Exploring the DAO2DAO Future - Jeremy Musighi

Hi, I'm Jeremy, Head of Growth at Balancer Labs, and today I'm going to talk about the DAO-to-DAO growth model for decentralized projects. That is, I want to show you how this is a mechanism through which positive-sum growth is created, and will continue to be created, in DeFi. In addition, I want to explain how and why we're using this strategy at Balancer, and after that, I'll reveal an exciting new development from the Balancer community. So here's what we have on the menu for today. Starting with the first topic, what is DAO to DAO?

What does this concept really mean? So, it is actually a multifaceted picture of several different mechanisms for coordination between separate decentralized entities. First, there are partnerships and collaborations where DAOs establish relationships that benefit both communities. And this happens at a social level. It also occurs at a technical level, where there are technical integrations between protocols, so that, for example, one protocol uses the smart contracts of another.

This also creates a mutually beneficial relationship, because as the application built on top of it grows, the base application or protocol also grows indirectly through that utilization. And DAO to DAO is really this idea of ​​a co-ownership ecosystem between decentralized projects and communities. You can also think of DAO to DAO as a business model for a DAO. It's something like an evolution of B2B, or business to business. This is D2D.

Where their growth strategy is based on focusing their efforts and energy on serving and supporting other DAOs as their clients, basically. At Balancer, our growth model is really centered on this DAO-to-DAO concept really centered on this DAO-to-DAO concept , and we focus on creating and supporting a thriving developer ecosystem that integrates with the Balancer protocol and builds mutually beneficial relationships with these other decentralized communities so that we can grow together. Second thing: what is Balancer? I love talking about Balancer. This talk isn't just about Balancer.

So I'll give you a brief description about it. First, Balancer is the most flexible, dynamic, and customizable AMM. There are many AMMs, or automated market makers , out there. But the question is what makes Balancer particularly interesting and unique. And what it is, is that Balancer is designed to be a fully configurable and customizable liquidity pool protocol.

And by creating a design like this, you end up with a protocol. You end up with an AMM that goes far beyond how we've used AMMs so far in this, so to speak, first foray into DeFi, which is essentially to create liquidity for a token and help traders finalize swaps between one token and another. Balancer does that, and it's very important, and it's great. But in reality, AMMs go far beyond this, and when you have a flexibly designed AMM, like Balancer, you can take full advantage of the potential of what an AMM can be the potential of what an AMM can be . So traders aren't the only ones who need access to liquidity in DeFi.

The protocols need access to liquidity. Applications need access to liquidity. As the DeFi ecosystem grows, as more and more people around the world use DeFi protocols, this is how Balancer will indirectly grow as these applications built on Balancer gain more use. They have more users using their platform, there is more capital flowing through their protocols that will also flow indirectly through Balancer. In other words, Balancer is the AMM of the future.

And if you believe in the future of DeFi, then you believe in Balancer. So , if this is something that sparks your interest, if you are a developer or a project in space, you can get in touch with us. I'll give you the links to our Twitter and Discord contacts. Getting back to the topic, how are relationships formed between DAOs? And there are some ways.

Technical alignment is created through technical integration. Smart contracts that are connected to each other. I am developing an application that uses your protocol as part of its core functionality as composable building blocks. This creates this technical alignment for mutual success because, as people use my app, they are also indirectly using your protocol , and that is a mutual growth that occurs on both sides. Financial alignment can be achieved in a couple of ways.

The most common way is through token exchanges. And this is when DAOs agree to exchange a certain number of tokens from their treasuries with each other. And they generally also agree to hold those tokens for an extended period of time. They could stake those tokens, and it's a symbol of a long-term commitment to each other's success. This is because both communities want the other token to increase in value, as they own a significant amount of it.

Another more incipient and early way in which DAOs can create financial alignment, which I find very exciting, is through liquidity pools between DAOs. This can happen after a token swap where now my DAO and your DAO own each other's tokens. We created a liquidity pool that contains our two tokens. We both contribute liquidity to this fund and each liquidity provider in this fund has a direct interest in both projects. So it's actually like a kind of physical financial representation of a financial relationship between two communities.

This is even more true when you do this on Balancer: you can use the Balancer fund token, the BPT, which represents your ownership in this fund, as your own governance token. You can use that token, for example, to vote on decisions that these communities are making together, such as on a joint project. Therefore, that fund could basically represent ownership in a joint project, and the token of that fund could be the governance token of that project. I believe this is a great area of ​​potential and I really want to see it grow. And also, a shout-out to Primed DAO because I think they were the first to come up with this, and they also launched the first DAO-DAO fund, which is the Primed-Bal fund on Balancer.

