The Fundraising component is one of the core components of the DAOSquare Incubator and is used to help Venture DAOs raise money for DAOs, funds, or specific investment projects.
Like all the other components of the DAOSquare Incubator, the Fundraising component is a smart contract running on a public chain, and the DAOSquare Incubator itself is not entrusted with any user assets. Users have absolute control of their assets when using the component to participate in the fundraising process of a DAO, fund, or specific investment project.
When a Vintage mode Venture DAO starts a new fund and raises money for it, or when a Flex mode Venture DAO launches a specific investment and raises money for it, Or when a Collective Venture DAO starts a Fundraising for a DAO, the fundraising component can help the DAO dictate fundraising rules and requirements, such as fundraising timing, participant eligibility, and so on. These things can be easily done through several parameters the Fundraising component provides.
Parameters
The following list shows the Fundraising component's parameters and introduction.
Parameters | Description |
Currency | The currency of the fundraising. The DAOSquare Incubator provides a list of common currencies for users. |
Custom Token Address | If the fundraising currency is not in the default list of common currencies, the user can enter the token contract address of the currency to add the currency. |
Minimum Funding Goal | The minimum funding goal for the fundraising. |
Maximum Funding Goal | The maximum amount raised in this fundraising. |
Start Date | Start time of the fundraising period, to the second. |
End Date | Closing time of the fundraising period, to the second. |
Minimum Deposit | Specify a minimum capital participation threshold that investors participating in the fundraising need to meet. If the deposit input is less than the minimum deposit, it cannot be deposited successfully. |
Maximum Deposit | Specifies the maximum capital participation limit of investors participating in the fundraising (the limit amount is the cumulative amount, not the maximum amount of a single advance deposit). If the advance deposit input is more than the maximum deposit, it cannot be deposited successfully. |
Type | Type of fundraising. Currently, the Fundraising component offers two types of fundraising: FCFS and Free-in. See the FCFS & Free-In section below for details on these two types of fundraising. |
Priority Depositors | Priority depositor is a function that guarantees deposit priority for a specific group of people. For more information on Priority Depositors, see the Priority Depositors section below. |
Max Total Investment and Min Total Investment are calculated from Maximum / Minimum Funding Goal and related fees.
Max Total Investment in the above formula is defined as the total investment corresponding to the maximum funding goal, and its calculation formula is as follows:
Min Total Investment in the above formula is defined as the total investment corresponding to the minimum funding goal, and its calculation formula is as follows:
FCFS & Free-In
FCFS and Free-In are two different types of fundraising. It establishes a mechanism for allocating capital in a fundraising activity. According to the agreed distribution mechanism, determine which investors can be eligible for a deposit and the amount of the deposit.
In many cases, especially popular Venture DAOs and investment projects, the amount of investment is often very scarce, and DAOs can be pre-agreed rules through different types of fundraising to achieve different goals, such as:
- Better leverage the value of DAO/community membership.
- Differentiate membership and guarantee preferential participation for certain groups of people.
- Open and transparent fundraising mechanism to ensure fair distribution.
- More interesting fundraising process.
The following is a detailed introduction to FCFS and Free-In type of rules.
According to different DAO modes, FCFS & Free-In are set in Fund Establishment Proposal in Vintage DAO, Fundraising Proposal in Collective DAO, and Investment Proposal in Flex DAO.
FCFS
FCFS is a first-come, first-served type of fundraising. When the actual deposit amount reaches the maximum funding goal or the Investor/Member Limit, subsequent participants cannot continue to deposit unless someone withdraws during the Fundraising Period.
At the end of the fundraising period，
- If the current fundraising amount is greater than the minimum funding goal, the fundraising is successful. Each investor's share of the investment is equal to their Advance Deposit.
- If the current fundraising amount is less than the minimum funding goal, the fundraising fails. Investors can make a refund.
Until a fundraising campaign is completed and successfully executed, any investor who has deposited funds is free to withdraw their funds from the fundraising pool without being charged a redemption fee.
In the FCFS type of fundraising, whether a person can successfully deposit in a single fundraising, the participation time is an important factor, which is why the model is called FCFS. Therefore, assuming that you are participating in an FCFS fundraising campaign, the earlier you participate, the greater the probability of being allocated an investment quota.
Free-In
Unlike FCFS, participants can continue to deposit money during the Fundraising period when the total advance deposit reaches the maximum total investment. However, it should be noted that if the Investor/Member Limit is reached, subsequent participants will not be able to deposit any more money. In addition, the Free-In model provides a Priority Depositor function, which can be turned on and off.
What Is Priority Depositor
In the type of Free-In fundraising, DAOs can enable Priority Depositors to guarantee priority for a specific group of people. Priority Depositors is also a eligibility verification for a role, so it uses the Eligibility component (see the Eligibility for details).
