DODO is revamping the tokenomics for vDODO, DODO’s proof of membership tokens. To understand this vDODO Tokenomics proposal, it’s important to understand the basic facts about DODO and vDODO tokens, and about the Membership Points (MP) reward model.
- Is a reward token that is neither yield-generating nor does it have governance power;
- Has the best liquidity to become a DeFi building block, e.g. collateral;
- Is a way of exchanging value.
- Is minted by staking DODO;
- Is an interest-bearing token for 5% fixed-rate APY;
- Gives the holder the power to vote on any DODO Improvement Proposals, including DODO incentives, use of treasury funds, and fee distribution;
- Is transferrable and their voting power can be delegated to others;
- Can be swapped for DODO tokens with 0 fees and restrictions.
Membership Points (MP for short):
- Are generated over time when you hold vDODO tokens;
- Are generated faster the longer you’ve held vDODO;
- Are not generated with vDODO tokens that are delegated;
- Are not tokens and are neither transferable nor tradable
- Will drop to 0 when you convert vDODO to DODO tokens.
- Will be used in a to-be-introduced utility market, and all consumable utilities will require users to consume the necessary amount of MPs.
MPs can be redeemed for certain uses - all of which can make your life and business activities much easier.
MPs can be redeemed for…
- Subsidies for transaction fees;
- Slippage protection;
- Partial reimbursement for gas fees
- Portions of the minimum IDO and crowdpooling starting capital;
- Impermanent loss protection;
- Funding for project airdrops.
DODO is also introducing vote delegation, where business-side users (i.e. project) protocols will incentivize vDODO holders with extra token rewards in return for the vDODO holders delegating their voting power to the protocol owners. Protocols will compete for governance uses of Membership Points (see above), including DODO emission incentives, use of DODO Treasury funds and fees distribution.
How will this work? Read on:
a. How will voting and governance work?
For voting, use Snapshot - no on-chain actions required!
b. How do I delegate my votes?
A special ‘vote delegation’ account must be set up. This account has voting power on its own but can collect vDODO tokens to gain voting power via delegation. Vote delegation requires some on-chain actions: the delegating user can delegate (transfer) their vDODO to the ‘vote delegation’ account, and the owner of this account can then start voting for any proposals with these tokens. vDODO tokens from this account cannot be delegated to another account. This delegation account can then be traded as an NFT.
c. How do I recall my delegation?
It depends! A standard recall clause includes an ‘earliest recall time’ and a ‘pending period’. For example, if the earliest time to recall your delegation is January 1, 2025 and the pending period is 1 week, then, after January 1, 2025, anyone can initiate a recall request and the delegation recall will be executed after 1 week from the time of initiation.
d. How can I get delegated votes?
Any way will do as long as you can convince vDODO holders. The most basic way is to offer token rewards in exchange for vote delegation. DODO will also offer multiple tools for ‘governance mining’, which will include:
a. Multi-token rewards;
b. Token vesting;
c. The maximum amount of vDODO raised.
‘Governance mining’ is the act of providing token rewards in exchange for delegated voting power.
e. How do I initiate a proposal?
To initiate a DODO Improvement Proposal (DIP), you need to pre-lock a certain amount of vDODO tokens for at least 1 month. The content of the proposal will be uploaded to AR/IPFS.
f. How long does a proposal last?
From the moment the proposal is proposed, a timestamp is generated, and the blockchain snapshot will be taken on the block right before the timestamp. A proposal should also have at least a 7-day publicity period and a 3-day voting period.
a. Alice’s protocol wants to win liquidity support from the DODO Treasury and needs at least 10,000 vDODO votes to pass. Alice offers an incentive of 1,000 ALICE tokens to vDODO holders in exchange for their voting powers via governance mining (with 1 month vesting). Alice then raises 12,000 vDODO to vote for her project to win support from the treasury, and vDODO holders get extra token rewards simply by delegation.
Note: If the protocol wanted to lock your vDODO for 4 years, the 4-year-locked delegated votes will have 5 times the voting power of unlocked ones. Meanwhile, these 4-year-locked vDODO votes will become an NFT that can be transferred and tradable in the market.
b. DODO starts a governance mining campaign with a 1-4 year vesting period, which can be considered as a fixed-term deposit with a very high return.
Benefits of Vote Delegation
a. Lowers the threshold for 3rd-party protocols to compete for voting power. The competition for votes will be much more intense than it is now, which will bring more benefits for vDODO holders with the same DODO emission.
b. Makes governance efficient. Ideally, 3rd-party protocols or DODO control the most governance voting power;
c. Will, in the case of business-side incentives, drive more user exposure and encourage long-term support for vDODO holders.
- vDODO will be available on every supported chain, with a 5% fixed-rate APY and instant reward unlocking.
- vDODO holders on different chains can vote on the same DIP.
- MPs will be calculated and generated off-chain: no matter which chain vDODO is minted on, MPs can be generated. This means that you won’t need to pay gas fees when MPs are minted or burned.
DODO’s aggregator service charges handling fees that can be deducted by holding vDODO.
When the final execution price is better than the intended execution price, that is called positive slippage.
For example, if a user sells 1 ETH, and the front-end quotes 1 ETH = $3000 USD, and then the execution price is $3050 USD, then this $50 USD is an “unexpected gain”, which is called positive slippage. Conversely, if the execution price is $2950 USD, the missing $50 USD is an “accidental loss”, which is called negative slippage.
Whether it is a front-end call or another DAPP call, as long as it passes through the DODO routing contract, the positive slippage will be charged by the protocol.
Positive slippage will be credited to the protocol revenue.
Gas fees will be reimbursed via DODO at the end of each month according to the amount of vDODO held.
Those who want more advanced control can call the API and add extra parameters when building transaction data for users to realize profit sharing.
We want to implement this design at both the contract layer and the backend API layer.
DODO’s revenue is currently generated from two sources:
- Trading fees.
- Token creation.
The current fees distribution is as follows: 80% of fees directly go to LPs, 15% goes toward DODO buyback, and 5% goes to the DODO Treasury.
In future, we plan to add two sources of revenue:
- Positive slippage.
- Proactive market making and fees for using liquidity management tools fees.
Fee distribution will be described in detail in future DIPs.