What is a DAO? How does the OptionBlitz DAO work?
WHAT IS A DAO
A DAO, or “Decentralised Autonomous Organization,” is a community-led entity with no central authority. It is fully autonomous and transparent: smart contracts lay the foundational rules, execute the agreed upon decisions, and at any point, proposals, voting, and even the very code itself can be publicly audited.
Ultimately, a DAO is governed entirely by its individual members who collectively make critical decisions about the future of the project, such as technical upgrades and treasury allocations.
Generally speaking, community members create proposals about the future operations of the protocol and then come together to vote on each proposal. Proposals that achieve some predefined level of consensus are then accepted and enforced by the rules instantiated within the smart contract.
Familiar hierarchical structures seen within large corporations give way to community collaboration under this framework. Each individual member of the DAO oversees the protocol at some level.
Part of the elegance of this framework is the alignment of incentives. That is, it is in the individual’s best interest to be forthright in their voting and only to approve proposals that serve the best interest of the protocol itself.
A healthy, robust protocol will garner more usage, and in turn, increase the value of the tokens of which each DAO member is in possession of. So as the protocol succeeds, so do the token holders.
HOW DOES A DAO WORK?
The rules of the DAO are established by a core team of community members through the use of smart contracts. These smart contracts lay out the foundational framework by which the DAO is to operate. They are highly visible, verifiable, and publicly auditable so any potential member can fully understand how the protocol is to function at every step.
Once these rules are formally written onto the blockchain, the next step is around funding: the DAO needs to figure out how to receive funding and how to bestow governance.
This is typically achieved through token issuance, by which the protocol sells tokens to raise funds and fill the DAO treasury.
In return for their fiat, token holders are given certain voting rights, usually proportional to their holdings. Once funding is completed, the DAO is ready for deployment.
At this point, once the code is pushed into production, it can no longer be changed by any other means other than a consensus reached through member voting. That is, no special authority can modify the rules of the DAO; it is entirely up to the community of token holders to decide.
OptionBlitz DAO is a decentralised autonomous organisation driven by the community of BLX tokens holders where BLX is an ERC-20 utility token minted on Ethereum mainnet.
To enable optimal performance and UX for stakeholders, OptionBlitz DAO will be deployed on the Ethereum chain. The Aragon platform will be used as a basis for the DAO. Due to the nature of ERC-20 tokens standard BLX tokens will be wrapped to be able to give its owner a voting power in the DAO.
The OptionBlitz DAO functions like a completely separate entity to the OptionBlitz protocol. It is deployed before the token sale event and controls the funds used to bootstrap the liquidity for the protocol. The funds raised are transferred to the staking pool of the protocol and locked for a minimum of 1 year. After this lock duration has elapsed the DAO stakeholders can make proposals on how to use the funds by voting with their BLX tokens. Governance related topics are discussed at forum.Optionblitz.co
SCHEMATIC OF THE TOKENS MOVEMENT:
The DAO is an extremely flexible system which adds value to the project by democratising the decision processes that affect our stakeholders the most. The mission of DAO is to continuously develop the OptionBlitz ecosystem.
The DAO has a treasury. The asset in this treasury comes from:
- Share from the fee captured by OptionBlitz ecosystem from staked funds.
- Sale of BLX in the treasury
- Fees captured from Uniswap token listing
- Other payments made to the DAO such as withdrawals from the insurance fund
The asset in the treasury is used to assist the DAO mission. Its specific usage includes but not limited to:
1 — Liquidity mining: Add liquidity to products in the OptionBlitz ecosystem
2 — Governance incentive: Incentives for BLX holders who participate in community governance
3 — Development incentive: Incentives for community starters and community managers
4 — Audit fee and other required fees
5 — Buyback BLX from the secondary market. The BLX will be part of the treasury asset.
6 — Provide liquidity for BLX (in the BLX liquidity pool on Uniswap)
GOVERNANCE
BLX holders have the governance right of the DAO. The DAO applies the “Off-chain discussion, On-chain governance” method. Since the governance is on the chain, every proposal is essentially an executable smart contract.
The DAO governance includes:
- Managing the specific usage of the treasury asset;
- Managing risk management parameters of the protocol such as insurance fund conditions.
- Upgrading the DAO and OptionBlitz protocol smart contracts. To upgrade any protocol smart contracts, Optionblitz admin has veto power. This means that the DAO would have to fork the code in the event that OptionBlitz admin rejected an upgrade proposal. This is to protect against malicious attacks.
The OptionBlitz governance proposal needs to be initiated by BLX holders, and the initiator’s BLX voting power has to be no less than 1% of the issued total. The voting quorum has to be no less than 5% of the issued total. The proposal initiator is set to vote yes.
A BLX holder can delegate the voting power to another holder.
Click Here to find out how to earn rewards and more by becoming an OptionBlitz affiliate.
