Understand the investment potential of the decentralized autonomous organization DXdao in 5 minutes

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Probably the DAO with the best profitability.

Written by: LeftOfCenter

Since the launch of the decentralized autonomous organization DXdao, its token DXD has soared tenfold from 45 USD to 467 USD. Although the currency price has subsequently dropped significantly, it remained at 251 USD at the time of publication, an increase of over 450% . DXdao adopted a joint governance of its governance tokens REP holders, while holding token DXD native mode share revenue generated by those products is entitled to. So, how does DXdao work? What is the profitability of its products? Is there still potential for growth? And why does the decentralized autonomous organization model DAO integrated data platform DeepDAO call it a mature decentralized management model ? Please see today’s chain news to read the series in 5 minutes.

What is DXdao?

DXdao was initiated by the Gnosis team in March 2019, based on the DAO Stack, and aims to develop DeFi products in a decentralized organizational model . After the project is deployed, Gnosis will withdraw to ensure that it does not retain any type of control rights or pre-mined assets in DXdao, to ensure that everything is fair and just.

The original purpose of DXdao was to manage the parameters of the DutchX protocol. DutchX is a completely decentralized transaction protocol using Dutch auction principles. Users who transact on DutchX can get DXdao “reputation token” REP, which holds the voting rights of DXdao. In addition, you can obtain “reputation token” REP by locking ETH or other ERC20 tokens supported by DutchX.

Although the original goal of DXdao is only to manage the DutchX protocol, since DXdao participants can vote to promote the logical upgrade of DXdao, DXdao can actually evolve into anything that is allowed on the Ethereum blockchain.

So far, all members of DXdao jointly own and operate a series of DeFi applications, including the decentralized prediction market Omen.eth, the permission-free DEX Mesa.eth, the privacy tool Mix, and the token exchange DXswap.

DXD is another token issued by DXdao besides the “reputation token” REP. DXdao uses the joint curve to issue the native token DXD for fundraising. Holding DXD tokens can enjoy the benefits created by a series of DXdao’s DeFi products . In May 2020, DXdao launched a crowdfunding plan to issue a total of 12,000 DXD tokens, aiming to raise USD 300,000 worth of ETH. However, this is not the first time DXdao has issued a currency. Previously, the team had claimed to pre-mint 100,000 DXD. Two months after the launch of the joint curve issuance program to the public, the price of DXD reached 0.51 ETH, and the total supply of DXD exceeded 124,000. Up to now, DXdao has generated 48,837 DXD based on the joint curve, earning 2485 ETH.

As the native token in the DXdao ecosystem, DXD grants and its holders a series of rights, including the right to share the total revenue of DXdao and the services and advanced functions of DeFi applications such as transactions without gas fees.

DXdao’s source of income

DXdao has two asset pools, the joint curve reserve pool and the DAO treasury (ie balance sheet) . DAO’s adjusted balance sheet is approximately US$12,441,257, while the joint curve reserve is approximately US$9,144.8 million.

In order to fund ecological development and growth, DXdao will transfer 90% of its revenue to the DAO Treasury . Regardless of the new token DXD purchase or the income generated by its products, only 10% of the quota will be allocated to the reserve, and the rest will be transferred to the DAO vault for ecological growth.

According to data from DeepDAO, the DAO comprehensive data platform of the decentralized autonomous organization model, DXdao is composed of 428 members. These 400 members jointly own and operate a series of DeFi application product portfolios, including prediction markets (Omen), auction platforms/DEX (Mesa ), privacy tools (Mix), token exchange (DXswap), and the second-tier payment application (Rails) that is still in its infancy. Among them, Omen is based on Gnosis’ Conditional Token Framework (Gnosis’ Conditional Token Framework), Mesa is based on Gnosis protocol, Mix integrates tornado.cash, DXswap is a clone version of Uniswap V2, and Rails uses Loopring’s zkRollup technology.

Among the above products, only Omen and Mesa have just launched, and DXdao, which is in the early stage, can hardly generate any revenue from these products. But once any product generates income, holders of its native token DXD can share this income.

In addition, DXdao’s balance sheet also has an important source of income, which is the native token assets issued by its various DAO projects . In April of this year, the DeFi Money Market Foundation (DMMF) allocated 2% of the total supply of DMG governance tokens to DXdao, so that DXdao members can help it manage the DMM DAO. On July 1, the decentralized arbitration machine Kleros provided DXdao with 4 million PNK tokens as rewards . However, the reward is conditional. The dispute resolution service provided by Kleros integrates Omen, a product prediction market under DXdao. Every time a prediction market transaction occurs on Omen, Kleros can become one of the arbitration options. The condition is that the reward will only be activated if a transaction volume order of at least $20 million is generated for Kleros through Omen. Similarly, after the interface of DXdao’s application products generates a transaction volume of 20 million US dollars for the Gnosis agreement, you can receive a 10,000 GNO grant from Gnosis. The data shows that Mesa alone has achieved this transaction volume goal, which means that DXdao has already obtained these tokens.

Understand the investment potential of the decentralized autonomous organization DXdao in 5 minutes
The picture above shows the various token assets included in DXdao’s balance sheet

DXdao on-chain governance

Due to concerns about centralized control, many decentralized projects currently adopt off-chain governance, causing their decision-making to paralyze or stagnate. DXdao believes that consensus is not an end, but a process. In view of the current status quo, a new system needs to be improved and constructed to help these decentralized projects reach consensus in a scalable, decentralized and effective way. Specifically, the core goal of DXdao is to build a tool, product, and process to facilitate decision-making and consensus-building in large decentralized communities around the world.