And by the way, this can happen with multiple DAOs and multiple projects. Balancer supports multi-asset token funds. So even if there are three, four, five So even if there are three, four, five , or even 40 of us, if that happens in the future, we could all be financially aligned through shared ownership of a liquidity fund, which is basically like our financial contract. This is our financial relationship and it is on the basis of this that we work together. Social alignment occurs through governance and community participation in decision-making.

So token exchanges are also a good mechanism to attract this other DAO to your community and make them part of the decisions you make and the discussions and debates you have. What makes a decentralized community strong is having a large and diverse set of intelligent actors who contribute to the discourse, who help to make the best possible decisions, and that all these people are aligned around the success of the project. So when one committed, capable, and passionate DAO meets another, it's mutually beneficial for them to open their doors to each other to really capture that talent, because we're already seeing it today, and I think that's how it will be. People are part of many DAOs will be. People are part of many DAOs .

You are not part of just one. So you know, you can be part of DAO A that creates a partnership with DAO B and, uh creates a partnership with DAO B and, uh , get involved in the governance, decision-making process, and voting of both. Voting is also an important point. Token swaps not only create financial alignment, but you are literally giving voting power to this other community by doing a token swap with them, and they have a reason to exercise that vote because they have a personal interest in your success. So, uh, yes, at Balancer we talk a lot about how the Balancer protocol is a platform for development.

Our entire strategy is about serving developers in the space, letting them use our technology, helping them use our technology, helping them understand how to use it, and creating, you know, understand how to use it, and creating, you know, fostering this ecosystem of DeFi protocols connected to Balancer. So the question is, well, who has built on Balancer? who has built on Balancer? What are we really talking about? So I'll quickly go over some examples.

Uh, circulating in the Twitterverse. Uh, Aave is a great partner of ours. We've worked on some things together. More recently we launched, uh, the first "boosted pool", which is a, uh, liquidity pool on Balancer that, uh, can, uh, allocate up to 90% of its assets to Aave to, uh, boost returns for liquidity providers. I'll be quick here.

Hey, Lido for your liquid ETH staking. They are using an ETH/wETH liquidity pool with staking on Balancer. Copper, which has grown to be the most popular token launch platform in the DeFi space, is built on Balancer using our liquidity starter funds our liquidity starter funds . Bankless, the, uh, podcast and the DAO. They are using a BANK/ETH 80/20 fund on Polygon.

And they're also using this as a way to educate their listeners about liquidity funds. Uh, CowSwap, also known as Cow Protocol, is tightly integrated with Balancer, so that transactions that occur on CowSwap actually flow through the Balancer vault. And, uh, Element Finance, which has implemented a custom AMM on Balancer to support its fixed-yield products . Ah, yes. And then we have Fei Protocol, the FEI/TRIBE.

Uh, they're using Balancer like this, uh, a really key component of a larger DeFi core brokerage product. So that's very interesting too. OK. I want to tell you about something I'm very proud of. Something that represents a very exciting development.

Not just for Balancer, but for the entire DeFi ecosystem. This has required a lot of work and technical challenges that had to be resolved in order to develop an elegant solution, something we believe is crucial not only for us, but for the entire sector. What we have developed is the first revenue-sharing model between DAOs. And just this week, the Balancer community voted to implement a permissionless revenue-sharing model among DAOs. This is an exciting step for the DeFi ecosystem.

It is a way in which DAOs can more fluidly align their interests around their success. We have already discussed how DAOs have aligned their interests so far. I think this could be even bigger than what we've already discussed. What this means at Balancer is that, very soon, anyone who creates a cash pool—something that everyone can do—will be able to start receiving 10 to 50% of the fees generated by that pool. This means that projects built on Balancer will directly benefit from the financial activity they help to generate.

It's something that's programmed directly into the protocol. It happens automatically. It's a " automatically. It's a " plug-and-play" system. You create a fund and, if it is used and there is trading activity in it, you will be generating commissions.

It's excellent for everyone, from the individual DeFi entrepreneur who finds an opportunity for a fund they consider profitable and useful, to large projects that make important integrations with the Balancer protocol using our liquidity infrastructure. Thank you.