PieDAO is a blockchain-based organization that helps in governing tokenized portfolios.
Over time, how people interact with financial investments has greatly changed. For example, people are becoming more aware of passive income streams. This trend has largely been fueled by evolving technological, political, and financial landscapes.
Notably, these factors have increased the risks associated with money, causing individuals to turn to index funds and other controlled portfolios to minimize the risks. Unfortunately, these risk-mitigating methods are also centralized. And although they address the risks in some way, they also introduce new types of risks.
This has necessitated a shift to similar albeit decentralized products such as cryptocurrencies and the world of decentralized finance (DeFi). However, due to their decentralized nature, a superior approach is needed to manage tokenized portfolios. PieDAO, for instance, enhances the management of tokenized portfolios to empower internet users economically.
How does it achieve this? Below is a complete overview of the project.
What is PieDAO?
PieDAO is a blockchain-based organization that helps in governing tokenized portfolios. In the blockchain space, a DAO (decentralized autonomous organization) infuses community involvement in distributed projects. PieDAO is no different.
The members of the organization govern the weight carried by tokenized items. The platform is powered by the Ethereum blockchain. Interestingly, Ethereum is home to some of the most considerable tokenized assets.
The system’s components are called PIEs. Participants can propose new PIEs or suggest adding or removing features on PIEs. Voting on proposals is allowed through DOUGH. DOUGH is PieDAO’s native token, tasked with, among other things, governance and voting on the network.
Being decentralized and community-focused, the protocol allows anyone to create a tokenized allocation of traditional or virtual assets. Note that conventional assets are represented using synthetic assets. Each PIE can be swapped with its linked asset.
Notably, PIEs can be combined to form stable allocations. This approach can scale DeFi networks by achieving a low collateralization ratio that emanates from the collateral provided by a stable PIE.
Governance on PieDAO
As mentioned earlier, the PieDAO network supports governance through the DOUGH token. Therefore, to be part of the family, you have to own DOUGH. With the governance tokens, members can propose and vote for proposals.
For example, DOUGH holders can review the risks associated with assets on a particular PIE. Also, they can change the fees charged on the system.
To ensure maximum community involvement, a discussion about the proposal is done off-chain on community pages such as the PieDAO forum or Discord. The discussions culminate in Pie improvement proposals (PIPs) packed in the form of financial outlines on Github. Lastly, a DAO vote seals the fate of the request.
The process attracts fees that are debited from the portfolio’s allocation assets. These fees accumulate in a pot before being distributed to those who participated in the voting process. Apart from this simplified use of DOUGH, the PieDAO roadmap has provisions for advanced DOUGH use cases such as staking and delegating tokens to select PieDAO governors.
These upgrades arrive with migration from DOUGH v1 to DOUGH v2. Majorly, the shift introduces PIEs’ liquidity provision and rewarding liquidity providers (LPs). LPs interact with, for example, the DOUGHv2/ETH pool. Note that fees from PIEs accumulate in the Balancer pool, awaiting a further decision from the DAO.
Additionally, DAO’s benefit from linear payments known as streaming fees. These fees are anticipated to be one percent of the entire DOUGH market capitalization.
DOUGH has a total supply, for both v1 and v2 tokens, of 100 million tokens with distribution scheduled for over several years. However, after the distribution, LPs and developers will have consumed 60 percent, DAOs account 20 percent, 10 percent to initial DOUGH contributors, and 10 percent set for future distribution.
Examples of PIEs on the Network
- DEFI+L (DeFi Large Cap Pie) – This PIE is so large that it gives access to 8 Balancer pools/assets. It comprises sub-indexes tied to the assets’ market cap.
- DEFI+S (DeFi Index Small Cap) – It’s the opposite of DEFI+L. Therefore, instead of dealing with the larger part of the PIE, it deals with a smaller amount.
- BTC++ – The PIE aggregates Bitcoin (BTC) occurrences on the Ethereum blockchain and presents it as a weighted allocation.
- DEFI++ — It carries the qualities of both the large and small-cap PIEs through a weighted index. However, balancing the weight considers all the factors such as risks and general market overview. The index has an initial value of $1K, with its tokens having a ratio of 1:1000 of the index.
- USD++ – This is a stablecoin PIE. Its weights are dictated by a host of factors such as the market risk, volatility of the base currency, and trust.
How to Join PieDAO
We mentioned that PieDAO utilizes the Ethereum blockchain. On the finer details, the protocol connects to the blockchain using an Ethereum-based DAO framework known as Aragon. The process of joining the PieDAO ecosystems starts with:
A browser wallet. For this example, we’ll make use of MetaMask. However, you can use any Web3-supported cryptocurrency wallet.
- Visit PieDAO via Aragon. On the upper right corner, hit “Connect Account.”
- Select your wallet, MetaMask in our case > Continue > Confirm connection.
- You’re connected! A successful connection is indicated by having your wallet address (although not in full) feature in the place of “Connect Account.”
To receive DOUGH tokens, visit the PieDAO dashboard and click “New request.” This allows you to request DOUGH tokens.
- Define the amount of DOUGH you need and the ETH coins you are willing to spend. There’s a calculator to help you know how much you’ll get.
- If everything looks fine, hit “Create Request”> Confirm the transaction.
- Hold still as the DAO members deliberate on whether to honor your token request. If successful, you’ll get your DOUGH after 84 hours (72 hours voting, 12 hours cooling down).
- Luckily, if you want your ETH back, you can follow Rage Quit, a process of burning DOUGH for ETH or any other underlying asset.
PieDAO Use Cases
Due to the platform’s immense capabilities in both the centralized and decentralized space, here are a few of the places where it can be used.
- A stablecoin to back stablecoins – the USD++ pie can be used to provide a diversified approach to hosting stablecoins. The PIE can contain a collection of other stablecoins, further increasing the supported asset’s stability and reliability.
- Blending DeFi coins: PieDAO can be used to put together all the hottest DeFi coins. This provides a safe haven since when one coin fails, the others continue raking in rewards.
- Bundling digital assets: Apart from DeFi tokens, the protocol can be used to bring your favorite tokens into a single basket allowing you to be exposed to the entire crypto market without delegating control of your holdings.
PieDAO mimics indexes offered in the traditional finance space. Consequently, it increases confidence in cryptocurrency-focused products. Apart from enhancing confidence, the protocol minimizes the risks involved when directly interfacing with virtual currencies.
Through its various PIEs, PieDAO has a wide range of use cases available. They vary from collecting a basket of cryptocurrencies to collecting a basket of stablecoins that can be used to back another stablecoin to increase its stability. Additionally, its focus on all-round community involvement makes its decisions truly distributed.
For example, to enhance community involvement, discussions about what to include, and what to discard starts on Discord and other off-chain channels. This ensures everyone’s voice is heard even before the voting starts.