Market Analysis of DAOSquare: An Incubator for Web3
Introduction
DAOSquare is a DAO-related project. To understand what DAOSquare is for, one needs to briefly understand what DAO is.
To put it simply, DAO is a decentralized autonomous organization. DAO’s ultimate goal is to achieve large scale “autonomy” through “decentralization”. The “autonomy” here does not mean that stakeholders “act on their own” and instead means “collaboration” among stakeholders without any hierarchical structure. From these two perspectives, Bitcoin’s system is the earliest DAO in blockchain.
However, DAO was first proposed due to the emergence of smart contracts on the Ethereum blockchain. In 2016, the blockchain company, Slock.it, launched the first DAO project — The DAO. It is actually a form of decentralized economic organization (decentralized autonomous organization + venture capital fund), which provides complete transparency, complete stakeholder control and unprecedented flexibility and autonomous governance.
Vitalik Buterin, the founder of Ethereum, said that they were conducting a lot of tests around decentralized organization, decentralized governance, Proof of Humanity, Proof of Participation, etc. He mentioned that Ethereum has spawned a variety of different ideas about how people can organize and cooperate on the Internet. He believes that it would be great to see more like-minded ideas emerge to really help people to do a better job and collaborate on a larger scale.
At present, DAO has gradually emerged in protocol layer consensus, application layer protocols, middleware services, including DAO financing, DeFi DAO module, cross-chain liquidity DAO, NFT DAO, aggregation service DAO etc.
DAOSquare is a decentralized incubator created for financing. It is used to provide financing, development, services and other types of support for projects.
In financing, DAO and DIO are the two financing methods of the DAOSquare incubator. They are used in different stages of the projects.
DAOSquare will meet the financing requirements before its public offering, and its investment behavior is based on collective decision-making. DAO participants can receive Token rewards from DAOSquare and the rewards received by the participants vary with tiers based on the reward curve depending on when they joined. DAO members can exit at any time.
DIO meets the public offering requirements of the project. Anyone who meets the DIO participation conditions can participate. There is no token reward for DIO participants. To participate in DIO, a person needs to use a DAOSquare Token as collateral (the stake rules are different for each project). Generally, DIO does not need to be locked up.
The incubation without lock-up is completed by DAOSquare’s service layer, operation layer and system layer. The service layer is an open service market. In the “Third-party Application Market”, any service provider that meets the standards can participate and cooperate to help the project grow. They can participate in media, PR, marketing, BD, community, listing, etc.
The operation layer will coordinate and output the resource network, which consists of research modules and incubators that match the needs of Web3; from the tool layer, the system layer will make the incubation and fund management more efficient through an “operating system” and protocolize the quantifiable interactions during the incubation process.
Therefore, the purpose of DAOSquare is to integrate the resources of projects, investors, investment institutions and service providers in the form of DAO, so as to realize a market that is decentralized, financed by the collaboration between multiple parties, and incubated.
DAOSquare’s direct competitors includes CoinList, The LAO, DuckDAO, MarketingDAO, etc. Its indirect competitors are some DEX platforms that can perform similar LBP.
From the past financing market, DAOSquare is full of both challenges and opportunities. The opportunity lies in that under the current mainstream financing methods, it is difficult for ordinary investors to participate and they have to take certain risks to obtain the project quota at a high price from investment agencies and other channels; similar to LBP and IDO financing methods, although ordinary investors can participate, in the past, due to factors such as trending market and price curve, the project participation price is generally higher than secondary market price. These issues may open up opportunities for DAOSquare.
The challenges are: 1) How can DAOSquare make the project price more reasonable during the financing process and prevent “the financing price of the project in the primary market to be much higher than the secondary market price”; 2) How to produce the CoinList effect and continuously explore high-quality projects that can bring secondary market returns; 3) Integrate resources for high-quality projects, investors, investment institutions, service providers, etc. These tests DAOSquare’s market power, not the project itself.
Looking back at the entire DAO market, as of early May this year, the amount of funds in all DAOs has reached $1.06 billion USD, growing by 523.63% in the last 6 months. The growth of DAO funds cannot be separated from the continued popularity of DeFi. Compared with the entire trillion-dollar market value of cryptocurrency, it is still far away from the early stages of the evolution. There are also many problems such as inadequate governance mechanisms, security, fragmentation of functionality and liquidity, and the performance of the blockchain itself.
Tokenomics
RICE is the governing asset of DAOSquare with a total issuance of 100 million, of which:
30% for Guild, with 1/2 allocated to foundations and 1/2 allocated to core contributors;
50% for the community, incubator rewards, trade rewards, airdrop, public offering and marketing;
20% is allocated to early investors.
RICE is unlocked as follows:
Early Contributors: In the first year, 1% of RICEs are issued to service providers (SPs) using the protocol (SAFT) at each start of project incubation. In the second year, if the remaining RICEs written in SAFT are not released in the first year, they will be released linearly in the next 6 months.
Incubator reward: No lock up, rewards are started when VentureDAO launches. The number and speed of rewards depend on the scale and speed of VentureDAO’s investment.
Core contributor: 24 months linearly, 12 months cliff.
Foundation: 30 months linearly, 6 months cliff
Marketing: 36 months linearly.
Airdrop: No lock up, allow claim after LBP.
Public pool: no lock up.
Community Reward: 12 months linearly, 6 months cliff.
Financing Situation
DAOSquare completed seed funding and angel financing in March and April 2021 for an unknown amount. The institutions involved include 10 institutions, such as IOSG Ventures, Alameda Research, NGC Ventures, HashKey, CMS, MXC Labs, LD Capital, SNZ, and other individual investors such as DODO co-founder Diane Dai.
Supply and Demand Analysis
Practical Application Analysis:
RICE is the governing asset of DAOSquare, so the underlying scenario revolves around asset management, such as staking RICE to become part of governance. The other scenario is that RICE stakeholders are eligible to participate in DAOSquare’s incubator as an investor, which fits DAOSquare’s own business. Other scenarios include rewards from service providers. No other usage scenarios have been officially announced by DAOSquare.
The selling pressure of RICE mainly comes from the unlocking or cash out by investment institutions, the cash out by public sale, and the possible cash out by teams and the Foundation.
