Behind the Product #2 — Beyond Voting. Rethink DAO as a Business.
Most token nowadays is positioned to be a DAO, shallowly treated as an equity or proof of ownership of a protocol through its voting power. With such, people mostly adopt buy-low-sell-high strategy to extract “value” from the token, through arbitrary, while advanced players would be using all sources of Defi operations to leverage their capital for even more gain.
Regardless, earning through financial operations on DAO token is how majority, both mass and product owners, preserve a DAO protocol. Indeed, often overlooking the business representation of it.
To create real, tangible value to token holders, we need to enable something to do with DAO. We better think businesses.
Running a Protocol as a Business
In reality, a business is an entity that has its own cashflow, mostly operational. stakeholders then influence the business development (through certain authorities structure), and in return they gain returns based on equity share they own. While such statement does sound like how a DAO does, with most decision making replaced by democracy, the operational income has been missing from the puzzle.
Our ambition is to build a fully decentralized protocol, to certain extend, we intend to evolve our protocol to be similar to a publicly owned business on-chain, with shared ownership, revenue streams, and dividends distributions.
Having a shared ownership and voting rights could be simplified as a normal DAO mechanic; while dividend sharing have also been briefly touched on the users’ side, by showing how to bond $STND, our DAO token, for yielding; the remaining question is, what are the revenue streams? where does the revenue come from?
Revenue Models, and Our Initial Offerings
Let’s face the truth: if we want to grow a business, we need talent, effort and capital; If we want to grow a Defi protocol in a decentralized way, we need an incentivized community, and a decentralized revenue model that scaled permissionlessly. Hereby, on our first MVP, here’re are two sources of revenue from our Inflow Side:
DEX — Transaction Fee
As briefly mentioned in last article, we take 0.05% of transaction 0.3% transaction fee and split it across growth fund, treasury and dividends. This revenue stream will be correlated to the market sentiment and trading volume. In other words, to grow this revenue stream will rely on growing the usage of our DEX, i.e. trading volume & LP share as KPIs. Fortunately being the first few DEXs on Shiden and having discounted pairs resulted from collateral liquidation will certainly bring certain edge to us in coming months.
Vault — Stability Fee
Recalling that we’re a overcollateralized rebaseable stablecoin protocol. By allowing borrowing of our stablecoin Meter by overcollateralizing assets, user can gain liquidity from their assets without actually spending it (which is important during a bullish market). Members who want to redeem their asset will only need to pay a fixed interests, a.k.a. stability fee, in addition to their borrowing amount. While the details of stability fee will be surfaced later, this fee, will be considered as income of the protocol. KPI of this revenue stream will be TVL growth in our vault.
In general, to grow our protocol, a decentralized business that we have framed, will be simplified in improving revenue generation & efficiency on each revenue source, in addition, to introduce more revenue stream in an on going basis. Here’re some examples we have in our mind (may or may not be happening):
- Shiden Build-to-earn program
- Bridge and bridge fee
- Money market for Meter
- Syrups fee
- …and more.
All these income will be earned by the protocol, secured as capital on our audited contracts. Now the question is, what can we do with it?
Your Fund. Your Decision (to Spend).
We build Standard Protocol for the community, and we are committed to this statement. The revenue model is built in a way such that both the inflow and the outflow of the fund will be fully controlled by our DAO owner.
Two main aspect on Outflows side for our treasury: the Reward, and the Growth.
Reward — Dividend Pool
The module that converts and distributes sources of incomes to our community members.
STND holders can bond STND in our Dividend Pool, and claiming the fee that we have collect from our DEX, receiving in the format of LTR, our Liquidity Token. We share this income stream as-is and hence avoiding diluting STND holders’ share. Decoupling the reward from equity dilution enable members to gain real and tangible earnings without concerning the protocol tokenomics.
[As of writing, per learning from Shiden release, the team is discussing on a dividend-bearing token xSTND to decouple the utility conflict between Bonding (for reward) and DAO, as well as the reduced circulation of STND. More info will be released soon.]
As stated before, transaction fee will be one of the revenue stream. Our analytics on Shiden currently shows the APY is roughly 1%-2% for the moment. Imagine if we develop more.
With more income sources introduced, the Dividend Pools will be our key feature that enable our protocol stakeholders, you, our community members, to get a steady level of compensation for growing the protocol with us.
So yeah, you own the revenue of the protocol.
Growth — Treasury & Proposal
But why stop there, where you should indeed, also own the future of the protocol.
You hold STND, you are one of the stakeholder of this crypto business. But ownership is not complete until you can actually decide what it goes next, in particular, how to grow the business, and financially speaking, how we spend our treasury.
We will empower every of our STND holder to not just vote for proposal, but also how the income sources will be and how the treasury should be spent: which income source we should establish? shall we hire a new dev team to quicken certain development? Or shall we incubate a new proposal with treasury in exchange for a new revenue stream? Standard Protocol will be fully turned into DAO, bit by bit, brick by brick, and ultimately become a protocol that own by the community.
With STND, you’re one of the owners of this protocol, this crypto business.
Road to a True DAO
It will take time, and persistence.
The first step could always be difficult. To start with, members are invited to our canny page to suggest on product features, or explore our forums for proposal that will benefit to the community in long term. Over the next few months, the team has also committed to continue setup the foundation of the protocol, presences of multiple chains, as well as most importantly, our Stablecoin, Meter, a.k.a $USM. The complete DAO mechanics will be surfaced afterwards, along with the full decentralizing of our treasury, revenue stream.
From now on, talk business to us.
About Standard Protocol
Standard Protocol is the first Collateralized Rebasable Stablecoin (CRS) protocol for synthetic assets that will operate across multichain ecosystems, with our in-built DEX as a market maker to ensure capital-efficient liquidation process and stability of our stablecoin MeterUSD ($USM). It is also a recipient of the Shiden Network Builders Program Grant, Polygon #DefiForAll Fund and Polkadot Web3 Foundation Grant. Standard Protocol strives to innovate as the next-generation digital asset and prides itself on its global community growth approach.
We are launching our DEX and will also be the first native stablecoin Shiden Network, which unlocks financial opportunities to its community in both bullish and bearish market.
Behind the Product #2 — Beyond Voting. Rethink DAO as a Business. was originally published in Standard Protocol on Medium, where people are continuing the conversation by highlighting and responding to this story.