The Arbitrum DAO

Karolina

04 Oct 2023
The Arbitrum DAO

The Arbitrum DAO stands at the convergence of technology and democratic decision-making, capturing the attention of the blockchain world. As we delve into this exploration, we'll examine the intricacies of DAOs and what distinguishes the Arbitrum DAO in this dynamic environment.

Understanding DAOs

Decentralized Autonomous Organizations (DAOs) are organizations governed by computer code embedded rules and stored on a blockchain. Unlike conventional organizations, DAOs operate without centralized authority, making them resistant to single points of failure or control.

Structure. Smart contracts, which are pre-established rules encoded on a blockchain, drive DAOs' operations. These contracts automatically execute when specific conditions are fulfilled, without any intermediary involvement.

Purpose. DAOs aim to facilitate a truly decentralized decision-making process in which every stakeholder has input. This democratic method ensures decisions are made to benefit the entire community rather than just a select few.

Function. Governance tokens are generally associated with DAOs. Token owners can propose amendments, vote on proposals, or assign their voting rights to someone else. The voting weight may be proportional to token holdings, enabling stakeholders of all sizes to have a say.

Arbitrum DAO

Arbitrum DAO represents more than just another instance of blockchain governance; it signifies an evolutionary leap in decentralized governance mechanisms, particularly concerning Ethereum scaling solutions.

Unique Features. Progressive decentralization is the distinguishing characteristic of Arbitrum DAO's approach. While enhancing Ethereum's transaction processes with Arbitrum Rollup and Arbitrum AnyTrust protocols, the DAO ensures that control over these protocols resides within its community.

The $ARB Token. The $ARB governance token is more than just a tradable commodity; it represents both a voice and a vote. Through this mechanism, stakeholders can influence Arbitrum's future by deciding on matters ranging from protocol updates to potential integrations.

A Vision Centered on Community. The driving force behind the DAO is community participation. The potential to shape the course of Arbitrum protocols lies with every token holder, developer, and enthusiast. By decentralizing decision-making power, the Arbitrum DAO showcases a model directed by many, not just a few.

It's crucial to appreciate that DAOs, particularly those like the Arbitrum DAO, represent more than just technological wonders. They embody a transformative shift in governance, decision-making, and community engagement. The DAO serves as both a reflection of our current position in the blockchain landscape and an indicator of our future direction.

Arbitrum DAO - Governance Mechanism 

The cornerstone of the DAO is its powerful and inclusive governance mechanism designed to ensure that decisions reflect the collective will of its community members rather than being dictated by a select few. This multi-dimensional process carefully balances decentralization with operational efficiency.

The $ARB Token's Role. The $ARB governance token is more than just a digital asset; it is essential for decision-making within the DAO. Each token represents influence within the ecosystem, enabling holders to propose, discuss, and vote on various facets of the Arbitrum protocols.

Security Council and DAO Dynamics. Working alongside the broader DAO, the Security Council functions as a specialized group dedicated to safeguarding Arbitrum's security and performance. Chosen by the DAO, these 12 council members step in only during emergencies to maintain system resilience and stability.

Proposals and Voting. Community members have the freedom to submit proposals for consideration and voting. This democratic practice helps the DAO remain adaptable to the ever-changing needs of the blockchain realm.

Decentralization - Arbitrum DAO

In Arbitrum DAO, decentralization serves not merely as a trendy term but as its foundational principle and core strength.

Decision-making without alterations. Unlike centralized organizations where decision-makers can change or overturn decisions, Arbitrum DAO decisions remain permanent. Once the community reaches consensus, the blockchain solidifies it as an immutable and transparent record.

Diversity brings harmony. Decentralized systems let numerous voices, viewpoints, and skills influence each decision. This diverse input fosters innovative and thorough solutions that centralized approaches might miss.

The community drives evolution. As the blockchain landscape progresses, Arbitrum DAO does too. Community feedback directs this evolution, ensuring it stays relevant and adaptable through the strength of decentralization.

Engagement

Participation in the DAO goes far beyond token ownership; inherently, it means actively influencing its trajectory. Numerous opportunities exist for anyone who shares the organization's vision of a better future.

Delegate roles. Eager to shape the future of the DAO? Delegates have the chance to represent fellow token holders through active participation in decision-making processes and ensuring the collective voices of constituents are heard.

Joining discussions. Discord server facilitate lively debate, conversation, and idea generation. Ideas of every magnitude can find an attentive audience on these platforms.

Staying current and casting votes. Token holders who prefer a less active role still wield significant influence by keeping informed on current proposals and voting accordingly. Every vote has value, accurately reflecting collective desires in shaping the DAO's trajectory.

The living entity that is Arbitrum DAO continuously advances with each interaction, vote, and conversation. Embracing active participation and inviting each member to take a hand in shaping its future, it thrives on collaboration.

Conclusion

At its core, the Arbitrum DAO merges cutting-edge technology with democratic practices in perfect harmony. Rooted in decentralization, the organization symbolizes not only the revolutionary capabilities of blockchain but also provides a model for digital-age collective decision-making. The transparent, immutable, community-driven decision process exemplified by Arbitrum DAO bears an undeniable role in defining the way forward for decentralized ecosystems and beyond.

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Aethir Tokenomics – Case Study

Kajetan Olas

22 Nov 2024
Aethir Tokenomics – Case Study

Authors of the contents are not affiliated to the reviewed project in any way and none of the information presented should be taken as financial advice.

