Decentralized finance (DeFi) meets decentralized governance.
This is the idea of StakerDAO, a new decentralized autonomous organization (DAO) that invests in existing Proof of Interest (PoS) block strings.
Introduced on Wednesday by Tezos Capital CEO Jonas Lamis, the new DAO will allow participants to vote to determine the best way to earn rewards as validators in a given network.
"StakerDAO is a new platform for managing financial assets," said Lamis. "We want it to be secure, decentralized and compliant."
The main investor in the project is the crypto hedge fund Polychain Capital. The other participants were not disclosed, nor the amount invested.
"It's about maximizing returns, but also carefully managing a portfolio of those underlying assets," said Olaf Carlson-Wee of Polychain.
StakerDAO will focus on existing PoS blockchains like Cosmos, Tezos, Terra and others, he added.
Beyond the similar name, Carlson-Wee said that MakerDAO (in which Polychain was an early investor) was the main inspiration for StakerDAO.
"The MakerDAO project is very interesting because it has managed to create a DAO in which the MKR token generates value for the holders through the success of an underlying DeFi intelligent contract system," Carlson-Wee said. about the highly popular decentralized loan protocol, adding:
"I think this model in which a DAO can generate value based on an underlying DeFi protocol is a possible thing beyond MakerDAO."
MakerDAO is a two-chip system well known for its DAI stablecoin, in which borrowers commit to obtaining a dollar-indexed DAI. To recover their ether, they must return the ICD, plus a tax payable in ICD or the MKR token.
But while MakerDAO is built on ethereum, StakerDAO will live on the Tezos blockchain.
Where MakerDAO will have its MKR governance token, StakerDAO will have STKR. STKR is the means by which investors can hope to earn money, Lamis said.
"Whether it's direct profits generated (DeFi projects that it builds) or a redemption and token-burning model like MakerDAO, we expect profits." , did he declare.
As such, the STKR tokens will be offered as collateral, Lamis said, fully compliant with US securities law.
Respect the law
While full compliance with US securities laws normally means restricting access to tokens to a limited group of qualified investors, Lamis refrained from specifying the exact qualifications he imagines to own STKR.
"I do not want to pick up on how it's going to work right now. Lawyers do not want to talk about that yet, "said Lamis. "When you start dealing with the US Securities and Exchange Commission, you have to be very conservative in your vision."
Lamis plans to launch StakerDAO and its token voting system by the end of 2019.
In addition, it expects STKR token holders to vote as soon as new DeFi applications are launched in the first or second quarter of 2020.
While these applications may include new coins (similar to DAI), loan protocols and derivatives platforms, the StakerDAO platform is not quite capable of doing so, said Lamis.
How it works
At the beginning of each year, STKR tokenholders will elect five board members to make governance decisions regarding DeFi projects and applications to build.
Then, every 30 days, the voting proposals of the StakerDAO board members will be presented, deliberated and finally executed.
According to Lamis, this part of StakerDAO's iterative governance was largely inspired by the Tezos blockchain.
After completing his first ever system-wide upgrade finalized by a token-holder voting process in May, Carlson-Wee said the Tezos governance model reflected how "difficult decisions" "could be taken in a decentralized way on a blockchain.
Lamis added that the Tezos governance processes implemented on the protocol layer were ultimately the reason why StakerDAO was built on the Tezos blockchain rather than on Ethereum. Ethereum currently supports an informal and off-line decision-making process, influenced by the collective will of protocol designers, miners and other community stakeholders.
"Tezos is by far the best-structured chain of channels for managing long-term governance," said Lamis. "We think this will be the blockchain (the most stable) for long-term governance."
Image of Jonas Lamis via Tezos Capital