DXdao uses holographic consensus for governance, this mechanism can expand the scope of decision-making. Specifically, there are two ways to implement a proposal. For a regular proposal , as long as an absolute majority (more than 50%) of REP holders’ votes are obtained within a certain period of time, the proposal will be passed and executed. Another way is that before voting, community members can use GEN pledged tokens to staking a regular proposal. Once the staking GEN token reaches a certain threshold, the proposal will be upgraded to an “enhanced” proposal . More people will notice it, so the turnout rate for its approval will not be so difficult to achieve. After that, if the proposal receives an absolute majority (more than 50%) of the votes of REP holders within a certain period of time, then the proposal will be implemented.

In the DXdao system, there are 3 types of tokens , namely the native token DXD, the governance token REP and the pledge token GEN . Among them, holding DXD native tokens can enjoy the benefits created by DXdao’s products; REP is a reputation token, which is mainly used for voting and governance of DXdao. It cannot be purchased and can only be obtained by contributing to the community. It is associated with an Ethereum address. Cannot be transferred. GEN is a pledge token, mainly used for staking to oppose or support proposals.

DXdao adopts a relatively complex governance mechanism to separate economic benefits (DXD) and voting rights (REP) , so as to achieve as much decentralization as possible, and enable it to maximize the distribution of REP and expand to The world’s largest decentralized organization.

Overall ranking and data performance

Based on the adjusted balance sheet rankings, DXdao ranked first , and the second was The Lao . DXdao ranked third in terms of the total number of members, the total number of votes and the number of proposals generated.

Understand the investment potential of the decentralized autonomous organization DXdao in 5 minutes

Understand the investment potential of the decentralized autonomous organization DXdao in 5 minutes

Understand the investment potential of the decentralized autonomous organization DXdao in 5 minutes
Understand the investment potential of the decentralized autonomous organization DXdao in 5 minutes

The data shows that the top 10 reputation token REP holders control 52% of voting rights . Although there are active communities on the forum and the total number of proposals has increased, the overall number of votes is gradually decreasing.

Before the launch of DXdao, 100,000 DXD has been pre-cast, and these funds will be unlocked in the DAO vault reserve within three years. Before the release of 100,000 pre-cast tokens DXD, there were only 48,837 DXD in circulation on the market. Therefore, before the 100,000 DXD is completely released, the market value of DXD can only be calculated based on 48837 DXD. Based on the current price, the market value of DXD is approximately US$12.69 million. The complete DXdao vault reserve can be seen here .

Understand the investment potential of the decentralized autonomous organization DXdao in 5 minutes

DXdao’s treasury reserves are mainly to provide funds for the future growth of its products, and most of the funds are spent on product development and marketing costs. According to DXdao’s budget proposal, it can be seen that DXdao’s monthly regular expenditure arrangements are relatively reasonable. On the premise that no new DXD purchases are added, the product does not generate income, the current token price does not fluctuate, and the 100,000 pre-cast tokens DXD released every month are not added, then the current inventory funds are held DXdao still maintains 6.3 years of operation.

So, what is the profitability of DXD? Maybe you can calculate the price to book ratio of its native token DXD.

According to DXdao’s balance sheet, the price of net assets per share of each DXD can be calculated. As shown in the figure below, it is calculated that the price-to-book ratio of DXD is 0.91 , which means that DXD still has a certain upside potential. In addition, DXdao’s products have not yet produced revenue, but have great revenue potential. For example, the current trading volume of the prediction market Omen has greatly exceeded AugurV2, and the monthly trading volume of Mesa is slightly lower than IDEX.

Understand the investment potential of the decentralized autonomous organization DXdao in 5 minutes
Price-to-Book Ratio (P/B PBR) refers to the ratio of stock price per share to net assets per share. The price-to-book ratio can be used for stock investment analysis. Generally speaking, stocks with lower price-to-book ratios have higher investment value. On the contrary, the investment value is lower; but when judging the investment value, the market environment and the company’s operating conditions at the time should , Profitability and other factors.

On August 23, Delphi Digital, a cryptocurrency research organization, announced that it had joined the decentralized autonomous organization DXdao (DXD) and put forward a series of suggestions for improvement based on the current status of the organization:

  1. So far, DXdao’s products have hardly generated any revenue. Delphi Digital recommends that DXdao learn from Costco’s business strategy and business model to maximize the value of its different application ecosystems and members, that is, to collect membership fees when the ecosystem reaches a critical mass. Prior to this, non-members can obtain the same benefits as members in order to better expand the scale of capital and increase the adoption rate;
  2. Delphi Digital recommends that DXdao build the entire ecosystem on the second-tier solution to increase scalability and flexibility;
  3. The current joint curve of DXD hinders the short-term development of the project, resulting in a lack of liquidity to prevent potential members from purchasing DXD and substantial discounts in the secondary market. Delphi Digital recommends that DXdao update its joint curve;
  4. DXdao’s current governance design is too cumbersome, lacks a user interface, and the DXD held is not directly equivalent to voting rights. DXdao can further update its liquidity mining plan and allocate some tokens;
  5. DXdao needs to standardize its project development process and make information transparent.