Luis Cuende | Using DAOs to fundraise for your project | CrossLink Taipei 2019

thanks for being here cool so well first of all thanks for being here again RAF to Taipei a couple days ago and it's been a great experience being here I went through the electronic market and all of these crazy walls with CPUs and stuff it's really cool so I want to talk today about a couple of things but before getting into into talking about those couple things I want to ask how many of you know about about Aragon in general and how many of you do you know about dowse the concept of decentralized organizations okay well I would a little bit of an intro so decentralized organizations are this very interesting concept where you can use a theory on you can use smart contracts to create organizations that are actually encoded on chain and so that has many benefits for example they are fully programmable basically you can write code and the code is what defines your organization if you know a little bit about how organizations like companies nonprofits all of these things work in the traditional world what you have is a huge stack of paper that defines the rules on how people can interact and so one example is when you hire someone you want this person to have for example a vesting contract so a contract that maybe you know after two years three years four years whatever rewards them with some shares in the company or tokens or whatever and so traditionally what you have to do is just kind of create this piece of paper that a lawyer rides for you takes a lot of time texts a lot of money and then that's what kind of creates the contract between two parties and then one of them has to like you know gravely create more shares or or give more service to this employee with a smart contract or with with a dhow that can be so easy as like ten lines of code and so you can gradually you know set the recipient and this recipient will receive more tokens or search or whatever each aetherium block and so now stick this to a whole new level and basically enable anyone to create organizations that are on chain fully programmable and that are also upgradable and get better over time so what I wouldn't and I'll talk about today is what Dow's can do for the whole ecosystem and especially one use case that we're super excited about which is fundraising because I mean you all know what I SEOs right that everyone knows about mostly okay well so I see us were great what a great way of funding back in the day but I think they have some drawbacks and so we're trying to figure out how to fix those issues with Aragon fundraising with the app we're building portion racing while allowing for any project to fundraise and basically you know did with a bunch of projects did back in the day which is for example there is no way a theorem is here the reason why Aragon is here is because of this amazing family mechanism so first of all I want to talk a little bit about defy so this centralized finance this centralized finance it's it's really great and there are there are some things to unpack here so one of them is the market the market is people here because we all know how to use a theorem and so we are the users people outside the theory unnecessarily need to or know how to use it so maybe they like even if they want to use it at the account so the market is basically us you have like multiple bank account systems or similar to bank accounts which is like wallets like argument or in our apps like instead of that enabled you to not only hold money but also to transact and get loans and stuff like that and then you have like a bunch of financial applications like bets on over decentralized exchange in Europe and you have lending and borrowing like compound khyber stuff like that and then for like capital markets we used to have ICS which is you know basically you have this huge like list of projects that you can put money in and then participate in this like capital allocation and also in the value creation mix over time if they build something valuable you benefit from that then we have a stuff like maker affair which can be argued that it's a store value sometimes depends but then you know I think the the partner that I I'm not quite sure about because everything else I think projects are are taking on it very well like makers taking on and I junior 7 over are working and half kind of pro market fit but for icos I think after 2017 and 2018 and all of the regulatory crackdown and all these scams right now I think it distillation is kind of terrible like you either have it's coming Ponzi schemes like the one that clogs a theorem a couple weeks ago or you have like regulated kyc crowdfunding which is basically not ICO so this is like kind of basic kyc powered fundraising which we had a really for decades and so I think with ICS like I mean they are amazing because I spilled the built on racing fully peer-to-peer fundraising no intermediary no need to be a venture capitalist anyone could just put money in there's a lot of liquidity because you an tap on this amazing liquid a pool of basically you know anyone in the world that wants to put money into your project and then also founded years of research and development like the reason we're here today is because someone had the idea to do an SEO for theorem back in the day and it was successful they raised 18 million dollars and they were able to hire great people to build the things that we are using today but there were a bunch of weaknesses and so one of them is you receive all the money up front so I see oh you get all the money up front and then we have what you know happened back in the day which is people being like oh I have money and there is a Ferrari store here I can use to spend my money on buying a Ferrari and and so that's that's a very bad incentive alignment then also because of that nature because of the fact that