Governomy is the governance and economic module of DAOSquare Incubator.
Design Purpose
The purpose of the governance and economic module of DAOSquare Incubator is to distribute ownership and governance rights of DAOSquare Incubator to relevant business participants based on the value provided by DAOSquare Incubator. It aims to provide economic compensation to maintainers of the entire DAOSquare Incubator system, encourage more users to become participants in DAOSquare Incubator, encourage more system maintainers to ensure the security of the system, and provide more suggestions and measures to promote the development of DAOSquare Incubator.
Why Governomy
DAOSquare Incubator is an on-chain infrastructure and open market focused on Venture DAOs. With the advantages of blockchain, people can easily and securely establish and invest in Venture DAOs globally.
DAOSquare Incubator is a commercial product with a profit requirement. Therefore, in addition to building excellent products, economics is also an important aspect of its affairs, and governance should also focus on economics. The compatibility of economics and governance is particularly prominent in the crypto field and is a fundamental principle. It is not only a key factor in determining the health and sustainability of a product, community, and ecosystem, but also determines the lifeline of the product, community, and ecosystem. On the other hand, economics can also be a driving factor for governance. Proper economic strategies can help achieve governance. Therefore, in DAOSquare Incubator, we combine governance and economics in one module, called Governomy.
It should be noted that economics is not simply about incentives. Just like national economics, it is systematic and includes how products, communities, and ecosystems can profit from business, how profits are distributed, how economic strategies are formulated, etc., to promote the development and ensure the structural stability of products, communities, and ecosystems.
Governomy is the brain of DAOSquare Incubator. It maintains and optimizes the protocol code, financial income and expenditure, economic strategies, operational strategies, and other affairs of DAOSquare Incubator through the aggregation of the wisdom of community members in the form of collective decision-making.
Design Principles
1. Minimize human control and maximize automatic operation.
2. The fewer governance actions, the better.
3. Only govern executable actions.
4. Executable actions are controlled by verifiable on-chain programs, on-chain programs are controlled by mechanisms, and mechanisms are controlled by community governance (the community is defined as the goRICE holder group).
5. The community has 100% ownership and control. There are no special groups with special voting rights, treasury control rights, or contract control rights (such as founders, developers, project teams, boards, etc.).
6. Help real users of the product and direct stakeholders become governors and owners.
7. The driving force of governance comes from the demand for maximizing personal interests.
8. The realization of maximizing personal interests lies in maximizing collective interests and balancing the interests of all parties.
9. The purpose of incentives is not to stimulate active data, but to provide feedback on business contributions. The adoption of the product depends on its value, not incentives.
Architecture
In simple terms, DAOSquare Incubator generates revenue through Venture DAO investments (protocol fees), and Governomy regulates and allocates these revenues to the Compensation Pool, Treasury, Buyback & Burn Pool, and distributes RICE Rewards to Venture DAOs in DAOSquare Incubator. DAOSquare Incubator users (participants in Venture DAOs) earn RICE Rewards by contributing protocol fees, and secondary market RICE investors acquire RICE by purchasing it. These RICE holders can become goRICE holders by locking RICE, thereby having absolute ownership and governance rights over DAOSquare Incubator and Governomy, such as adjusting economic and governance parameters, initiating operational strategies, upgrading contracts, etc.
Workflow
The following diagram shows the complete business flow of Governomy.
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Basic Workflow
DAOSquare Incubator users generate protocol fees when investing in DAOSquare Incubator.
The protocol fees are allocated to the Treasury, Compensation Pool, and Buyback & Burn Pool.
goRICE holders collectively decide on the use of funds in the Treasury.
goRICE holders can claim compensation from the Compensation Pool.
Funds from the Buyback & Burn Pool are used to repurchase and burn RICE.
The RICE reward amount for DAOSquare Incubator users is calculated based on the repurchase quantity, and RICE is transferred from the RICE Reward Pool to the RICE Claim Pool for DAOSquare Incubator users to claim rewards.
DAOSquare Incubator users and secondary market RICE investors become goRICE holders by locking RICE and gain ownership and governance rights over DAOSquare Incubator.
goRICE holders adjust Governomy parameters, DAOSquare Incubator parameters, upgrade contracts, etc., to maximize their personal interests.
