Token Economic Model Outline

Token Economic Model Outline

The token economic model should align with Built By DAO’s mission of making homeownership affordable and sustainable. Here’s a potential structure for the token economics:

1. Token Types:

   • Governance Token: This token gives holders voting rights within the DAO. It could also incentivize long-term commitment by offering voting power based on tenure or staked amounts.

   • Utility/Asset Token: This would represent either partial ownership or claim to assets within the DAO’s portfolio, such as collectively owned rental properties, or a mechanism for redeeming housing credits over time.

   • Reward Tokens: These could be allocated to contributors for their roles in reducing costs, managing construction, or onboarding new community members.

2. Token Distribution:

   • Initial Token Offering: Consider an Initial DEX Offering (IDO) or other DeFi-native methods to engage early participants while ensuring the supply is equitable.

   • Community Incentives: Tokens can be issued as rewards for activities like property development contributions, on-time project completion, community engagement, and more.

   • Earning through Contributions: Construction laborers, planners, and community members can earn tokens through time-based contributions or completed milestones.

3. Token Utility:

   • Voting: Governance tokens should allow members to participate in decision-making for property development, spending, and property sales.

   • Asset Redemption: Over time, members could use utility tokens to claim a portion of ownership in properties or redeem credits toward housing or amenities.

   • Rental Rebates: A percentage of rental income from DAO properties could be redistributed as tokens, further incentivizing involvement and staking.

4. Token Flow:

   • Token Staking for Rewards: Staking mechanisms to encourage holding governance tokens, which could yield rewards or provide additional voting weight.

   • Burn and Buyback Mechanism: To maintain token value, consider a portion of fees generated within the ecosystem to buy back and burn tokens, creating a deflationary mechanism.

5. Treasury and Reserve:

   • The DAO should hold a treasury for long-term stability. This reserve could accumulate from fees, transaction percentages, or contributions, with smart contracts managing the release and distribution based on DAO governance decisions.

EVM Smart Contract Requirements

To implement the model above, we’ll need a set of smart contracts on Ethereum or another EVM-compatible chain (like Polygon or Optimism for reduced fees). Here’s an outline of the necessary smart contracts:

1. Governance Contract:

   • DAO Voting Contract: Manages voting rights, proposals, and voting results. This would control key decisions such as property selection, budget allocation, and other community matters.

   • Treasury Management: Ensures funds are released only with community approval and that spending aligns with the DAO’s goals.

2. Token Contracts:

   • ERC-20 Governance Token Contract: Manages issuance, staking, and transfer of governance tokens. It should integrate staking logic to incentivize holders.

   • ERC-721 or ERC-1155 for Property Ownership: If fractional ownership or asset representation is desired, NFT or semi-fungible tokens can represent unique ownership shares in properties.

   • Reward Token Contract: An ERC-20 token for reward distribution, possibly auto-minting or distributed by the governance contract as contributors achieve milestones.

3. Staking and Rewards Contract:

   • A contract that allows users to stake governance tokens in return for rewards. This could include a time-based reward multiplier for long-term stakers or loyalty rewards.

4. Rental and Rebate Contract:

   • Manages rental income from DAO-owned properties. Could automatically issue rebates to tenants as reward tokens or provide a mechanism for renters to gain partial ownership over time.

5. Token Redemption and Buyback Contract:

   • A mechanism for token holders to redeem asset tokens for property benefits or equity. The contract can manage token buybacks, funded by a percentage of DAO-generated income, to maintain token value.

Key Steps for Development

1. Design the Token Economics with Specific Parameters: This includes the total supply, initial distribution plan, staking reward structure, and buyback policies. Once we solidify these, we can hard-code these mechanics into the contracts.

2. Draft Smart Contracts in Solidity:

   • Write modular contracts to ensure flexibility, particularly for the governance model and rental rebates.

   • Implement fail-safes and auditing best practices to prevent vulnerabilities, especially around treasury and token redemption.

3. Integrate Testing and Security Measures:

   • Use tools like Hardhat or Truffle for local testing and simulation.

   • Conduct test deployments on testnets like Rinkeby or Goerli.

   • Implement comprehensive auditing through automated tools (e.g., MythX) and possibly a third-party audit for the final iteration.