has indeed been challenging, especially since we compete with rug pulling Shamen who hypnotize all the degens and then rob them blind.

Our strategy right now is to get maximum exposure to the working project that is SmokeSignal. Any use there will translate into both awareness and a supply side contraction of the $FRY price, which will further attract attention.

You’re absolutely correct about that danger and sad story all too common. While we are definitely more comfortable with technicals than marketing, marketing is currently our #1 focus, and even development is bent to that end.

Currently, as Schalk said, our marketing is focused on SmokeSignal engagement

Hi there!

With your idea of liquid democracy and whales delegating to more knowledgeable people, how do people in the FRY ecosystem get to find out who’s knowledgeable and worth listening to on DAO decisions?

Any DAO needs off-chain coordination to supplement and lead to on-chain proposals and votes, and in this Foundry is no different. A main focus right now is to get the forum (forum.foundrydao.com) going. That will be where people share info on good governors as well as on the merits of various specific proposals.

So governance will have two major parts. Onchain and offchain. Offchain is actually where the real discussions will take place. This is where users will meet and get to know each other.

Here’s an early version of some off-chain governance https://dashboard.foundrydao.com

We’ll be building more such tools so that proposers have a very good idea if a proposal will pass or fail before they go through the process of on-chain proposal.

Can you guys tell us a bit more about the reasons you chose these pictures?

Hmm, those pictures don’t translate too well to B&W. See here for better pics and a bit more context as to the tone https://foundrydao.com/team-toast

I’ve pushed for a certain kind of irreverence in some of our marketing, and our Team page definitely has some of that

Amazing AMA!

I have several questions to begin with.

- Why did you choose DAI as the core token for the SmokeSignal? I understand that it is important to have a decentralized stable coin, but why not allowing for other type of volatility? For example, what do you guys think about YFI and its vaults as a core token?”

- What other gamified aspects of the staking and yielf farming world do you tend to bring into the table?

- What if the Foundry failed to bring profitable projects to their members? Who would be liable?

Good question. We chose DAI because at the time the reports of censorship around Covid19 were quite topical and we just needed a neutral, known value to base it off of. We have come up with a few proposals that allow us to burn basically ANY token on Ethereum (including Ether) and actually have that value accrue to $FRY. $YFI is an unbelievable project I am lucky enough to live in Cape Town and have met Andre once. He is truly in a class of his own.

Gamification: I am strongly considering governance, not with $FRY directly but with ETHFRY liquidity. This would make an attackers task much, much harder, all while supporting the price and deepening the liquidity.

Failure: Well it’s definitely caveat emptor. Once governance is out, it is Foundry itself that will control 100% of its treasury. The token holders would have only themselves to blame if we hand them a working system.
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And that was all folks!
Big thanks to the $FRY (Foundry DAO) team, Logan and Schalk for their presence in our group today and for giving us this opportunity to research and understand their project more!

To follow up more on their updates and latest news, please head over to one of their socials mentioned here:

Website: http://foundrydao.com
Whitepaper: https://github.com/team-toast/foundry-design/releases/latest/download/foundry-design.pdf
Prospects of FRY DAO: http://foundrydao.com/presentation.pdf
Telegram: https://t.me/FoundryCommunity
Ongoing sale: http://sale.foundrydao.com
YouTube: https://www.youtube.com/channel/UC4Z34M4q5emaYlJP_Sqa-Cw
Twitter: https://twitter.com/FoundryDAO

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