you put your fat and the fans up front it's very difficult to recover them almost impossible like once once you send the transaction it's unchanged you have no recourse like that's it and then that led to like a lot of fraud and and now it's referring what's happening right because I SEOs were like meant to actually disintermediate capital allocation and we have this weird dynamic where we have exchanges that are the ones that provide liquidity especially centralized changes that actually are making a lot of money by use basically receiving some kind of bribes so I've been like hey you want to talk enlisted develop a and so that's I think the Hertz universe in a lot and also that kind of goes against the ethos of decentralized IRA because we are being like yeah we centralize everything there is ICO is there there are tokens anyone can create a token but then if you want to get listed right so I don't think that's how things will work and then the list - like logic liquidity issues there is the problem of ICS racing if so it is a very volatile asset probably not the best asset to raise money in maybe you're looking for something like die because at the end of the day you use the funds to pay people and people cannot go and buy a street food with if yet but you can do that with dollars or die I know it IVA like you can at least have something stable and also a cos you subtract a lot of like certain speculators like pump and dump kind of thing like oh I got into a token sale now I can like wait a day and um my tokens in the market so the question is how can we create this or how can we unlock this capital allocation fully decentralized capital allocation while keeping accountability and our answer is better governance so if you look at all the issues that we see here is mostly around basically lack of governance like there is a team that receives the funds and they do whatever they want which is a kind of governance it's called dictatorship but not really works very well looking at history and so going back to a very very similar use case or kind of an example of something similar that happened centuries ago so the the London Stock Exchange was a stock exchange of course want them to increase capital allocation make it more efficient and also make people participate in value creation very similar to ICS in that sense and they were systematically excluded by the national state and the legal system and so they were not even a place and so the problem there is obviously you know you either have something super regulated or or you have something that kind of runs from the side that is not related and if you do have that and it's not like regulated at all then you have a lot of fraud and so you know that there are two ways to look at this issue one is one is like you have this nation state that regulates everything kind of dystopian is honest that controls everything that you do and everything that you put money in or you have the other kind of path which is self-regulation and serve relation was a solution so they said right we don't want fraud to happen we want this to exist the national state will not back as they will not collaborate so let's create like this coffeehouses these private clubs in which we can create our own sort of like parallel legal system we can create our own social contracts and we can allow for Lisa stock exchange to exist in a parallel reality to the legal system and so yeah I mean it's it's is fascinating I don't want to go too much into history but it's just like very interesting how they were like experimenting with different rules inside the club to like kind of sort of regulate and I think it's like happening something very very similar in this case so we took that approach of self-regulation and instead of thinking you know the nation-states relate all the cross tunnel in the world which i think is a good idea that doesn't really empower innovation or freedom we thought you know we can create using smart contract susan dowse we can create the world's best talking sail or kind of contribution or how do you wanna call it across funding experience it's a basic refining experience both news experience and also in accountability so accountability is a key factor here so basically you know I see us are great but they lack the canta bility that we're a bunch of scams and so we said you know what if instead of doing like a SEO kind of fundraising like a dictatorship kind of fundraising do you put a dowel in there and this Dow is the one that represents token holders and this dial balances power out from the team that is gonna build the project and so how it works it's it's very very simple so basically when you want to create a dowel because I didn't say you're creating a dowel with this fundraising app so I will go into that later but Eragon dowels are very modular so they have like multiple apps and this one raised in a pitch is one of them so you install your app into integral down or you just create a new day with this fundraising template and you tweak a little bit the parameters here and there and basically you have fundraising going on and so there are some parameters here that I want explain so one of them for example is there's a Capri shell and then after the Brazil there is the actual kind of crowd funding and so it really is like a typical kind of pretty said that we would be used to so like your target goal the price in this case pair died because Isis before I think dies a way better talking for for actually like generation then the deafening period so how much time do you want the tokens sale to to last at this pre-show and then you have a couple parameters there which are how much is that is going directly to the project and how much is that is they just going to the Dow and then and then after that what you have is a couple interesting things to which is you can also set the vest in for your