In this article we analyze tokenomics of Aethir - a project providing on-demand cloud compute resources for the AI, Gaming, and virtualized compute sectors.
Aethir aims to aggregate enterprise-grade GPUs from multiple providers into a DePIN (Decentralized Physical Infrastructure Network). Its competitive edge comes from utlizing the GPUs for very specific use-cases, such as low-latency rendering for online games.
Due to decentralized nature of its infrastructure Aethir can meet the demands of online-gaming in any region. This is especially important for some gamer-abundant regions in Asia with underdeveloped cloud infrastructure that causes high latency ("lags").
We will analyze Aethir's tokenomics, give our opinion on what was done well, and provide specific recommendations on how to improve it.

Evaluation Summary

Aethir Tokenomics Structure

The total supply of ATH tokens is capped at 42 billion ATH. This fixed cap provides a predictable supply environment, and the complete emissions schedule is listed here. As of November 2024 there are approximately 5.2 Billion ATH in circulation. In a year from now (November 2025), the circulating supply will almost triple, and will amount to approximately 15 Billion ATH. By November 2028, today's circulating supply will be diluted by around 86%.

From an investor standpoint the rational decision would be to stake their tokens and hope for rewards that will balance the inflation. Currently the estimated APR for 3-year staking is 195% and for 4-year staking APR is 261%. The rewards are paid out weekly. Furthermore, stakers can expect to get additional rewards from partnered AI projects.

Staking Incentives

Rewards are calculated based on the staking duration and staked amount. These factors are equally important and they linearly influence weekly rewards. This means that someone who stakes 100 ATH for 2 weeks will have the same weekly rewards as someone who stakes 200 ATH for 1 week. This mechanism greatly emphasizes long-term holding. That's because holding a token makes sense only if you go for long-term staking. E.g. a whale staking $200k with 1 week lockup. will have the same weekly rewards as person staking $1k with 4 year lockup. Furthermore the ATH staking rewards are fixed and divided among stakers. Therefore Increase of user base is likely to come with decrease in rewards.
We believe the main weak-point of Aethirs staking is the lack of equivalency between rewards paid out to the users and value generated for the protocol as a result of staking.

Token Distribution

The token distribution of $ATH is well designed and comes with long vesting time-frames. 18-month cliff and 36-moths subsequent linear vesting is applied to team's allocation. This is higher than industry standard and is a sign of long-term commitment.

  • Checkers and Compute Providers: 50%
  • Ecosystem: 15%
  • Team: 12.5%
  • Investors: 11.5%
  • Airdrop: 6%
  • Advisors: 5%

Aethir's airdrop is divided into 3 phases to ensure that only loyal users get rewarded. This mechanism is very-well thought and we rate it highly. It fosters high community engagement within the first months of the project and sets the ground for potentially giving more-control to the DAO.

Governance and Community-Led Development

Aethir’s governance model promotes community-led decision-making in a very practical way. Instead of rushing with creation of a DAO for PR and marketing purposes Aethir is trying to make it the right way. They support projects building on their infrastructure and regularly share updates with their community in the most professional manner.

We believe Aethir would benefit from implementing reputation boosted voting. An example of such system is described here. The core assumption is to abandon the simplistic: 1 token = 1 vote and go towards: Votes = tokens * reputation_based_multiplication_factor.

In the attached example, reputation_based_multiplication_factor rises exponentially with the number of standard deviations above norm, with regard to user's rating. For compute compute providers at Aethir, user's rating could be replaced by provider's uptime.

Perspectives for the future

While it's important to analyze aspects such as supply-side tokenomics, or governance, we must keep in mind that 95% of project's success depends on demand-side. In this regard the outlook for Aethir may be very bright. The project declares $36M annual reccuring revenue. Revenue like this is very rare in the web3 space. Many projects are not able to generate any revenue after succesfull ICO event, due to lack fo product-market-fit.

If you're looking to create a robust tokenomics model and go through institutional-grade testing please reach out to contact@nextrope.com. Our team is ready to help you with the token engineering process and ensure your project’s resilience in the long term.

Nextrope Partners with Hacken to Enhance Blockchain Security

Miłosz

21 Nov 2024
Nextrope Partners with Hacken to Enhance Blockchain Security

Nextrope announces a strategic partnership with Hacken, a renowned blockchain security auditor. It marks a significant step in delivering reliable decentralized solutions. After several successful collaborations resulting in flawless smart contract audits, the alliance solidifies the synergy between Nextrope's innovative blockchain development and Hacken's top-tier security auditing services. Together, we aim to set new benchmarks, ensuring that security is an integral part of blockchain technology.

Strengthening Blockchain Security

The partnership aims to fortify the security protocols within blockchain ecosystems. By integrating Hacken's comprehensive security audits with Nextrope's cutting-edge blockchain solutions, we are poised to offer unparalleled security features in our projects.

"Blockchain security should never be an afterthought"

"Our partnership with Hacken underscores our dedication to embedding security at the core of our blockchain solutions. Together, we're building a safer future for the industry."

said Mateusz Mach, CEO of Nextrope

About Nextrope

Nextrope is a forward-thinking blockchain development house specializing in creating innovative solutions for businesses worldwide. With a team of experienced developers and blockchain experts, Nextrope delivers high-quality, scalable, and secure blockchain applications tailored to meet the unique needs of each client.

About Hacken

Hacken is a leading blockchain security auditor known for its rigorous smart contract audits and security assessments. With a mission to make the industry safer, Hacken provides complex security services that help companies identify and mitigate vulnerabilities in their applications.

Looking Ahead

As a joint mission, both Nextrope and Hacken are committed to continuous innovation. We look forward to the exciting opportunities this partnership will bring and are eager to implement a more secure blockchain environment for all.

For more information, please contact:

Nextrope

Hacken

Join us on our journey to deliver top-notch blockchain tech and a safer future for the industry!