As part of a recent engagement, we have been asked to evaluate the tokenomics of Web3Dev DAO (Portuguese website here). We started our evaluation with a basic paper drawing and a conversation. The following is the summary of our evaluation.
Web3Dev DAO’s objective is to build a two-sided web3 marketplace that connects companies to tech professionals such as developers, designers, and data specialists.
The DAO will also work to develop software, tools, educational content, and courses to allow anyone to use, create, and benefit from the web3 ecosystem.
The DAO wants to launch its token WDT to decentralize its governance while creating a powerful token incentive for its ecosystem participants, who will have the possibility to participate in its management and unlock other token utilities in the future.
Web3Dev has created an interesting organizational structure made up of a consulting company, a DAO and a group of sub DAOs, this structure beside enabling scale and fragmentation also easily connects with the traditional world.
Wagbi Consulting is a traditional company that works as a bridge between the client and the DAO, who have access to guilds (Sub DAOs) made up of tech professionals.
TokenomicsDAO was invited to analyze Web3Dev DAO tokenomics strategy and provide our comments on the presented model. We have created a diagram that describes the mechanisms and ecosystem participants. Further, we described our observations along with our suggestions and references.
The diagram below describes the mechanism with which the ecosystem participants interact with each other. A zoomable version can be found here.
Voting Escrow: Web3Dev’s main objective is to incentivize DEVs and lock them into their ecosystem. However, despite having a staking mechanism, the current design doesn’t offer any lock-up feature. We see that as a possible barrier to achieve the defined objective.
A possible solution can come from the Ve(3,3) token model, where locking up tokens longer gives more voting power. Find below an article that explains Ve(3,3) Tokenomics and its benefits against traditional models.
Resources: VE Token model breakdown and evolution
Making Governance Attractive for Developers: In the presented model, access to DAO governance is regarded as the main utility provided by the token; however, there is no clear definition of how governance tokens will be seen as worth holding by a participant.
We envision two reasons for that. The first is the scenario where developers work full-time and can not be active in the DAO management. The second is if the proposals won’t directly impact their ROI. As a potential solution, we recommend including topics such as treasury management and dividends distributions as part of governance.
Developer Reputation: Developers are one of Web3dev’s leading resources, and there are no real mechanisms to classify them according to their performance and engagement. We would like to suggest implementing a reputation system that can support the process of classifying developers based on their reputation and retain them within the ecosystem.
Bringing this reputation on chain in the form of a token, will give developers credentials they can use when applying for other jobs and can make the process of selecting the right developer for a client project a lot more transparent.
Additionally, a reputation mechanism can be used to award DAO internal roles to reputation holders. Members who have proven themselves, can then take more responsibility.