Omen & Swapr: Taking the next step

With Swapr and Omen both growing up, I suggest we take the next step in supporting their independence.

A part of every project’s success is due to the investors they chose to work with and going through the fundraising process by itself. This process is a great feedback mechanism and helps every project/founder re-evaluate their assumptions. Have they been correct and the product has made good progress, funding will be easy. But if they are building in a vacuum for an audience that doesn’t exist or have trouble phrasing their message, funding becomes much more challenging. In any case, this process sharpens a founding team’s ability to think about their market and their product from an outside perspective.

I would therefore like to encourage Swapr and Omen to go through this process to take the next step in becoming more independent from DXdao.

Swapr and Omen have enjoyed comfort so far building their products as DXdao incubations, but we have to avoid that relying on DXdao’s treasury becomes too comfortable.

I am therefore suggesting the following process:

  1. Swapr and Omen calculate their 18-month budget now (including some growth scenarios). This will be the target amount to raise.
  2. They then set out to talk to VCs and other sources of capital in this space to raise this amount. The lead capital source will determine the valuation for that round.
  3. Swapr and Omen will have complete authority over what investors they chose to work with and the DXdao community has no say in it - after all they are the ones who have to work with them for the next years
  4. If Swapr or Omen would fail to raise any or all amounts, they can still fall back on DXdao. For example, if they only raise 80% through outside investors, DXdao would commit to taking the remaining 20% of the round.

I see the following benefits for Swapr and Omen:

  • Challenge yourself against the market. Investors usually have a good view of the market and will be able to give some valuable input.
  • While DXdao can provide solid input on many angles such as governance, marketing, community, and tokens, DXdao lacks expertise in other areas and would benefit from bringing additional stakeholders into its products. Not only will this sharpen the narrative for both products, but will create a set of stakeholders that will promote and support Omen/Swapr
  • Get more independence with product directions. By having their own treasury, Swapr and Omen will feel more emancipated and will push back more against DXdao should there be a potential conflict of product direction
  • The funding environment is currently very favorable for projects right now, and it will probably not be this easy again for a couple of years

And the following benefits for DXdao:

  • Get more outside contributors / stakeholders involved
  • Create a blueprint for other DXdao incubations
  • Build up a network of VCs and capital sources that can be reused for future incubations
  • Sharpen the narrative around DXdao to be a decentralized incubator

We at 1kx would abstain from participating in any of these rounds, but we would be happy to provide help in building a deck and feedback on pitching.

Quick poll to gauge some community sentiment regarding this idea:

  • Yes, we should drive projects towards more independence now
  • Yes, we should drive projects towards more independence eventually
  • No, we should keep projects close to DXdao and guide their product directions
  • Other (please comment)

0 voters

7 Likes

Interesting proposal! So basically you view DXdao as a serial incubator?

This is not a bad point of view, honestly, since DXdao has 70% of the tokens of Omen and probably also of SWAPR. So their (even if independent from DXdao governance) success is a win for DXD holders.

I am not sure, however, about the proposal. So I have not answered.

I’m quite neutral to this. It may have some benefits.

What I don’t understand: how this should technically work?

I assume both have a token and we only can give these token for an investment into Omen/Swapr. Dxdao will hold a majority in these tokens and over this also majority in gov power. So how should they have no say?

An investor could not sign a legal contract with Dxdao nor Omen/Swapr because there is no legal entity.

Do you think you could make an example how this should work?

4 Likes

Very good point. I think DXdao owning 70% of both of these networks will likely be a huge deterrent to any outside investor and therefore also risk the protocol’s chance of success and I would encourage DXdao to go for more realistic levels such as 20% (which is still pretty high). Unless of course, DXdao locks these tokens for a very long time to signal it is only interested in the revenue shares, but still then I don’t believe 30% will be enough to incentivize usage, leave enough room for the team and get outside contributors on board.

Investors don’t necessarily need legal agreements. IndexCoop recently did a treasury sale and has used vesting contracts that remove counterparty risks. Of course, the token would need to be minted for that to work (note: I only said minted, it doesn’t need to be distributed or have utility yet).

Also just answered in the OMN thread: Omen Guild: Governance, Distribution, & Liquidity Incentives [UPDATED] - #7 by HeyChristopher

1 Like

If we decide to go through with this I would like to assist in raising the capital as I’ve worked with various VCs in the past in raising funds for crypto start ups, Thorchain being one of them, and we’ve had great success.

1 Like