subDAO, the new crypto for the expansion of the web3 project

Growth is crucial to return on investment. However, in web 3, there are very few projects that can successfully expand new businesses, and most old projects and new businesses cannot compete with new projects that this business competes with.

SubDAO + execution may be the answer to this question. From Pendle's Penpie to Radiant's Radpie, Magpie is rapidly expanding in the subDAO mode. This Thread will take this as an example to analyze the best practice of subDAO for you.

**A. What is subDAO? **

Today's subDAO also has unsuccessful examples such as MakerDAO's Spark, but this kind of independent token project is actually still in the incubation stage and has no reference. A qualified subDAO should have the following characteristics

• subDAO has independent tokens and independent expansion capabilities
• ParentDAO holds more interests in subDAO
• Mutual benefits between ParentDAO and subDAO

Take Magpie's subDAO and Radiant's yield booster Radpie as examples. Radpie will issue $RDP, of which Magpie treasury holds 20%, and 30% of IDO shares will also be given to MGP, which means

• MGP holders can share IDO revenue
• MGP holders will be able to enjoy the "dividend" of $RDP in the future
• Magpie has great control over Radpie, which in turn has governance over Radiant *Radpie will utilize Magpie's team resources for a quick start

**B. What are the advantages of the subDAO model? **

• Reputation, subDAO inherits the reputation accumulated by ParentDAO in the past, which is easy to start
• Growth, independent tokens allow sufficient incentive growth budget
• Narrative, subDAO tokens keep up with the new narrative, enabling ParentDAO to keep up with the new narrative
• Circulation, subDAO is linked and shared resources within the ParentDAO ecosystem to improve efficiency
• Leverage, the ParentDAO of the governance track can achieve leverage governance through subDAO

B.1 Reputation

The most feared thing about new projects in the currency circle is rug pull, and LPs often give new projects a high risk discount. However, subDAO can inherit the reputation of ParentDAO, which greatly dispels this concern, and the cooperation with KOL and other project parties will become much smoother.

And reputation is an intangible asset that can be continuously accumulated. The success of existing projects will snowball to pave the way for new subDAOs.

B.2&3 Growth & Narrative

Wang Huiwen, the co-founder of Meituan, once commented that web 3 has a more radical customer acquisition and financing model, and Token is a tool to realize this model. Old projects are often caught in a dilemma when they start new businesses. If a large number of additional tokens are issued to motivate new projects, they will face a price drop. Otherwise, it will be difficult to win the competition.

What is even more uncomfortable is that because the tokens of old projects are too big to speculate and their positioning is not clear, the market will not include this token in the core discussion of the narrative when chasing a new narrative. For example, StakeDAO has developed a Convex-like governance business in the past year. It has integrated 10 projects but the effect is very limited. Its integration of Pendle has not shared much of Pendle's enthusiasm.

The subDAO model is different. For example, Penpie/ $PNP, as an independent project, not only does not issue any additional $MGP, but also firmly binds the narrative of Pendle. Although the price of $MGP currency appears to be unchanged, MGP is a project started by Wombat. The similar project WMX has fallen by 70% recently. Without Penpie, it is not difficult to imagine what MGP would be like.

B.4 Loops

For example, the mPendle/Pendle trading pool has recently entered Wombat, and is seeking to use Bribe through MGP, so that the incentive expenditure of PNP will be in the hands of MGP holders.

Next, can mWOM/mDLP and the LP tokens on both sides also log into Pendle, and then use $MGP and $RDP to participate in Penpie’s bribery market? Although there is no clear information at present, it should be inferred from common sense possibility of.

The newly emitted tokens remain in the Magpie system through the bribe. This is the so-called internal circulation, the meat is rotten in the pot, and the net external expenditure is reduced. If there is an inner loop, there will naturally be an outer loop. By sharing resources among multiple projects, we can reduce costs and increase efficiency. For example, Ankr obtained Wom incentives through Magpie Bribe, and Penpie also successfully pulled it over.

The end result of Magpie should be that all incentive tokens are not issued directly, but to improve efficiency within the ecology through bribe, mutual benefit, and establish a more competitive bridery market through BD resource sharing.

In addition, Magpie focuses on the track of governance rights, which can be said to be a perfect match with the subDAO model. This track is not the same as Perp, which requires continuous deep cultivation. After the project is built, there is relatively little post-work, and the homogeneity is also high. Basically, a lot of previous work can be reused for new projects.

For example, Penpie soon launched a bribery market, which is very similar to the market Magpie made for Wom before, which is also part of resource recycling.

B.5 Leverage

Taking Magpie as an example, Magpie nominally controls 20% of Penpie's governance rights, and Penpie controls 25% of Pendle's governance rights. On the one hand, Magpie enjoys 20% x 25% = 5% of the benefits of vePendle, but on the other hand; for protocol governance, 20% of Magpie’s votes will be largely It is the vote that decides Penpie, which means that it actually has nearly 25% of Pendle's governance rights.

This is the so-called leverage. Although the subDAO dilutes the general equity, there is almost no dilution in terms of protocol governance. The entire Penpie is a concerted actor in a sense, that is, 1/20% = 5 times leverage.

C. Execution

The idea of subDAO is beautiful, but it always depends on execution. MakerDAO’s Spark has been released for half a year but has not seen any improvement. After all, AAVE was forked, and there have been no major updates since then. The token economics has no shadow. At present, it cannot be called a subDAO at all, so it still depends on the execution of the team. .

Summarize

subDAO + execution, paving the way for web 3 projects to grow. Rapid expansion through subDAO can obtain sufficient new project growth budget, keep up with new narratives, and realize ecological linkage and resource sharing. Of course, all of this is based on the team's excellent execution.

In the past, DeFi was mostly just a module, unable to compete with the huge system of large CEXs, but if DeFi can quickly expand horizontally and become a system, perhaps a singularity is about to appear.