The Venture Window

DeFiantDAO grew out of what was initially slated to be a simple IDO launchpad application. We have modified this technology and, in doing so, have broadened its use to any stage in crypto fundraising.

Problems with IDO Launchpads

To start, we need to understand the basic mechanics of an IDO launchpad smart contract.

Here is how those projects work:

-A new IDO listing is created.

-That listing includes the time window for the IDO, total amount raised, allowable contribution, and a whitelist of addresses allowed to interact with the contract.

-The whitelist is usually generated prior to the IDO based on some combination of staking the platform’s tokens and passing the project’s KYC requirements (if applicable).

-Users then go to the list and deposit the required amount of a stablecoin or other currency until the project is filled or the time window closes.

-Those funds are held in place by the smart contract until the listed project does their token-generation event (TGE) and deposits the correct amount of their tokens to fill their side of the contract.

-At that point, the fundraising is released to the project, and the tokens are released to the users.

Most of these features are useful at any stage of a fundraising round. But as launchpads have been used historically, the requirement of the final tokens from the TGE being deposited on the other end have made this concept of limited usefulness in other stages like seed or private rounds. This is because without the TGE, the project cannot receive the funds, and in these earlier rounds, the TGE could be months away. If the project does the TGE early, that requires them to start the clock on any vesting/unlock periods from their other investors or as dictated by their SAFT notes or related agreements, since those things are also encoded in the token’s smart contract.

Additionally, a fee-driven entities, launchpads suffer from misaligned values. It is in their interest to do a high volume of deals, rather than focus on curation. It is outside of their incentive structure to be overly concerned with the long-term good of the projects they list or the outcomes for the participants in those IDO's.

Enter the Venture Window

This is where we introduced innovation for a better user experience. DeFiantDAO has created a new concept called the preToken. In the following article in this series, we will cover the technical considerations of the preToken as well as the downstream implications allowing us to create additional new product offerings. For now, here is a high-level view of how the preToken impacts the Venture Window on NFT projects and whitelist spots. Those functions are on our roadmap and will be introduced later.

How the Venture Window works:

-Project XYZ wishes to do a raise with a DAO using our Venture Window.

-The DAO has a subdomain on our site (or their site if they have in-house development) and creates the listing for XYZ.

-Many of the same parameters apply—time, amounts, etc.

-The DAO’s subdomain will be gated so only their membership can access their listings by whatever criteria they set (holding DAO token, NFT, etc.) similar to a Collab Land Discord verification.

-The DAO will also have a whitelist of their members and amounts committed that they will preload into the application as well. In other words,full customization as if they were conducting their round the usual way through Google Forms and a designated wallet, just with the manual component automated.

-Members will deposit their stable coins into the contract for XYZ’s fundraise.

-Instead of waiting for XYZ’s TGE, users will be issued a special purpose token called ‘preXYZ’.

-preXYZ functions as their future interest in the TGE. We had initially considered having preXYZ peg 1:1 with XYZ but opted instead for a design that pegs preXYZ 1:1 with the amount of the fundraise. This is because SAFT notes and tokenomics change all the time in deals, and we didn’t want the project to be unduly constrained or anybody to have to bear the cost of continuously reminting preXYZ and exchanging it.

-Until the TGE, the preXYZ holders have custody of their interest or, functionally, their tokenized share of the master SAFT agreement that the DAO has with XYZ. The DAO also has a way to collect their carry, if applicable, in preXYZ tokens, without the hassle of having to custody and distribute the final XYZ tokens later. Trustless. Permissionless.

-Upon the TGE, holders can then deposit their preXYZ back at the Window and receive their official XYZ.

-Although it’s not our core focus at this time, the same basic mechanics can work on NFT projects and whitelist spots. Those functions are on our roadmap and will be introduced later.

In summary, DeFiantDAO has adapted the widely used IDO launchpad concept, further innovated its design and developed our unique Venture Window. The introduction of the preToken is critical to that process and we will cover that in more detail in our next post.