DAOrayaki Research | DeGate： Decentralized Transaction Protocol

DAOrayaki

6 min readJun 11, 2021

DAOrayaki Research | DAO Project — — DeGate：

DAOrayaki DAO Research Grant：

Fund Address: 0xCd7da526f5C943126fa9E6f63b7774fA89E88d71

Voting Result：DAO Committee Yes

Grant Amount：170 USDC

Category：DAO project coverage,Ethereum Layer 2 DEX, rollup-based solutions, two-tiered system management, Liquidity Bootstrapping Pool, centric-protocols

Contributor：Jones, 朱莉白@DAOrayaki

Keywords: Ethereum Layer 2 DEX, rollup-based solutions, two-tiered system management, Liquidity Bootstrapping Pool, centric-protocols

Financing:

DeGate current price: $0.316 USD

DeGate current volume: $23.43M USD

Launch date (mainnet): March, 7 2021.

Token name: DG is considered to be DeGate’s native token.

Token type: DG is issued under the standard protocol ERC20.

Chinese Version:https://daorayaki.org/daorayaki-research-basketdao-eng-chn-daorayaki-3/

Introduction:

According to Gulu, the inspiration to build DeGate is the ethos that blockchain itself embodies, where DeGate defined as a DAO-centric protocol of the community, by the community, and for the community. In which, both openness and transparency are guaranteed.

DeGate is a rollup-based L2 DEX, where trading fees are at their lowest and volume liquidity is at its highest. It is expected to encompass a full-set of exchange-related modules but not limited to autonomous-market-making (AMM) functionalities, orderbooks, leverage-capabilities, L1-L2 bridge, fiat on/off-ramps, and initial-offering capabilities.

Team members:

Founder of KEY GROUP Bin Lu (A.K.A Gulu) has been around the crypto industry since 2011 and he is considered to be the one behind the Layer 2 Decentralized Exchange DeGate.

There is not much informations about the DeGate dev team which is KEY GROUP except that DeGate is initially owned and controlled by Home DAO, where this latter designate Council DAO as the decision-making management group, the below members are considered the DeGate administrators according to their Discord server:

Larry Jones: Lary_Jones#5777

MissDeGate: MissDeGate#8045

DeGate governance mechanism:

DeGate protocol governance mechanism follows the community governance, which is conducted by a “two-tiered DAO system”: Home DAO, Council DAO. Although Home DAO hold the right to alter everything about the DeGate protocol, the dev team has a foundational principles by which as a social contract that will not be easily changed. The list below contains these different principles:

- Home DAO is 100% in charge of any losses caused by DeGate protocol’s own lack of care.

- Minimize the tyranny of (token) majority is aimed by Home DAO.

- Ensure the balance between stability and flexibility using a two-tiered DAO system to conduct the governance structure.

Two-tiered DAO system:

Home DAO and Council DAO are considered as the two-tiered system responsible of the protocol governance, where:

o Home DAO has the complete ownership of the DeGate protocol.

o Council DAO is designate by the Home DAO to manage the day-to-day decision-making.

Home DAO:

With the Home DAO being the owner and controller of the DeGate protocol, it became entitled to the revenue generated:

o All generated revenue will be swapped to DG token and hold withing the Home DAO account / treasury.

o DG token will determine the Council DAO members via an election process that considers these tokens as votes.

o Home DAO will provide the necessary funding for the Council DAO along with giving the full right to exercise capital allocation power at its discretion.

o The Home DAO controls Council DAO in a way that it can freeze and withdraw the funds, or to a re-elect a new Council DAO , and that is by holding Council DAO smart contract.

o Home DAO has the ability to vote or any governance proposals with its DG token, where these kinds of proposals are launched by both Council DAO and DG token holders that meets the requirements.

o In short terms, anything includes highly importance will be directly decided by Home DAO. Allowing this will help with the stability and consistency of decision making along with trust collecting.

Council DAO:

When it comes to decision-making Council DAO appears since it is assigned by the Home DAO to manage these decisions.

o Partial rights for the Council DAO to part of the DeGate protocol’s smart contracts.

o Council DAO will take control over the budget received from Home DAO that only concern DeGate operations.

o Achieve a highly competitive market environment to allow the protocol for reacting quickly in the hands of the Council DAO.

o The board members of the Council DAO are elected by DG token holders, while Council DAO decisions are elected by one board member for each vote.

o Hiring employees directly and outsource tasks to outside 3rd parties is considered as one of the Council DAO abilities.

DeGate incentive mechanism:

DG Token Allocation:

The supply for the DeGate protocol from the DG tokens is around 1 Billion, completely owned by Home DAO initially.

- 19.8% Founder Financing: the founding team would obtain the stake of 990.000 USD, by which the tokens will vest linearly over 4 years. The unvested tokens can enjoy the same set of token rights but cannot be transferred.

- 44.0% Incentives: Taking liquidity mining into consideration to provide an allocation for the DG tokens, where the founding team expect that 1/11 of the (44%) would be allocated for token-swap offering to KEY holders (BIHU and MYKEY users). Founders believe that KEY exchange channel will impact consensus constructing and diversify DeGate’s reach.

- 20% for Financing: guarantees a stable continuous growth for raising capital throughout the time. The 20% allocation can either be offered publicly or privately. However, the privately offered prices must be inherited from the public ones. All raised proceeds will be owned by the Home DAO treasury.

- 9% Business development: this slice is designated for the compensate partners in exchange for their different services, management, or any other type of collaboration. The underlying allocation has the sale possibility via structured products to strategic partners and that is for a long-term interest. All raised proceeds will be owned by the Home DAO treasury.

- 5.2% Reserve: reserved for Home DAO in case of things getting out of hand or instant needs.

- 2% Liquidity Pool: grant half of the allocation to an AMM pool at the Founder Financing round valuation of ~5 million USD to bootsrap day 1 token liquidity, while the other half redistributed into the same pool for further liquidity. All raised proceeds will be owned by the Home DAO treasury.

Contracts: