Tldr: draft proposal for a DXD Token Working Group. Feedback appreciated
The DXD token was launched by DXdao just over two years ago in May 2020, using a novel bonding curve contract. In the original design, revenue from DXdao products - in the form of ETH - would be deposited into the bonding curve contract. At any time, DXD could be deposited into the bonding curve contract in exchange for ETH. The price at which the bonding curve “buys” DXD is determined by the amount of ETH in the buyback reserve of the bonding curve contract. In this design, revenue from products would support the market price of ETH.
This is not how things played out. The bonding curve was very successful at launching DXD and providing DXdao the resources to build products, but it has not been a successful value accrual method for DXD.
Instead, DXdao enacted a buyback program in May of 2021 to purchase DXD off the open market as it was trading significantly below the NAV of the treasury. So far, 14,500 DXD has been purchased, which is more than 30% of the DXD that was minted from the bonding curve. With the buyback reserve depleting, a scaled-down program using funds from the general treasury is being weighed by the community.
The buyback program has driven value to DXD, but it is not a sustainable model - it is capital inefficient, requires manual submission and does not scale to other forms of non-ETH revenue. This has long been discussed in the community with differing opinions on how to move forward, but the discussion lacks the rigor and analysis needed to find consensus.
A dedicated DXD Token Working Group (WG) would give this issue the attention it deserves with the goal of finding a sustainable model that can then be built and implemented. The overall process should be similar to the Governance 2.0 Working Group, which took place 18 months ago. The Gov 2.0 WG consisted of full-time DXdao contributors, engaged REP and DXD holders, and other DeFi and DAO groups (Delphi Digital, DAOstack).
An on-chain proposal is needed to initiate the DXD Token Working Group, which can also serve as an open invitation to the DXdao community for feedback and suggestions on a new design. The WG will take the form of calls, forum discussions, research & modeling, and ultimately another on-chain proposal to ratify its findings.
Scope of WG:
Identify shortcomings in bonding curve and buyback models and present solution(s) that address these and create a long-term sustainable value accrual method for DXD.
DXdao governance needs to approve a new DXD token model accomplishes these goals:
Translates revenue/profit/assets of DXdao into DXD
Can be staked to participate in governance
Clearly communicated and attractive to new token holders
Perhaps the solution should also address a multichain world. The WG might also consider the overall liquidity of DXD and DXdao-provided liquidity.
All members of the DXdao community are invited to participate. DXdao contributors that are active participants in governance are expected to follow along and provide feedback. DXD holders (@hughesconnor , @0xSpicySoup , @hedgedhog )are especially encouraged to be actively involved and the WG should make an effort to actively seek out their input.
A new DXD Token Model will affect all corners of DXdao. DXdao contributors plan to be key members of the WG as it relates to their product (@0xVenky, @ross) or squad (@KeenanL ).
Anyone in or outside the DXdao community interested in participating, please reach out to @Powers
A specification document, signed off by DXD Token WG, that provides solutions that can be executed on by the DXdao community. It will be up to the WG to decide if the final document includes a single-agreed-upon plan or one that can be voted on by DXdao governance.
- The WG will take up a considerable amount of Governance squad resources over the three month period. Estimated to be 20% of squad time
- WG participants can earn mainnet REP for their contributions (if not receiving REP as a contributor)
- Outside research may enhance WG’s understanding and may require paid consultation. WG may request up to $10,000 in for research or model building.
Schedule & Timeline:
The WG will need to report back its findings as well as provide updates during the process. Currently proposing bi-weekly calls on Thursday at 16:30 UTC. Below is proposed timeline:
- Late July/Early August - discuss Working Group structure, submit and pass proposal
- September 1 - Kickoff & welcome call. Identify key problems with current model and review a history of DXD
- September 15 - Competitive overview of token models; successes/failures & lessons learned from other projects
- September 29 - Draft token model presentations from community
- October - DXretreat DXD Token Workshop Colombia will present an opportunity for a half-way check-in & presentation to broader DXdao community on the Working Group’s findings
- November 3 - Reach consensus on general token model and present initial draft proposal. Post proposal in the forum
- November 17 - Finalize proposal text and present findings to DXdao community