For specific details of the workflow, please refer to the introductions of each unit (key participants, key objects, key actions, key parameter adjusters).
Key Participants
– RICE reward receivers in DAOSquare Incubator: Various roles in a Venture DAO, including investors, governors, scouts, etc. The recipients of RICE rewards are determined by the DAO. These participants are the ultimate recipients of RICE rewards.
– RICE investors in the second market: People who purchase and hold RICE in the secondary market.
– goRICE holders: goRICE holders are the owners and governors of DAOSquare Incubator. They become goRICE holders by locking RICE.
Key Objects
– Venture DAOs: Organizations that use DAOSquare Incubator products for venture capital investments and contribute protocol fees to DAOSquare Incubator (protocol fee generators).
– Treasury: The community treasury that provides funding support for the development of DAOSquare Incubator, controlled by goRICE holders. The funding comes from protocol fee allocations and initial RICE allocations.
– Buyback & Burn Pool: Pool of funds used for repurchasing and burning RICE. The funds come from protocol fee allocations.
– Compensation Pool: Pool of funds that provides compensation to contributors (goRICE holders) to ensure the safe operation of DAOSquare Incubator. The funds come from protocol fee allocations.
– RICE Reward Weight Counter: Records the protocol fee contributions of each protocol fee generator (Venture DAOs in DAOSquare Incubator) and calculates their RICE reward weights at the end of a Distribution Cycle. Please refer to the Distribution Cycle section for more information.
– RICE Reward Pool: Reserve pool that provides rewards to Venture DAOs in DAOSquare Incubator. The total supply of the RICE Reward Pool is 35,000,000 (35% of the total RICE issuance). When the balance of RICE in this pool is 0, the Buyback & Burn Pool will be adjusted to allow injection of RICE into the RICE Reward Pool, as detailed later.
– RICE Claim Pool: Pool where Venture DAOs in DAOSquare Incubator claim RICE rewards.
– RICE Locker: Module that allows RICE holders to lock RICE to obtain goRICE. Please refer to the following sections for detailed mechanics.
Key Actions
– Invest: Invest in Venture DAOs in DAOSquare Incubator.
– Convert: Convert protocol fees from multiple currencies to a single currency for subsequent distribution.
– Buyback & Burn: Repurchase and burn RICE, triggering the transfer of RICE for DAOSquare Incubator rewards (see RICE Reward Supplement for details).
– Claim: Allow goRICE holders to claim compensation from the Compensation Pool.
Key Parameter Adjusters
– Protocol Fee Scale Adjuster: Adjust the protocol fee collection ratio as a percentage of the total investment. Protocol fees come from every successful investment in DAOSquare Incubator. Refer to the product documentation Fee & Carry section for details.
– Token List Adjuster: Determines which tokens (protocol fees) can be converted to a single currency (Distribution Token) for subsequent distribution. Protocol fees in the Token List will be converted, while those not in the Token List will directly enter the Treasury. The Token List Adjuster is used to add or remove tokens from the Token List.
– Distribution Token Adjuster: Adjusts the target currency (Distribution Token) for protocol fee conversion in the Convert action. The Distribution Token can only be selected from the Token List.
– Protocol Fee Distribution Adjuster: Adjusts the distribution ratio of the Distribution Token in the Treasury, Buyback & Burn Pool, and Compensation Pool.
– RICE Burn Scale Adjuster: Adjusts the burning ratio of repurchased RICE. When the balance of RICE in the RICE Reward Pool > 0, the burning ratio is 100% and this adjuster is not available. When the balance of RICE in the RICE Reward Pool = 0, this adjuster is activated.
– Buyback & Burn Triggerr Reward Adjuster adjusts the trigger rewards for the Buyback & Burn action (any goRICE holder can execute this action). RICE Release Scale Adjuster adjusts the RICE reward ratio for the Incubator. The calculation base for this ratio is the amount of RICE obtained through Buyback. The RICE Release Scale ratio allows for values greater than 100%.
Note: The hexagons in the image represent the adjusters.
