DeFi for Good: The DXdao Approach

There’s no doubt about it: the DeFi boom is here. Years of work has gone into building a decentralized financial system on top of Ethereum, and that work has started to bear fruit. The total value locked (TVL) in DeFi increases every day, and more and more new people are being drawn into the Ethereum ecosystem.

Most of the attention has focused on the yield farming craze, where the more value you deposit in protocol, the more of its tokens you get. To some people, the DeFi boom isn’t quite what they had in mind when they got excited about Ethereum in the first place: are we eliminating middlemen or just changing who collects the fees? But to us, DeFi is a key step on the path towards a world where value is distributed more broadly. To see where we’re headed, take a look at DXdao, a great example of how DeFi can chart a path towards a better world.

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DXdao is a decentralized collective that builds and governs DeFi products and services for the world, and aims to be an open community that reaches consensus in a transparent and fair way.

After having bootstrapped its creation in early 2019, DXdao recently launched a token (DXD) to raise capital for the DAO. That’s how DXdao became one of the largest DAOs in existence: they hold $4 million worth of ETH, $4 million of DMM, plus several other assets. DXdao uses those assets to fund work on the DXdao’s products, with the goal of driving fee revenue back to the holders of DXD. The DXdao’s current products include Mesa, an open-source interface to a permissionless decentralized exchange, and Omen, a fully decentralized prediction market platform.

Where DXdao differs from most DeFi communities is that they also aim to fund public goods outside of their own protocols. When they want to fund their own products like Mesa and Omen, they use DXD and the capital they raised, but when they want to fund open-source work for everyone to benefit from, they use their PAN staking cluster to match donations on Gitcoin Grants.

In June, DXdao chose to support several projects on Gitcoin, including Black Girls CODE, Abridged, and The 19,763 PAN raised by these projects was matched at 4.74x by DXdao’s staking cluster, resulting in a total of 93,684 PAN (currently about $10,000) for their projects. The PAN used to match donations comes from Panvala’s Bitcoin-style inflation curve. That means the PAN tokens held and staked by the DXdao community were diluted to match donations. It’s the same logic that’s common in yield farming systems, but in Panvala, we farm philanthropy instead.

The five Panvala League communities earned up to 4.74x matching for their favorite projects by staking PAN and making their donations using PAN.

If the DeFi boom plays out the way many expect it to, the communities that are forming around each protocol will dramatically grow their wealth from the tokens they hold and the fees their protocols collect. But that’s not where the story ends. At the end of the day, the protocols with the strongest communities are the ones that will be able to maintain active user bases over the long run. Ensuring that the value of these protocols spills over to benefit everyone is the key to building communities that are worth joining.

We want your DeFi community to join DXdao in the Panvala League! Here’s how to get started.

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