participants so one of the problems that we have before is pump and dampers right so like they come in they buy price pumps they sell right and you don't want to have the skin of people in your community you wanna have people that actually believe in your project and so with Weston you can say right if you're gonna get in but you are gonna have to like wait a year until you are able to sell your drugs again right and so that way you actually incentivize long term support and not short term speculation and then and then there are basically two different pools and this is the core difference with like traditional methods of fundraising is that there is no team doing the fundraising the Dow is doing the fundraising so this set of a smart contracts that represents the Dow is the one that is going to receive the money and is the one that is actually doing the fundraising so there are two different pools the reserve and the discretionary so basically you can think of it the same way the reserve is the Dow there is surface where all the funds go and that one it's controlled by token haulers that one is community govern by your community your participants in your sale and then there is a discretionary pool and the discretionary is the team's pool is what the team uses to actually build a builder project so let's say for example you want to build another blockchain because that's that's cool right so you start from race and then with this fund race you race a lot of a lot of money that goes into the reserve and then gradually you will have what's called top rate and this right basically it's like money that has been streamed at you so like every month you can pay salaries you can hire people and a lot of that but the research pool can did there is a full can at anytime come together take a governor's decision and vote that maybe you are not doing well they don't want to they don't want you to continue and they can stop funding there that's the completely kind of firewall that separates these two pools so the the go team of here as well as we use this thing called bonding curves and so bonding curves are what the governor will like do nice job or any kind of like this and release chains it's it's similar in the sense that they give you the quality without the need of being listed in a centralized exchange so basically what you see here in this curve it's a bunch of different points there for example there is that point there like in the near the 2000 and the 100 in the kind of bottom half and so for example if you want to buy now that will be the price that you get basically and so you see also like in the kind of numbers in the top which are way easier to look at so that you have a stuff like the price market cap trading volume token supply what's in the reserve pool which is also important and the monthly allowance which is basically what the team can get every month to pay salaries and develop the project and so the the finger I want to talk about more here is the resource part so unlike icos in traditional sense which is gonna have kind of weird edge cases for example in the case of Aragon Aragon Falls around I think right now forty five million dollars in their reserves but the market cap of int is like thirty which doesn't make any sense like that's basically the market is like saying you guys are going to it up and you are gonna like a spend fifty million dollars on Lambos or something and some highest lose money in a rational world what will happen is that the reserves are actually somehow linked the market cap the market value of a project and so with bonding curves that actually happens and that's one of the very very very cool thing is all Ivan foundation is that instead of just sending and then after the the Salish gone the money is basically e ATM by speculators because if you think about it when you do a token sale do you raise like let's say ten million dollars those two million dollars is the team who can have access to it and use it to develop the project but once that token sale is is done and you don't raise any more money then it's all market and so basically that means that in the market people farming in profit like you know from that profit nothing really goes back to the project and here's the cool thing is each time you buy you're not buying into a team you're buying into this bonding curve and this one in curve is linked to a reserve and so basically what this means is that when you put money in when you buy a token you are effectively putting money into the reserve for the team to use it later and when you sell to the bonding curve what you're doing is you're taking money out of the reserves so there is also very cool for accountability because ice token holders you know that you are not ever going to have just like empty hands because if you if you buy today and you want to sell tomorrow you are least gonna sell at a good price that is like a part of the reserve so you always have that kind of research to back it up and then we're building this very cool UI as well to find cool projects in the it is not only for the crypto space although I think a lot of scrip the price will use it but also in general for like anyone who wants to create a fun race or a crowdfunding campaign like I think one of the cool things about this kind of douse is that you can create them for like three bucks and then you can use them for something super super small and then kind of ditch them like there is no there is no this huge sort of process where you have to create legal documents and hire lawyers and notarize documents and all of that stuff right so basically if you wanted to do this this kind of fund raise in the traditional world with like legal documents do probably need like months and like you know thousands of dollars in lawyers with this you can literally do it in like two clicks so I think we're going to see a bunch of