On February 7th, we dove deep into the realm of DAOs with DeXe Protocol, a leading figure in the blockchain and DeFi sectors. This Ask Me Anything (AMA) session served as a stage for a comprehensive and insightful conversation, focusing on DeXe Protocol’s recent advancements, strategic goals, and the future prospects of DAOs. This summary will highlight the main points and insights from this captivating discussion.
Q1 – Intro of yourself (what do you do)?
Serhii Kravchenko, Core Contributor to DeXe Protocol and CEO at DeXe DAO Studio
Q2 – What is DeXe Protocol, can you give us an overview of your project?
The DeXe Protocol is an innovative infrastructure of 50+ smart contracts for creating and governing DAOs in a meritocratic way, with proper incentive alignment and wide flexibility. It’s designed to help DAOs grow fast and sustainably, with active and useful participation of members and an emphasis on expertise.
The Protocol is governed by DeXe Protocol DAO, which is responsible for the Protocol’s continued development and improvement. DeXe Protocol DAO is a decentralized autonomous organization built around a specific mission and vision outlined above. To achieve them, DeXe Protocol DAO is releasing the DeXe Protocol, which we hope to be the dominant toolkit for future and current DAOs to use in building and updating their own DAO blueprints. The DAO’s governance token is $DEXE.
Our mission is to provide infrastructure that truly fulfils the power of decentralized governance. We don’t just want to emulate the old models; we aim to improve, refine, and revolutionize them. In doing so, we’re challenging the old guards of centralized control and plutocracy.
Q3 – How does the DeXe token (DEXE) integrate into the platform, and what are its primary uses?
$DEXE is DeXe DAO’s utility and governance token used to distribute rewards to contributors and to govern the DeXe Protocol.
As with most DAOs, holders of the $DEXE token automatically become DeXe Protocol DAO members. Any Member can create proposals on every aspect of our DAO, vote on them, and execute passed proposals into action.
Holders of the $DEXE token can earn rewards for their contribution. Rewards for substantial contribution to the organization’s activities are a fundamental tool that incentivizes DAO members, encourages quality contributions, and compensates for the time and gas fees incurred. In addition, by rewarding active DAO members by paying them $DEXE tokens, we reduce the voting weight of passive members who do not vote. The new DAOs created on the DeXe Protocol will pay a commission on rewards and token sales to the DeXe Protocol DAO’s treasury, strengthening the $DEXE token.
Q4 – You have extensive experience of active participation in DAOs, tell us about current challenges and market trends we can expect
DAOs are not a new phenomenon, for example, many well-known DeFi protocols have long been working as DAOs. Uniswap, Compound, Gitcoin, etc. But in the past, far fewer projects opted for a decentralized management approach than do now.
The DAO cycle has long since begun and continues to gain momentum. We see a trend that has been going on for the last 2 years – the number of DAOs is increasing every day, as well as the number of participants in these DAOs. This indicates their massive spread in different directions both in the crypto world (DeFi, asset management, gaming) and in the real sector. According to DeepDAO, there are currently about 20 thousand DAOs. This is a trend and DAOs will become more and more numerous, primarily due to the improved and convenient infrastructure, which now has several problems. Creating and managing DAOs will become easier, more convenient, and more decentralized.
Among critical challenges in the market for existing DAO tools and the organizations themselves, we can identify the following:
Lack of Decentralized Treasury Management Tools: Even when creating a DAO, you still need a multi-sig wallet with a certain number of signatories, which distorts the very idea of decentralization and concentrates power in the hands of the founders.
Plutocracy: Despite the decentralized nature of DAOs, significant decisions in most organizations still follow the will of large stakeholders — founders, their teams, and investors. Many organizations rely solely on ownership-based governance models, centralizing power around the narrow circle of interested parties, which fundamentally misrepresents the essence of DAOs and creates manipulation risks. For DAOs to genuinely embody decentralization, we must establish mechanisms encouraging participation and influence from a broader spectrum of competitive contributors. By doing so, we can ensure that decisions are made collectively and are not highly influenced by a narrow circle of key stakeholders.
Incentive Imbalance: In current structures, DAO members must not only spend time studying proposals and making decisions but also cover commission costs. At the same time, the benefits of the organization’s activities can be accessed by all members regardless of their involvement and the outcomes of their efforts. Such a model devalues initiative and demotivates individuals.
Low Activity: As a result, most organization members remain insufficiently motivated and engaged. Initiative and contribution go unrewarded, and a quorum for decision-making is only achieved with the participation of a narrow circle of interested parties.
Lack of Infrastructure: Although there are many solutions in the market, we still lack a comprehensive infrastructure that contains mechanisms for constructing complex organizational structures, discussions, on-chain and off-chain voting, incentivization mechanisms, decentralized treasury management tools, the ability to integrate proprietary contracts, and autonomously execute DAO decisions, and so on.
