IOTA, one of the largest crypto ecosystems, announced today its community’s approval of the establishment of a community-owned decentralized autonomous organization (DAO).
Starting Monday, June 13, and following a 17-day voting process, community members chose not to eliminate a significant portion of remaining unclaimed tokens in IOTA’s ledger and voted instead to reallocate them into a DAO.
In short, the choice was to build or burn. Approximately 82% of votes were cast in favor of the building. The tokens that will be held in the community treasury under the DAO are currently worth about $18.5M.
This positions IOTA’s community to determine the direction and development of the IOTA ecosystem.
It is now up to the IOTA community to define and build the governance structure and mechanisms of this DAO. Once completed, the IOTA community will be able to actively support projects with the treasury.
There are two sources of unclaimed IOTA tokens set to be reallocated into the DAO treasury.
- The first is connected to IOTA’s initial crowdsale in December 2015, during which early adopters bought the full IOTA token supply. The sale funded the protocol’s early development, and when the mainnet launched, the vast majority of early adopters claimed the IOTA tokens they had purchased during the crowdsale. The Founders, and later the IOTA Foundation, kept the claim period for the remaining unclaimed tokens open until June 2021.
- The other portion of the unclaimed tokens is related to a change in the protocol in 2016. Several months after the network went live, the IOTA Founders decided to increase the token supply from 999 billion to 2.77 trillion. IOTA notified the community of the supply increase and set up an exchange process in which holders could turn in their original token amount and claim a threefold amount in new IOTA tokens. A small number of users did not partake in this conversion process. The tokens originally set aside for them remain unclaimed and will now fill the remainder of the community treasury.
A dedicated group of IOTA community members stood involved in every phase of the voting process, including helping design and build the voting system itself. The vote was conducted using a token-based voting system that guaranteed pseudonymity and Sybil protection.
In order to prevent vote manipulation through a flash loan attack – a term for when a user buys up a large number of tokens with which to vote and then offloads them immediately after voting – IOTA implemented a time-dependent voting system.
This ensured the most active and committed community members had the biggest say. IOTA protocol’s feeless and permissionless structure is uniquely suited to support community voting and DAO projects.
Blockchain-based votes typically have low participation due to the fees required to execute an on-chain vote – every vote is nominally a transaction, which costs fees on blockchains like Ethereum.
Not so with IOTA’s feeless infrastructure, which already powers Soonaverse, a DAO creation platform with 1,450 active spaces, 1,000 NFT collections, and 13,700 registered users.
Just as the IOTA Foundation deferred to the community to decide the fate of the leftover token supply, it’s also ceding decision-making power to the community in selecting DAO-funded initiatives.
The opportunities are endless, and the only requirement for an initiative to be nominated for funding is that it actively improves the IOTA ecosystem.
Community members might choose to develop a new decentralized exchange or lending-borrowing platform, build bridges to other ecosystems, or support individual projects proposed by community members so talented builders don’t have to turn to venture capital.
“We’re thrilled the community has chosen to build instead of burn, thus taking ownership of these tokens and assuming a more active role in the present and future of IOTA. This ecosystem would be nothing without our users and giving them a voice in major decisions such as this one is only right. Their decision to create the DAO and start funding projects that benefit the ecosystem is the best kind of feedback loop. The projects these tokens will fund will be game-changers for IOTA. To me, the result of this vote demonstrates that the community shares this belief, and I’m excited to see it happen in real-time.”
– Dominik Schiener, Co-Founder & Chairman of the IOTA Foundation
You can learn more about how to take part in the treasury vote here.