How do these DAO-Oracles work?
We all know the money of the world flows to the top of the hierarchy. What happens when we tokenize the inverse flow of money? We get a fairly distributed governance asset.
We first start with something that is a blatant pyramid. A user can buy into the smart contract and receive bonds. Those who buy early, get bonds cheaper than those who buy later on.
The money spent on bonds and the time they were purchased is recorded within the smart contract.
When a user sells back to the smart contract, the price of bonds decreases.
When bonds are sold, the user get an amount of ether back along with a secondary “resolve” token.
The amount of resolve tokens a user receives is based on a “loss” & “hodl” multiplier. The more the bonds depreciate, the greater the loss multiplier. The longer the bonds were held (relative to current holdings in the contract), the greater the hodl multiplier.
resolve tokens = investment * (investment / return) * ( hodl / average hodl )
This way of minting resolve tokens harnesses market forces to drive their fair distribution. Only those that have sacrificed the most money and time get the most resolve tokens.
These tokens can then be used to back watchers that run the oracle. The oracle must respond to request tickets within a set time window.
Resolve tokens also have a deflationary component to “tighten” the ring of their distribution. They can be staked back into the contract to earn from the dynamic “friction fee”.
friction fee = resolve tokens outside contract / total resolve tokens
The slope of the pyramid’s bonding curve is static per instance of the contract, but this factor of the protocol achieves its dynamism by chaining/hopping through multiple instances of the contract.
Smooth Hops: The bond value remaining in an old contract can be distributed to the resolve holders but in the form of bonds in the new contract.
This protocol has mirror properties of Nakamoto consensus in that it requires an exponential amount of time and resources to corrupt the consensus. Ideally, the consumed asset for bonds should be something generated from Proof of Work.
Why does this work? It doesn’t actually force anything to be distributed by taking anything away from anyone. If someone holds resolve tokens outside the contract, the core is incentivized to inflate the supply. The thing is, things can’t inflate forever. That’s why you have to hop rings. Once the inflation of the resolves has capped out (the market share of the economy those resolves have of the “inverse economy”) it will begin to destabilize. This will be visible on analytics tools. You’ll probably feel it too. Before the ring completely destabilizes everyone needs to agree to jump to a new ring. So it uses inflation, but it also harnesses greed. You can’t force distribution, but you can sure as hell incentivize it. “Sure, you can make money off of this pyramid, but you’ve got to forfeit governance power”
