Revolutionizing DAO-powered NFT communities
Cons of the previous DAO models
The successful cases of Mutant Cats and HeadDAO NFT projects proved that DAO communities with plenty of utility can be successful. The concept of such communities is pretty straightforward: the NFT mint sales flow into the community vault — which is a source of funds for the blue-chip NFTs.
Those are later fractionalized and the community token is issued and “pegged” to the wallet. Some DAO NFT communities buy only top NFT projects like CryptoPunks or Bored Ape Yacht Club — therefore creating a so-called S&P 500 index for the NFTs. At first sight, the idea sounds great — NFT holders receive passive income in tokens that are backed by other popular NFTs, but there are still some pitfalls.
The utility of such tokens seems great in the short-term — right after the mint. The hype for the project is still up, 80% of holders stake their NFTs and receive community tokens every day — sounds like a dream. Until the laws of supply and demand come into action. Since new tokens are distributed to the NFT holders every day, the supply of those coins increases — resulting in the depreciation of the token.
As a result — the passive income that seemed great in the first week after the mint is exponentially decreasing as the value of the community token goes down. This triggers the panic sellers to get rid of the coin — consequently, the coin plummets. The graph below is a perfect representation of that — a community token crashed from $44 per one to $0.33.
The floor price of their NFTs also dropped from 0.8 ETH to 0.167 ETH:
Additionally, both the token price and the floor price of the NFTs are highly correlated with the NFT market activity in general — there is no reason for them to increase in the bear market, and holders are not hedged against those risks.
Unfortunately, this model proves to be unsustainable in the long term. That is why we have been thinking about possible improvements to the concept of DAO communities.
The introduction of the “IDO-powered communities”
The idea of a community vault seems tempting — constant utility to the holders and rewards for their loyalty. But what if instead of buying back other NFTs we created something different — more meaningful. That is how the idea of the IDO community vault came up. For those who don’t know: IDO stands for Initial DEX Offering. Offering better and immediate liquidity at every price level due to its mechanics, IDOs are an excellent choice for new projects and startups keen to launch a token and access immediate funds.
It is also a more autonomous way of attracting the crypto capital, especially compared to its predecessor — ICO — coin offering that is held via a centralized exchange. Why is it important for the crypto world? Some of the projects launched on such platforms (e.g. Bloktopia or Sandbox), have revolutionized the crypto space and implemented groundbreaking ideas. Why is it important for NFT holders/individual investors? The ROI of those projects is insane — more than 500x in a couple of months! This gives NFT community vault a completely new opportunity.
Now, NFT holders can decide what game-changing project they want to invest in. They can get paid much better and can actually contribute to the development of blockchain technologies. Sounds intriguing, isn't it? But the question is still there — why do people need to buy an NFT to participate in the IDO projects, why can’t they do it directly via multiple launchpads. And the answer is simple — allocation amount and staked tokens.
We chose the TrustPad launchpad as an example because it has one of the most transparent whitepapers among the top platforms.
In order to be eligible to participate in the IDOs — a certain amount of the launchpad tokens should be staked. The allocation amount (the amount you can invest in the project on top of the staked tokens) and the probability to win it are commensurate with how many tokens are staked. That is how the Tier system works.
Let’s say you stake 3000 TPAD and want to participate in the next IDO project on TrustPad. You only have a 20% chance of winning the allocation — meaning that out of the next 5 projects launching on TrustPad you will be eligible to invest only into one. Unfortunately, unless you stake 15000 TPAD (the equivalent of $15000) you will not receive a guaranteed allocation. In that system simple retail investors suffer the most — they are missing out on big projects and receive only a fraction of the allocation which is not even guaranteed. However, Generous Robots offer a new solution. We will consolidate people who can’t afford to stake many launchpad tokens on their own and will form a community vault to operate as a whale and always receive guaranteed allocations! The benefits of such a method are depicted in the table below:
We can see that the expected ROI from the project increases with the allocation amount. Let’s assume that on average projects launch every 3 days — that means that in 3 days Tier 1 investors can earn 3.33%. However, for the maximum tier, the ROI increases to 7.57%, which is 120% more. By consolidating their resources NFT holders can generate an additional 120% of the profit!
What is the role of the Generous Robots Society in all of this?
Holders of our NFTs will be invited to the exclusive DAO community where everyone will take a proactive role in selecting and screening the IDO projects. Additionally, the community members will be able to choose the next IDO launchpads.
Let’s calculate how much the Generous Robots Society could have earned in November had we participated in the IDOs. For the simplicity of calculations, we will only use one launchpad- TrustPad here (Each launchpad the community uses is subject to the approval of the NFT holders).
Let’s assume the project is sold out and the total community vault now has 700 000 USD (5000 NFTs *1 SOL * 70%* $200).
Let’s also assume that $630 000 are converted to TPAD and are staked to participate in the IDOs and $70 000 are saved for the allocation.
The table below represents the Current ROI and ATH (All time high) ROI of the projects launched on TrustPad in November.
There are two possible scenarios:
- We manage to sell tokens when the ROI is ATH
- We sell the tokens at the end of the month and have current ROI
In the first case, the monthly ROI ATH (Revenue/(Staked Amount+Allocation)) = 2,258,594/(630,000+73,500) = 321%
In the second scenario, the monthly ROI would have been 36%.
However, the vast majority of the projects have vesting schedules — when only a certain % of tokens are unlocked for IDO participants. Most of the time you can claim 50% of the tokens right after the public sale and the remaining 50% a month later.
In that case, the range of possible monthly ROIs decreases to 18%-160%. This mathematical model does not include APY that is generated through the staking of the token — that is an additional profit for the community.
To sum up, the IDO concept provides an excellent long-term opportunity to earn from what might be the next Facebook (or Meta) of the crypto world. At the same time, it is a great diversification tool against the NFT bear market.
It is about time the NFT community realize that they are not only limited to the benefits of the NFT market. NFT is only a small part of the immense and fascinating crypto world — why not benefit from it all if you can.
Join our social media:
#NFT #IDO #DAO