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Mutual Fund
Mutual funds give small or individual investors access to invest in crypto. Each shareholder, therefore, participates proportionally in the gains or losses of the fund.
In the simplest model, there are only 3 main stages of working with DAO:
- Raising Funds. LP burning is off. LP offer is activated;
- DAO earning process. LP burning is off. LP offer is deactivated;
- Profits distribution. LP burning is on. LP offer is deactivated;
- Repeat.
DAO's trust-based management model
Create a DAO. Add your public addresses. Give 10 GTs to your address. Set up a quorum to 51%.
Create LP token.
You can run a private round and a public one first. You can have the first round only private or only public.
How is a private offer different from a public offer?
A private offer makes it possible to buy only a certain amount of LP tokens for a specific user.
A public offer allows an unlimited number of users to buy an unlimited number of tokens.
Private Round - create a private offer specifically for one investor. Set the price in a specific asset, and the number of LP tokens that will be redeemed at the specified price (there are no restrictions here). After purchase, the offer will be deactivated automatically. Your DAO will receive the proceeds from the sale of LP into its account.
Public Round - Create a public offer for many participants. Set the price for 1 LP. Your DAO will receive the proceeds from the sale of LP into its account.
For example, consider this case:
You sold 10 LP to one participant in a private round for 100 USDT. 1 LP = 20 USDT.
DAO earned 200 USDT in a private round.
You also sold 1 LP each in the public round to 10 members at a price of 20 USDT. The DAO earned 200 USDT in the public round. DAO AUM (assets under management) 200 + 200 = 400 USDT.
In total, the DAO distributed 20 LPs. A member with 10 LP has 50% of the DAO's share. A member with 1 LP has 5% of the DAO's share.
After a successful closing round, you must deactivate (disable) all offers to buy LP tokens!
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 the launchpad or any other platform. The main prerequisite for investing on behalf of DAO is the ability to connect using Wallet Connect.
In our example a DAO by its actions was able to earn +100 USDT.
DAO AUM 400 + 100 = 500 USDT.
How will the profit be distributed among the participants now?
Participant with 50% share, 200 USDT -> 250 USDT.
Participant with 5% share, 20 USDT -> 25 USDT.
At this stage, the DAO does not make money and does not invite new members, but gives the current members time to exit. Let's say no one wants to leave the DAO this time. The shares remain the same.
Step 6 repeats Step 3. Now it is important to determine the value of the LP token in order to raise funds again and not depreciate the shares of contributors from the first round.
Use the following formula:
Or simply:
LP Price = DAO AUM / LP Total SupplyIn our example:
500/20 = $25 (you can also slightly increase the LP price this time so that previous participants get a small profit at this stage).
Create another public offer. Set the price for 1 LP = $25.
Your token was bought by another 10 people, 1 LP each and DAO received into the treasury + $250.
Total DAO AUM is 500 + 250 = $750.
The shares are distributed as follows:
Our DAO handed out 30 LPs in total. The participant with 10 LP has 33.3% of the DAO shares. A member with 1 LP has 3.33% of DAO shares.
The money is distributed as follows: Participant with 33.3% share, 250 USDT -> 250 USDT.
Participant from the first round has a 3.3% share, 25 USDT -> 25 USDT.
The participant from the second round has a 3.3% share, 25 USDT -> 25 USDT.
After a successful closing round, you must deactivate (disable) all offers to buy LP tokens!
Step 7 completely repeats Step 4. Let's say the DAO managed to earn x2 at this stage.
DAO AUM = $750 + $750 = $1.500.
Participant with 33.3% share, 250 USDT -> 500 USDT.
Participant with 3.3% share, 25 USDT -> 50 USDT.
Step 8 completely repeats Step 5. After successful deals, some of the partners decided to leave.
Let's say 5 people with 1 LP decide to burn their tokens and exit. There are 25 LPs left in circulation. DAO AUM = $ 1.250.
Participants' shares and earnings were distributed as follows:
Participant with 10 LP, 40% share, 500 USDT -> 500 USDT.
Participant with 1 LP has 4% share, 50 USDT -> 50 USDT.
Then this cycle can be repeated for an infinite number of rounds. The main rule is raise funds first, then earn.
The DAO earning process should be a phased one
Tip #1
How to distribute profits among investors? LP token is the very mechanism of profit distribution. Investors earn as long as they hold LP tokens. To exit with profits, they burn their share. This burning can be manually activated on predetermined dates.
Tip #2
How do you keep your investors safe? Do not forget to activate burning LP tokens and do not freeze this rule. You can also select specific days for participants when the burn function will be active. The burning function must be turned on and off manually.
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Last modified 5mo ago