New Ideas for Expanding Web3 Projects: Sub-DAO Model

In the Web3 space, project expansion and business growth are crucial for return on investment. However, many established projects often struggle to compete with new projects that focus on this area when attempting to expand into new businesses. Recently, the sub-DAO model has emerged as a potential solution, providing new possibilities for the expansion of Web3 projects. Below, we will take the Magpie ecosystem as an example to explore the characteristics and advantages of the sub-DAO model.

Definition and Characteristics of Sub-DAO

A mature sub-DAO typically has the following characteristics:

1. Possess independent tokens and autonomous expansion capabilities
2. The parent DAO holds a significant proportion of the equity in the child DAO.
3. A mutually beneficial symbiotic relationship is formed between the parent DAO and the child DAO.

Taking Radpie, the yield booster of Radiant in the Magpie ecosystem, as an example:

• Radpie will issue an independent token $RDP
• The Magpie Treasury will hold 20% of $RDP, with another 30% of the IDO allocation assigned to MGP.
• Magpie gains significant control over Radpie, thereby influencing the governance of Radiant.
• Radpie can leverage Magpie's resources for rapid launch.

Advantages of Sub-DAO Model

1. Reputation Inheritance: Sub-DAOs can inherit the reputation of the parent DAO, which helps to quickly establish market confidence.

2. Growth Drivers: Independent tokens provide sufficient incentive budgets for sub-DAOs, promoting rapid growth.

3. Narrative Update: Sub-DAOs can keep up with the latest market trends and inject new narrative elements into the parent DAO.

4. Resource Circulation: Sub-DAOs form resource sharing and interaction within the parent DAO ecosystem, improving overall efficiency.

5. Governance Leverage: The parent DAO focused on governance rights can achieve a leverage effect on governance rights through child DAOs.

Practice Cases of Sub-DAO Model

Taking Magpie's sub-DAO Penpie as an example:

• Penpie, as an independent project, does not issue additional MGP tokens.
• Closely align with Pendle's market narrative
• While the price of MGP remains relatively stable, it brings new growth opportunities for Magpie.

Ecological Circulation and Resource Sharing

The Magpie ecosystem is building an internal循环系统:

• mPendle/Pendle trading pool launched on Wombat platform
• Distributing PNP incentives to MGP holders through the Bribe mechanism
• The interaction of mWOM/mDLP on Pendle may be realized in the future.

This internal loop reduces reliance on external resources while improving overall efficiency through resource sharing among multiple projects.

Leverage Effect of Governance Rights

Taking the relationship between Magpie-Penpie-Pendle as an example:

• Magpie controls 20% of Penpie governance rights
• Penpie controls 25% of Pendle governance rights
• In key governance decisions, Magpie may influence up to 25% of Pendle governance rights.

This leverage effect allows the parent DAO to expand its influence in the ecosystem without increasing its equity share.

The Importance of Execution

Despite the great potential of the sub-DAO model, its success still heavily relies on the execution ability of the team. Projects that only have concepts but lack effective implementation find it difficult to make substantial progress.

Conclusion

The sub-DAO model provides a new path for rapid expansion of Web3 projects. It not only offers ample growth resources for new businesses but also helps projects keep up with market trends, achieving optimized resource allocation within the ecosystem. However, the success of this model relies on strong execution support.

As DeFi projects rapidly expand horizontally through the sub-DAO model, we may witness the birth of a more complete and feature-rich decentralized financial ecosystem, which could become a key turning point in the competition between DeFi and traditional centralized exchanges.