like projects that are not that like be in terms of like you can really fundraise for it your birthday party you can say what hundreds for this and you can literally do it so we're building this cannot discovery platform and so the way it's gonna work when you want to participate in a in an Oregon fundraising project is your gonna be able to go here purchase tokens with AD die or AMT which are the two like collateral types that Aragon Federation work with right now and then if there's an invest in you wait if not you can just clean your tokens and then it's time whatever time period you want you will have to vote and participate in the governance to either let a team continue or or no or stop them if they are not delivering on their promises and so this is very cool as well because I think one very very important part of it is used like don't put the money and forget about it you put the money and then you also have a say you can actually vote on how the future of this project is going to be and then if you want to sell tokens back to the project because do you feel that you have already participated in the value creation and and you made some money or something then you can just sell back to the bonding curve and the whole thing again is like journey it is not going to go to zero because you can basically all always redeem part of the reserve pool funds so that's very cool and I think that's a very needed protection for participants in in a token sale so to wrap up here this is like kind of some attributes that I believe very important for a special fundraising that's along on fundraising and that's like ICO models also Argan fan richness has been inspired on a couple things one is the model called ap re but look don't come from our team but also of italics dye avea which is basically decentralized autonomous ICS so it's very similar to what we're building here and so fans are milestone based as opposed to use like lump sum in SE OS fan recovery is very easy for token holders ICS is very hard or impossible transparencies built in like one cool thing about argon fundraising yes even ever you'll see what there is like a bunch of like these apps in the sidebar here one of them is a finance stuff you're going to boring app as I said like Aragon is modular kind of framework for creating dowse so you can have multiple apps and combine them and if you go to the finance app you are going to automatically see how the team is spending their money which I think it's super cool it's like built-in transparency right now for icos for example Aragon we have transparency that Aragon or this website that we like manually document all of our expenses but no one does that in this in the in the cryptical system within transparent is important but i think is to be built in I don't ability of course talking holders come vote the quality is guaranteed by this bonding curve so you're gonna have the issue where liquidity use goes to zero and we are not able to sell your tokens and that's never going to happen and then the Treasury asset for ICO is just to be eased which is very very idea very volatile dices table I think is a way to go and there in terms of incentives ICO just attract a lot of like sort them speculators and I think I've gone fundraising and actually incentivize long term you which I think it's so important for the ecosystem so to wrap up like this is kind of the the history repeating itself so coffee houses in the London Stock Exchange gave us this server who later law often assume markets but of course that didn't scale you cannot have like a global coffeehouse or club or something with that kind of bond and Trust I SEOs gave us a lot of trust minification because we don't need to trust each other we don't need to like be in the same coffeehouse to trash teach other but at the same time they had a lot of problems with accountability and I think I'd own fundraising combines both to actually deliver something that is good for Jago system and so this is decentralized governance this is what we are building at Aragon thank you we are hiring so we're hiring a bunch of positions especially developers front-end developers and you know engineers that are passionate about decentralized governance and taking these to the masses so they can build you know the next generation of organic cities in the world and we can actually build something that enables people to be part of value creation I think that's one of the coolest things about credo currencies even stuff like like Bitcoin you know like back in the day if you wanted to like participate in value creation you have to be a venture capitalist and you'll have to have amazing network in Stanford or like Palo Alto or something to it access to like Apple Siri say now with destroyed currencies we actually can give this thing capability to everyone in the world so I think it's so important to work on these fundraising mechanisms reducers comes but also keep that kind of value add that we are seeing so that's it thank you thank you very much do we have any right and there's one more thing where we're doing a party they are going to a party because we're also building a blockchain for real and so yeah here the details 30 30 30 cafe as you know me from 5:30 to 8:00 so just drop by and say hi Thanks okay now Mancini wine channel milk Erica no Tobias America Hodor what at oshri a sheet and a Donatello hotel zone Odeon ow Patti would Amanda Padian how to tell major food in general 30 cafe de nada teachers as I mention Lou Ashley eg how to tap him in James and fuging how does not mature into enchanted high Mourinho Roja do you want do you wanna come off in psycho the session do you have any questions from the audience about the session we just shared raise your hand if you have any questions anyone okay thank you very much for your sharing that thank you drama dates it down to Cheryl blender juncture