Mobilize NFT groups via DAO tooling

NFT = non-fungible token, FT = fungible token

Overview

DAOs offer an exciting future built around community and shared ownership. They're on the cutting edge of technology and culture, and are currently in a state of experimentation and exploration.

DAOs have recently started experimenting with NFT based governance, where NFTs are used to limit governing/community access and separate, fungible tokens, are used as the social currency to power action in the DAO (see Krause House). This exclusivity in the number of governing participants promotes contribution by properly incentivized NFT holders and decreases noise, while the fungible token enables efficient transfer of value. Sub-DAOs can also form organically from the main group of NFTs as they're identifiable and can be used to specify exact groupings. NFT-FT pools, as described below, would enable the exploration of DAO structures where the fungible token's value is pegged to the governance NFT and can seamlessly be converted into each other. These NFT liquidity pools are currently infeasible on Ethereum due to soaring gas costs.

There are tons of NFT based communities on Cardano. Minting and trading native assets, primarily NFTs, has been all that was available for the past few months. Proper governance tooling will mobilize these groups through financial empowerment.

Fungify is a Plutus-native NFT-FT pooling protocol, a key component required to expand NFT capabilities. NFT-FT pools enable people to do the following:

• Have access to immediate liquidity for your NFTs
• Earn yield on NFTs
• Use NFTs as collateral for loans
• Invest in indexes of NFT projects
• Swap NFTs of the same type effortlessly
• Become fractional holders of NFT projects

A NFT-FT pool works by locking a NFT into a pool, specific to that NFT's project, in exchange for fungible pTokens. pTokens represent a claim to one of the NFTs in the pool, and can be redeemed for a NFT contained in the same pool.

pTokens can be traded on any open market, such as SundaeSwap, where the price will be discovered through arbitrageurs. The price reflects the "floor" of the project. NFT holders can convert their NFTs to pTokens through the pool and sell them at this price for immediate liquidity. The liquid market allows NFTs to be used as collateral for loans. Liquidity providers for market making pairs can earn yield on their pTokens. People can buy fractions of NFTs represented by pTokens to track a project like an index fund. Assets of the same type can be easily swapped for another, a common use case in the metaverse, where certain quests require certain items.

Fungify V1

Fungify V1, with core functionality for swapping NFTs/FTs from a pool and a farming script for LPs to earn yield, is currently going through intensive internal testing and final touches are being made. We plan to release Fungify V1 this January. Liquid markets will be set up for several projects in order to showcase Fungify's potential.

To follow our progress on V1, hop into our Discord: https://discord.com/invite/4f36hKZBBd

To learn more, check out our docs: https://sicks0sicks.gitbook.io/fungify/

Roadmap

This proposal is for building upon the Fungify V1 foundation to allow novel NFT based DAO governance structures to be explored on Cardano. This work includes implementation of NFT governance contracts with native integration to Fungify NFT-FT pools.

In the next 0-3 Months

• Fungify V1 code audit
• Fungify V1 launch
• Modify Fungify to support various pool creation mechanism so DAO governance structures can seamlessly launch with integrated liquidity pools

In the next 3-6 Months

• Friendly UI interface for NFT based governance
• Support fine grain pools, delimited down to a specific set of NFTs, for advanced subDAO structures

In the next 6-12 Months

• Integrate with Hydra
• Code audit
• V2 release

Auditability

Fungify V1 and the NFT based governance contracts will go through an official code audit. Progress can be tracked through the number of projects using the NFT-FT pool and NFT based governance infrastructure. Success after 6 months will look like 5+ projects experimenting with novel governance models enabled by the Fungify V1 protocol.

Risks/Open Questions

• How will DAO governance experimentation evolve and how large of a role will NFTs play in leading models?
• Will NFTs with value directly correlated to fungible tokens play a role in leading DAO governance models?
• Will impermanent loss be sufficiently offset by yield farming/airdrops?

How would this help to make Cardano the go-to choice for DAOs?

Cardano, with its countless NFT communities, provides a fertile environment for the exploration of NFT based DAO tooling. Fungify's unique mechanism and tooling for NFT based DAO governance could jumpstart the DAO movement on Cardano and create an argument for other DAO pioneers to explore on Cardano.

Funding breakdown

2 Haskell/Plutus devs for 320 hours at $50/hr = $32000

1 front end dev for 180 hours at $35/hr = $6300

Total $38300