Trust Management

In the simplest model, working with a DAO is built around a repeating cycle:

• Fundraising. LP Burning is off. The offer is activated;
• Earning in the DAO. LP Burning is off. The offer is deactivated;
• Profit distribution. LP Burning is on. The offer is deactivated;
• Repeat.

Step 1

Create a DAO. Add your public address. Issue 10 GT to your address. Set the quorum at 51%.

🔷 See how to create a DAO.

Step 2

Create an LP token.

🔷 See how to create an LP token.

Step 3 (first fundraising round)

The first round can be run through both a private offer and crowdfunding, or through either method on its own.

Private round — create a private offer for a specific member. Set the price in the chosen asset and the number of LP tokens they will redeem at that price (there are no restrictions here). After the purchase, the offer is deactivated automatically, and the proceeds from the LP sale go to the DAO's account.

Crowdfunding — create an offer for many members. Set the price per 1 LP. Your DAO will receive the proceeds from the LP sale into its account.

Let's consider a specific example:
You sold 10 LP to one member in a private round for 200 USDT. 1 LP = 20 USDT. The DAO earned 200 USDT in the private round.

You also sold 1 LP each to 10 members in the public round via crowdfunding, at a price of 20 USDT. The DAO earned 200 USDT in the public round via crowdfunding.

DAO AUM (assets under management) 200 + 200 = 400 USDT — by analogy with traditional finance, this is called a unit.

In total, the DAO distributed 20 LP. The member with 10 LP holds 50% of the DAO's monetary share. The member with 1 LP holds 5% of the DAO's monetary share.

🔷 See how to create a private offer.

🔷 See how to create crowdfunding.

Step 4 (DAO earning)

Use the "Connect" tab and make your first purchases on DEX / NFT marketplaces or use farming — invest on behalf of the DAO and vote. You can also use a launchpad or any other platform. The main requirement for investing on behalf of the DAO is the ability to connect via WalletConnect.

Through its actions, the DAO managed to earn +100 USDT.

DAO AUM 400 + 100 = 500 USDT.

How will the profit now be distributed among the members?

The member with a 50% share, 200 USDT -> 250 USDT.

The member with a 5% share, 20 USDT -> 25 USDT.

🔷 See how to connect to XDAO Connect.

Step 5 (exiting the DAO)

At this stage, the DAO does not earn money and does not invite new members, but gives current members time to exit. Let's imagine that no one wanted to leave the DAO this time. The shares remain unchanged.

Step 6 (second fundraising round)

Now it's important to determine the value of the LP token in order to raise funds again without devaluing the shares of contributors from the first round.

Use the following formula:

$$price_{LP} = \frac{\sum_{i \in Assets}{balance_i \cdot price_i}}{totalsupply_{LP}}$$

Or, put simply:
LP Price = DAO AUM / LP Total Supply.

In our example:

500/20 = $25 (you can also slightly raise the LP price this time so that previous members get a small profit at this stage).

Create another public offer via crowdfunding. Set the price per 1 LP = $25.

Another 10 people bought your token, 1 LP each, and the DAO received +$250 into its treasury.

Total DAO AUM is 500 + 250 = $750.

The shares are distributed as follows:
In total, the DAO distributed 30 LP. The member with 10 LP holds 33.3% of the DAO's monetary share. The member with 1 LP holds 3.33% of the DAO's monetary share.

The money is distributed as follows:

The member with a 33.3% share, 250 USDT -> 250 USDT.

The member from the first round with a 3.33% share, 25 USDT -> 25 USDT.

The member from the second round with a 3.33% share, 25 USDT -> 25 USDT.

Step 7 (earning in the DAO)

Step 7 fully repeats Step 4. Let's assume the DAO managed to earn x2 at this stage. DAO AUM = $750 +$750 = $1,500.

The member with a 33.3% share, 250 USDT -> 500 USDT.

The member with a 3.33% share, 25 USDT -> 50 USDT.

Step 8 (Exiting the DAO)

After successful deals, some of the partners decided to exit.

Let's say 5 people with 1 LP each decided to burn their tokens and exit. 25 LP remain in circulation. DAO AUM = $1,250.

The members' shares and earnings were distributed as follows:

The member with 10 LP, 40% share, 500 USDT -> 500 USDT.

The member with 1 LP, 4% share, 50 USDT -> 50 USDT.

This cycle can then be repeated for an unlimited number of rounds. The main rule to follow is — raise funds, then earn.