Meet the Needs of Governance, Economy, Finance & Regulations — Ink Finance: For DAOs That Are More Than Social Groups (part3.)
Governance and Economy
INK mainly supports governance rights represented by a DAO’s own meta token, based on the principle of “having skin in the game”. Not only managers are required to stake a minimum amount of DAO tokens, public votes are expressed by staked tokens as well.
The INKStakingEngine is provided by INK for any DAO creator to simply plug their emission tokens into, with many customizable reward and penalty schemes for different staking terms, allowing DAOs to fit to their own tokenomics. The requirement of stake-to-vote not only is an effective mechanism guarding against Sybil attacks, and assigning clear governance utility to the meta token, it also happens to produce the effect of rewarding participation in the governance process, which typically more than offsets any gas cost spent on voting.
INK fully recognizes that governance by sheer stakeholding power is a crude and imperfect mechanism, and therefore, it devises a compensatory or offsetting mechanism — the badge mechanism, to let community members express governance rights via non-stakeholding contributions. Badges are typically issued by the sub DAOs of a large ecosystem where members are focused on narrower missions that should not be disrupted by the sheer size of the stakeholders of the meta token. DAOs can effectively balance the power of governance by configuring the weights of badges in lieu of stake-to-vote.
DAOs that support the badges can use them to implement member profiles in the organization as well, by standardizing their behavioral data transparently into a form of credit value similar to that on the Web2 fintech platforms. Full conversion of the badges into standardized SBTs (Soulbound Tokens) will be provided when such a standard is established in the industry.
Operationally, DAOs should have issued their own tokens on their native blockchains. INK provides a no-code interface for the DAO creator to
- Supply the tokens as staking reward；
- Set the emission curve during the emission period;
- Set different lockup terms that have different rewards and governance rights;
- Penalty levels for breaking the lockups;
QUILL is INK’s native token, and it follows the same general rule of the above utility principles, and it can be used for any small DAO as its governance token if it doesn’t intend to issue its own DAO token. Moreover, as a protocol token, QUILL is also a form of required capital for any DAO that uses INK’s facilities. QUILL tokens can be bought back from circulation with the fees charged for any financial activities taking place on the INK platform.
Fiscal and Financial Management
As the core of INK’s powerful financial capabilities, the Unified Custodian Vault, or UCV, is the smart asset holder capable of safekeeping any form of assets. Any DAO can set up multiple UCVs within its organization to isolate assets or liabilities for different purposes, which have different operational authorities administered by different duty-holding managers.
On asset mapping and creation, INK’s customizability and flexibility relies on InkEnvelope’s ability to wrap any asset or financial product into a single token. The power of InkEnvelope goes far beyond just minting. It encompasses critical information associated with an asset, such as insurance, appraisal, commercial licensing, etc, all assured by the integrity of the governance process.
Tokens wrapped with InkEnvelope can be non-fungible (NFT) or fungible (FT), compatible with any mainstream wallet and DeFi facilities. It can be used as a DAO’s treasury asset, collateral for borrowing, or as part of an investment portfolio, gaining the benefits of uniformity and liquidity on any blockchain facility.
InkEnvelope removes the opaque nature of generic tokens with the bonded clearing authorities and full descriptive power for on-chain processing, while preserving their on-chain tradability and descriptivity. It paves the way for the credit-based DeFi regime, where selling generic “shitcoin” for fundraising will be the past.
UCV and InkEnvelope are the underlying technical bedrock of all fiscal and financial functions on the INK platform. With them, INK
- Supports independent Treasury, Investment, and Funding operations within a large ecosystem;
- Allows each Committee to have its internal procedure regarding financial operations, in the form of intra-committee setup-and-approval according to the appointed roles, and executed on-chain;
- Supports the Treasury, Investment, Community, and Funding operations with DAO-to-DAO transactions between vaults, periodic automatic payments, and batched one-time payments, all secured with contract-based multi-signing processes. Various income or revenue categorization, as well as their audit is supported, which provides a clear asset deposit interface.
- Provides highly unified operational convenience, utilizing the same set of underlying technologies to support completely different business purposes. The difference between all pluggable applications on the INK platform mainly lies in the usage purpose of the managed assets, but UCV makes INK’s plug-and-play architecture very easy to implement.
- Supports regulatory compliant investment operations, including fund administration, asset adoption, risk management, and clearing functionalities, in addition to all the physical operations applicable to UCV. The process involves more management roles but follows the exact same internal setup-approval protocol that is tailored to regulation compliance.
Connecting DAOs to the Regulated Financial Systems
Whether a DAO is an emerging venture capital manager, asset management consortium, a NFT-rich metaverse, a decentralized Web3 protocol, it is likely to be in need of raising funds from legitimate investors around the world (including accredited investors in U.S.); the raised proceeds will be deployed to proper usage, and distribution of the returns will be made to the investors. All of these should be carried by smart contracts on a blockchain to achieve transparency and regulation compatibility.
INK aims to meet such demand by integrating with regulated financing platforms, including but not limited to companies such as Republic Capital, HKbitEx, Draper Dragon, and DigiFT. The recent fallout of FTX and other major centralized crypto financing firms pushes crypto regulation to the forefront of the industry. No one should have any illusions about avoiding regulation, particularly for organizations that want to touch investors’ funds. INK platform has the full capacity, through its professionally built, highly adaptive and flexible plug-and-play infrastructure, to embrace the regulated on-chain finance.
For instance, the DAO’s main treasury vault is used to store the raised capital, meta token allocations, and operational revenues, with the appointed Treasury Managers in charge of its operations. These managers are unlikely to be required by regulations, but they may be required to possess certain qualities required by the institutional investors to detect “rugpulls” and misappropriation. Meanwhile, the DAO’s Investment Committee can manage numerous other UCVs, each created for a different investment fund with separately appointed Investment Managers managing them. These managers are very likely to be required to hold particular licenses, and INK provides the necessary tools for the DAO, its members, and regulators to verify them.
To continue reading, please click: True Convenience of “Plug-and-Play” — Ink Finance: For DAOs That Are More Than Social Groups (part4.)