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  • What is XDAO?
  • Architecture
    • Glossary
    • GT (Governance Token)
    • LP Token (Liquidity Provider Token)
    • Hybrid Voting
    • My DAOs
    • Supported Blockchains
    • Smart Contracts
    • Audits
  • GUIDES FOr GT
    • Create a DAO
      • How to choose the right quorum?
    • DAO Page
      • Widget
      • Manage
        • DAO Customization
          • Verify DAO
          • Change Avatar
          • Change Banner
          • Edit DAO Profile
          • Change Widget
          • Edit DAO Analytics
        • GT management
          • Add Member
          • Remove Member
          • Change Members' Power⭐️
          • Change Quorum⭐️
          • Add Manager⭐️
          • Remove Manager
        • Investment activity management
          • Create LP Token
          • Create Private Offer⭐️
          • Manage Private Offers⭐️
          • Create Private Exit Offer⭐️
          • Manage Private Exit Offers⭐️
          • Create Crowdfunding⭐️
          • Crowdfunding past version
            • Create Crowdfunding⭐️
            • Manage Crowdfunding⭐️
          • Pay Dividends⭐️
        • Asset management
          • Send Token⭐️
          • Send "Coin"⭐️
          • Approve Token⭐️
          • Pay Salaries⭐️
          • Swap⭐️
          • Bridge⭐️
          • Hide Tokens⭐️
        • DAO Community
          • Create Proposal⭐️
        • Advanced
          • Add Permitted⭐️
          • Remove Permitted
          • Custom Transaction⭐️
          • Connect⭐️
        • DAO features
          • Forbid to Add Members
          • Forbid to Remove Members
          • LP Issue
            • Disable LP Issue
            • Enable LP Issue
            • Freeze LP Minting Status
          • LP Redemption
            • Disable LP Redemption
            • Enable LP Redemption
            • Freeze LP Burning Status
      • Activity
      • Info
  • User's Guide
    • My Account
    • Crowdfunding
    • Private Offer
    • Private Exit Offer
    • Burn LP
  • use cases
    • Launch of Crowdfunding: Step-by-Step Tutorial
    • My First DAO
    • Mutual Fund
  • XDAO Info
    • Partner with us!
    • Bug Report
    • XDAO Pill
    • Resolving Errors
    • Contact Us
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  1. use cases

Mutual Fund

PreviousMy First DAONextPartner with us!

Last updated 2 years ago

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.

Step 1

Create a DAO. Add your public addresses. Give 10 GTs to your address. Set up a quorum to 51%.

Step 2

Create LP token.

Step 3 (1st round of rising funds)

You can run a private round and crowdfunding one first. You can have the first round only private or only crowdfunding.

How is a private offer different from a crowdfunding offer?

A private offer makes it possible to buy only a certain amount of LP tokens for a specific user.

Crowdfunding offers the ability to set up mass sales of LP tokens publicly or to specific individuals.

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.

Crowdfunding 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 crowdfunding 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!

Step 4 (DAO earning process)

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.

Step 5 (exit the DAO)

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 (second round of fundraising)

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:

priceLP=∑i∈Assetsbalancei⋅priceitotalsupplyLPprice_{LP} = \frac{\sum_{i \in Assets}{balance_i \cdot price_i}}{totalsupply_{LP}}priceLP​=totalsupplyLP​∑i∈Assets​balancei​⋅pricei​​

Or simply:

LP Price = DAO AUM / LP Total Supply

In 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 crowdfunding. 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 (DAO earning process)

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 (Exit DAO)

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.

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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See how to create a DAO
See how to create LP token
See how to create private offer
See how to create crowdfunding
See disabling a private transaction
See disabling crowdfunding
See how to use XDAO Connect
See disabling a private transaction
See disabling crowdfunding
https://t.me/xdao_eng
https://t.me/xdaoapp
https://twitter.com/xdaoapp
https://www.youtube.com/c/xdaoapp
https://blog.xdao.app/
https://github.com/XDAO-App
https://www.instagram.com/xdaoapp
https://discord.gg/xdaoapp
The DAO earning process should be a phased one