Protocol Fee Supplementary Explanation
ItemsDescriptionProtocol fees are only charged when Venture DAOs in the DAOSquare Incubator successfully complete an investment transaction. The protocol fee is calculated as the investment amount multiplied by the protocol fee percentage. The investment amount includes the project investment, protocol fee, management fee, and scout fee. Please refer to the product documentation for more details on Fee & Carry. Who Pays the Protocol Fee? The investors participating in the investment pay the protocol fee proportionally based on their contributions. The protocol fee is separate from the project investment amount (for more details, please refer to the Fee & Carry section in the product documentation).
RICE Reward Supplementary Explanation
ItemsDescriptionRICE rewards are distributed based on Distribution Cycles. Within the current Distribution Cycle, only the rewards from the previous Distribution Cycle can be processed and claimed. The formula for calculating the RICE rewards for one Distribution Cycle is as follows: Buyback Amount x RICE Release Scale % when the RICE balance in the RICE Reward Pool is greater than 0. When the RICE balance in the RICE Reward Pool is 0, the formula for calculating the RICE rewards for one Distribution Cycle is as follows: Buyback Amount x (1 – RICE Burn Scale %). Who Can Claim RICE Rewards? The Venture DAOs whose protocol fees have contributed to the RICE Reward Pool and whose contributions are in the currency listed in the Token List can claim the RICE rewards. It is important to note that the rewards are allocated to the Venture DAOs and not to individual members (e.g. investors). The distribution among the members depends on the rules of each Venture DAO.
Distribution Cycle
We use Distribution Cycles to simplify the calculation and distribution of RICE rewards. Simply put, the RICE rewards generated within one Distribution Cycle need to be processed and distributed in the next Cycle after the current one ends. Here’s an example:
Assume that Distribution Cycle #1 generates 100,000 USDT in protocol fees, and the Buyback & Burn Pool is allocated 20,000 USDT (20%). The RICE Release Scale is set at 200%.
At the start of Distribution Cycle #2, the Buyback & Burn function is activated, and goRICE holders can trigger it to complete the Buyback & Burn from Distribution Cycle #1 before Distribution Cycle #2 ends. At the same time, the formula for calculating the RICE rewards is applied: Buyback Amount x RICE Release Scale, which equals 20,000 x 200% = 40,000 RICE. During the execution of the Buyback transaction, 40,000 RICE will be transferred from the RICE Reward Pool to the RICE Claim Pool. The protocol fee contributors who meet the conditions in Distribution Cycle #1 can claim the RICE rewards before Distribution Cycle #2 ends.
A few points to note:
The later the Buyback is executed, the shorter the time for the protocol fee contributors to claim the RICE rewards.
The execution period for the Buyback & Burn action of one Distribution Cycle is until the end of the next Distribution Cycle. If it is not executed within this period, the funds in the Buyback & Burn Pool will accumulate into the next Cycle. This also means that the rewards for the current Cycle will be cleared, and the beneficiaries of the next Cycle will receive additional allocations.
If the RICE rewards in the RICE Claim Pool are not claimed within one Distribution Cycle, they will be accumulated into the next Cycle. The claim weight of the original recipients will be cleared, and the beneficiaries of the next Cycle will receive additional allocations.
RICE Locker
Participants who receive RICE rewards from Venture DAOs and RICE investors in the secondary market can lock their RICE tokens in the RICE Locker to become goRICE holders and gain ownership, as well as corresponding economic and governance rights in the DAOSquare Incubator.
The RICE Locker offers four lock duration options: 90 days, 180 days, 270 days, and 360 days. Different lock durations result in different conversion ratios to goRICE, as shown in the following formula:
Example:
Lock DurationgoRICERICE LockgoRICE Receive3 Months25%10,0002,5006 Months50%10,0005,0009 Months75%10,0007,50012 Months100%10,00010,000
goRICE has the following characteristics:
Non-transferable: goRICE tokens in a wallet cannot be transferred to any other address.
Time-linear decay: For example, when you lock 10,000 RICE for 12 months, you will receive 10,000 goRICE. These 10,000 goRICE will linearly decay over the next 12 months, and at the end of the 12th month, the goRICE balance in your wallet will decay to 0.