Priority Depositors are also part of the Investor population, so priority depositors need to meet both the Investor Eligibility and Priority Depositor Eligibility. For example, if the Investor Eligibility criteria are set to hold a minimum of 1000 RICE and the Priority Depositors are set to hold a minimum of 1 APE NFT, then only those who meet the above two criteria can be classified as priority depositors.
When Priority Depositor Is NOT Enabled
At the end of the fundraising period, if the total advance deposit amount exceeds the maximum total investment, the system will calculate the actual deposit amount of each participant based on the proportion of advance deposits of each participant. All participants are free to refund part of the advance deposit over the final actual deposit at the end of the fundraising period. The calculation formula is:
- A: If the total advance deposit of all investors is greater than the minimum total investment and less than the maximum total investment.
- Actual deposit of a Depositor = Total advance deposit of Depositor.
- B: If the total Advance Deposit amount of all investors is greater than the maximum total investment.
- Actual deposit amount of a single Depositor = Max Total Investment x the proportion of a single depositor‘s advance deposit to the total.
- The total advance deposit of a depositor less the actual deposit is equal to the amount that this depositor can refund.
When Priority Depositor Is Enabled
If the Free-In type of fundraising is selected in a fundraising and Priority Depositors is enabled,
The system will allocate the deposit quota to the priority depositors first, and the remaining deposit quota will give to non-priority depositors based on the proportion of the advance deposit of each non-priority depositor. The non-priority depositors are free to refund the advance deposit above the actual deposit at the end of the fundraising period. The formula is as follows:
- Actual Deposit of a Priority Depositor = Total advance deposits of this Priority Depositor.
- Actual Deposit of a Non-Priority Depositor = (max total investment - total deposits of all Priority Depositors) x the proportion of this Non-Priority Depositor’s advance deposit to the Total advance deposit of all Non-Priority Depositors.
Example:
Suppose that the Maximum Total Investment of fundraising is 100,000 USDT, and
Jack | is the priority depositor, whose advance deposit is 30,000 USDT |
Jerry | is the priority depositor, whose advance deposit is 20,000 USDT |
Rose | is the non-priority depositor. whose advance deposit is 20,000 USDT |
Tom | is the non-priority depositor, whose advance deposit is 80,000 USDT |
So,
Jack & Jerry | will be allocated the investment quota of 30,000 USDT and 20,000 USDT first, and the remaining 50,000 USDT will be allocated to Rose and Tom in proportion to their advance deposits. |
Rose | is allocated an investment quota of 10,000 USDT [50,000 X 20,000 / (20,000 + 80,000)], so her actual deposit is 10,000 USDT, and her refundable amount is 40,000 USDT. |
Tom | is allocated an investment quota of 10,000 USDT [50,000 X 20,000 / (20,000 + 80,000)], so his actual deposit is 40,000 USDT, and his refundable amount is 10,000 USDT. |
The system will allocate all deposit quota based on the proportion of advance deposit for each priority depositor. All priority depositors can refund the excess advance deposit over the actual deposit after the fundraising period ends. All non-priority depositors will not receive any investment quota and can refund the entire advance deposit after the fundraising period ends. The calculation formula is as follows:
- The actual deposit of a certain Priority Depositor = Maximum Total Investment x the proportion of the advance deposit of this Priority Depositor to the total advance deposit of all Priority Depositors.
- The actual deposit of a Non-Priority Depositor = 0
Example:
Suppose that the maximum total investment of fundraising is 100,000 USDT, and
Jack | is the priority depositor, whose advance deposit is 50,000 USDT |
Jerry | is the priority depositor, whose advance deposit is 150,000 USDT |
Rose | is the non-priority depositor. whose advance deposit is 20,000 USDT |
Tom | is the non-priority depositor, whose advance deposit is 80,000 USDT |
Jack and Jerry's total deposit has exceeded 100,000 USDT, so the investment quota of 100,000 USDT will be allocated to Jack and Jerry in proportion to their deposit.
Jack | is allocated an investment quota of 25,000 USDT [100,000 x 50,000 / (50,000+150,000)], the actual deposit is 25,000 USDT, and the refundable amount is 25,000 USDT. |
Jerry | is allocated an investment quota of 75,000 USDT [100,000 x 50,000 / (50,000+150,000)], the actual deposit is 75,000 USDT, and the refundable amount is 75,000 USDT. |
Rose | the actual deposit is 0.00 USDT, and the refundable amount is 20,000 USDT. |
Tom | the actual deposit is 0.00 USDT, and the refundable amount is 80,000 USDT. |
The fundraising will fail, and each depositor can refund the total amount of their advance deposit.
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