Given the abovementioned challenges, most existing DAOs are better described as decentralized autonomous organizations with centralized governance (DAOCG). Current tools hardly allow for the creation of a genuine DAO. Many organizations continue to live in a distorted illusion of what they perceive to be a DAO. Otherwise, projects and organizations that recognized this fundamental flaw had no choice but to build their own DAO infrastructure and allocate substantial resources to maintain it.
In other words, there is interest and a growth trend, but there are several problems that have not yet been solved – which indicates a huge market and potential.
Q5 – How DeXe Protocol is addressing those challenges?
To address these challenges, we have created DeXe DAO Studio on top of DeXe Protocol.
DeXe DAO Studio is a cutting-edge platform designed to create and manage Decentralized Autonomous Organizations (DAOs). It is a comprehensive solution for users to initiate and operate a DAO with ease. The platform is intuitively designed to cater to both novices and seasoned professionals, emphasizing a user-friendly experience.
At the heart of DAO Studio is the facilitation of autonomous governance. It provides a suite of tools that enable varied voting models, token delegations, and the establishment of expert sub-DAOs. Moreover, it offers resources for crafting meta-governance proposals, enhancing the collaborative decision-making process.
Q6 – What makes DeXe DAO Studio unique compared to its competitors?
DeXe DAO Studio simplifies the creation and management of DAOs with its all-in-one platform, integrating essential tools for effective interaction, such as notification systems, real-time statistics, and adaptable management features. This seamless integration of functionalities makes DAO management more user-friendly and efficient.
I’d like to make a special note:
The reward system incentivizes DAO members, encourages quality contributions, and compensates for the time and gas fees incurred.
Meritocratic Governance: we’ve crafted a system where increased holdings have diminishing returns on voting power, ensuring no single entity can dominate.
Vote delegation system: You can delegate tokens to the experts or anyone for more competent decision-making in the DAO. In the case of using the Meritocratic voting system in DAO, experts have an increased voting power coefficient, allowing the delegators to receive even more rewards from the experts’ voting than their own votes. We amplify the voices of validated experts but keep them in check with duty.
Q7 – How does DeXe Protocol prioritize user security and trust? Any Features and strategies for risk mitigation.
First of all, DeXe DAO Studio has the option of using validators as an additional layer of protection. Validator voting is the second round of voting. It is an additional security measure designed to protect the DAO from malicious proposals and manipulations, similar to double-factor authentication. After the main voting phase, the Validator voting begins. Validators use a separate token that cannot be transferred to another wallet. Validator voting takes effect after the main voting phase and also has its own quorum and voting duration settings. After the Validator voting ends, the proposal is either accepted and proceeds to the execution stage or rejected.
The entire code base of the DeXe Protocol underwent extensive security testing and auditing by DeXe DAO contributors. Additionally, the Protocol also went through 5 external security audits from Certik, Cyfrin, Hacken, and twice by Ambisafe. These audits looked at the Protocol’s smart contracts from all angles to find even the smallest vulnerability vectors. Having several expert security firms audit the Protocol allowed different teams of security experts to review the code at different stages through their unique skills and toolkits.
To ensure long-term systematic security testing from the best white hackers in the world, the DAO launched an open-ended bug bounty campaign on 3 leading bounty platforms, one of them being HackenProof. The campaign is funded via a dedicated DAO with a 500,000 $DEXE treasury. It will allow the Protocol to quickly react to new threats that may develop in the DeFi market in the near and far future.
The real-time, on-chain protection from SphereX has been successfully launched on the DeXe Protocol. This is 24/7 protection for any DAO that runs on the Protocol, keeping them secure both in terms of funds and against any governance attack vectors.SphereX rejects all transactions that do not match an approved pattern, making sure that a malicious transaction doesn’t drain user funds, for example. This also protects from governance attacks since any passed proposal will go through SphereX before execution.
Q8 – How can developers and security researchers contribute to DeXe Protocol DAO, and what outcomes they can expect?
Join DeXe Protocol DAO, contribute, and earn rewards for your participation. Holders of the $DEXE token automatically become DeXe Protocol DAO members. Any Member can create proposals on every aspect of our DAO, vote on them, and execute passed proposals into action. DeXe DAO has rewards related to such governance activity as submitting proposals, voting, delegating, etc.
We’re always on the lookout for talented individuals to join our team and help us grow. If you’re a skilled developer or DAO expert, feel free to contact us. You could help shape the future of decentralization.
We invite all white hat hackers to join our bug bounty program, you play a pivotal role in enhancing the security of the DeXe Protocol, contributing significantly to the safety and seamless operation of our ecosystem. Your skills and vigilance are vital in maintaining the highest level of trust and security for our users.