Rights of goRICE Holders
Rights to claim compensation from the Compensation Pool. The ability to trigger rewards by executing Buyback & Burn transactions in Governomy. The ability to modify the parameters of all adjusters (by initiating and participating in proposals in the Adjuster category in Governomy). The ability to change the protocol fee percentage (by initiating and participating in proposals to adjust the DAOSquare Incubator Protocol Fee). The ability to upgrade the DAOSquare Incubator contract (by initiating and participating in proposals to upgrade the DAOSquare Incubator protocol). The ability to upgrade the Governomy contract (by initiating and participating in proposals to upgrade the Governomy contract). The ability to manage and invest in the Treasury (by initiating and participating in Swap proposals). The ability to execute development strategies such as product development, marketing, BD, operation, service expenses, events, investments, etc. (by initiating and participating in Expense proposals).
Governance
Governance Content
DAOSquare Incubator’s governance consists of three parts: DAOSquare Incubator, Governomy, and Treasury.
ItemCategoryPartDescriptionProtocol Fee Scale AdjustmentParameter adjustmentDAOSquare IncubatorSee the Key Parameter Adjuster section. Incubator Protocol UpdateContract updateDAOSquare IncubatorUpgrades the incubator protocol smart contract. The new version of the contract can run parallel to the old version, and Venture DAOs in the incubator can choose whether to update or not. Token List AdjustmentParameter adjustmentGovernomySee the Key Parameter Adjuster section. Distribution Token AdjustmentParameter adjustmentGovernomySee the Key Parameter Adjuster section. Protocol Fee Distribution AdjustmentParameter adjustmentGovernomySee the Key Parameter Adjuster section. RICE Burn Scale AdjustmentParameter adjustmentGovernomySee the Key Parameter Adjuster section. Buyback & Burn Trigger Reward AdjustmentParameter adjustmentGovernomySee the Key Parameter Adjuster section. RICE Release Scale AdjustmentParameter adjustmentGovernomySee the Key Parameter Adjuster section. Voting Mechanism AdjustmentParameter adjustmentGovernomyAdjusts the voting mechanism. Proposer ThresholdParameter adjustmentGovernomyAdjusts the minimum goRICE holding required to be eligible to initiate proposals. Governomy Contract UpdateContract updateGovernomyUpgrades the Governomy smart contract. ExpenseTransferTreasuryExpenses from the treasury. SwapTransferTreasuryConverts a token in the Treasury to another currency. For example, converts 100 ETH to USDT. It is important to note that, to mitigate attack risks, the target currency for conversion must be one listed in the Token List.
Proposal and Voting
In Governomy, all governance content is proposed and decided through voting. The voting results are executable. For example, when a proposal to adjust the protocol fee percentage from 1.5% to 2% is approved, the protocol fee percentage parameter in the DAOSquare Incubator Protocol will be modified to 2% without any manual intervention (e.g. developer modifications).
Governomy uses the same voting system as DAOSquare Incubator. Please refer to the product documentation for more details on the Voting System. The following are the parameters of the Governomy voting system:
ParameterOptionDescriptionVoting AssetERC20 (goRICE)Only ERC20 is supported as the Voting Asset. Contract AddressgoRICE contract addressThe token address is fixed as the goRICE address and cannot be changed. Weight AlgorithmQuantity/log2/1 vote 1 voterCan choose from three algorithms. SupportYES / (YES + NO) > x%Only one support rate algorithm is provided. Quorum(YES + NO) / Total > x%Only one quorum algorithm is provided. Voting PeriodHours/Days/WeeksValue + time unit = voting duration, e.g. 25 Hours, 3 Days, 1 Week.
These parameters can be modified through a Voting Mechanism proposal.
Eligibility RestrictionsDescriptionWho Can Initiate Proposals? goRICE holders with a minimum of 5,000 goRICE have the right to initiate any proposal in the governance content. Who Can Vote on Proposals? Any goRICE holder, regardless of the amount of goRICE held, has the right to vote on any proposal.
Key Proposal Constraints
The Distribution Token Adjustment proposal cannot be used when the Compensation Pool Balance > 0.
The Distribution Token Adjustment proposal cannot be used when the Buyback & Burn Pool Balance > 0.
The RICE Burn Scale Adjustment proposal cannot be used when the RICE Reward Pool Balance > 0.
The RICE Release Scale Adjustment proposal cannot be used when the RICE Reward Pool Balance = 0.
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