An Overview of PrimeDAO, Providing Cross-DAO Collaboration Tools: How Does DAO2DAO Coordinate Work?

Written by: Eshita Nandini, Messari

Compiled by: DeFi Dao

This article is part of a series that provides an in-depth study of some of the most popular DAOs today. To learn more, you can read other content in the ++DAO Deep Dive series++.

In the past year, the number of DAOs created and the infrastructure supporting them has been vast, building a multitude of tools for governance, finance, compensation, and more. Simplifying the operations of individual DAOs has been at the forefront of development, but little consideration has been given to how to coordinate work between two or more DAOs.

This poses a greater challenge compared to B2B software, as traditional companies have strict and easily understandable structures and scripts for how to run and scale a business, which is not the case for DAOs. The latter is a fluid structure with potential ranging from single-use to taking on the entire functions of a company, or even operating as a nation.

This article introduces PrimeDAO, which focuses on building tools that support independent DAO operations while also setting DAOs up as plugins to effectively collaborate with other DAOs. It fundamentally enhances the decentralized control and collaboration of DeFi by establishing research and cross-DAO coordination tools for decentralized organizations. In addition to a token sale, the team has also secured $2 million in venture capital.

PrimeDAO Product Suite

Given that we do not have enough data or years to accurately infer which entities will sustain and which will not, the development cycle of DAOs has many stages that can provide some signals indicating how DAOs will succeed. Today, venture capital entering DAOs has almost no financial data to follow.

It is primarily based on the potential of the founding team, whitepapers, and token performance (if any). While the foundation for making these decisions will certainly evolve over time, for now, PrimeDAO focuses on several areas of the DAO lifecycle: fair token distribution, liquidity bootstrapping, rating protocols, and collaboration with other entities.

At this point, PrimeDAO has listed some products that have already been released or are about to be released.

Prime Launch

++Prime Launch++ provides the capability to facilitate fair token releases for projects by offering clarity to contributors regarding the project and its terms. Projects can either raise seed funding through the community and create whitelists or launch liquidity through Balancer.

Liquidity Pools

++Prime Pools++ are community-managed liquidity pools, conceptualized as index funds. These pools have adjustable parameters that multiple users can propose changes to.

Currently, there are three liquidity pools: DGov Pool, Defi 7+1, and PRIME Pool. The co-managed pools allow community members to set fair and consistent economic parameters.

Protocol Rating

++Prime Rating++ is a permissionless framework for quantifying the risks of participating in DeFi protocols. Based primarily on publicly available data, it provides a generated letter grade for protocols to inform users about functionalities and associated risks. The system is managed by the Prime Rating DAO.

DAO Deals

++Prime Deals++ is a smart contract framework for DAOs to negotiate and collaborate on-chain. The main functionalities of the service will include token swaps, joint liquidity provision, joint ventures, and collaborative liquidity farming.

D2D Issuance

Prime launched its PRIME utility token in 2020, distributed among various stakeholder groups. In September 2021, the DAO launched D2D, a network token focused on curating, building, and controlling a suite of DAO products and services. The token was launched through Prime Liquid Launch (LBP), with a supply of 7 million. PRIME holders automatically received D2D tokens on a 1:1 basis. Due to the token update, the PRIME token is no longer in use.

The token distribution is as follows:

20%: Early Contributors (3-year lock)

10%: Seed Contributors (2-year lock)

8%: Prime Foundation (2-year lock)

7%: Liquid Launch (immediate hold)

5%: V1 Contributors (3-month lock)

50%: Prime Treasury

Treasury and Governance

The D2D token powers PrimeDAO by managing the products and services of the Prime network. Holders are able to access Prime products and assets, but currently, there are no governance rights or upward mobility tied to the token. The DAO draws on some practices of Holographic Consensus as part of its governance framework, a defining feature being governance power based on non-transferable reputation scores.

The D2D token will be activated at the end of April, which will open access to governance through the reputation scores that contributors have already built up.

In addition to holding the majority of the native tokens, the PrimeDAO treasury also holds two liquidity pools—D2D-USDC (80/20) and D2D-BAL (50/50) as part of its portfolio. Contributors providing liquidity to these pools receive a fee share of 1% and 2.5%, respectively.

Community and Building

Most members of this community include builders and researchers in DeFi. The DAO uses Prime Development Cycles (PDCs) as their method for building products, which lasts about 2 months, during which a carefully curated group of builders is assigned project tasks.

Priorities are determined by Prime Development Proposals (PDPs), which are essentially the DAO's board meetings supported by Prime Stewards. The DAO typically adopts a steward system to delegate more responsibilities to the natural core leaders of the DAO, who take on tasks such as leading sub-DAOs and acting as voting representatives.

A Lot About Tools for 2DAO

Since DAOs are fluid and fundamentally a generic term for a type of entity, continuous evolution will be needed to ensure these activities are well-supported. Prime ultimately aims to become an open-source network of cross-DAO tools.

Below is a layout of tools for an excellent DAO stack. Our goal is to develop support for DAOs to operate efficiently whether with 10 members or 1 million members. D2D will be immensely important for the future of DAOs, as we are in an open-source, decentralized, and composable environment where DAOs may insert and connect, merge certain parts of each other, and so on.

Source: ++Nichanan Kesonpat++

D2D: Mergers/Acquisitions

D2D will be distinctly different from the B2B world we are accustomed to. Therefore, some tools will need to emerge to support this. In the realm of mergers and acquisitions, we have seen a resurgence of activity in recent months. To date, the largest DAO merger occurred in December 2021 between Rari Capital and Fei, with the merged entity's TVL at $2 billion. The governance of the Rari protocol integrated Fei and TRIBE as official governance tokens. Around the same time, BasketDAO ceased operations due to a vulnerability, providing PieDAO with an opportunity for product liquidity.

In January, the first merger of Avalanche DAO occurred between the venture capital DAO Snowball and TeddyFinance, with Teddy Finance wanting to develop a more robust governance system, thus collaborating with Snowball.

For all these examples, either liquidity needs to be acquired or a larger treasury needs to be established. A more powerful DAO acquires a protocol to avoid potential failures, such as their governance style or the operation of their treasury. This is an important characteristic of the DAO lifecycle.

The team focuses on building key tools for the next generation of DAOs, and as products are launched and PrimeDAO establishes its own reputation, Prime Deals will become an important project for DAOs to leverage in coordination processes.

Prime: What's Next

PrimeDAO is in the stage of developing and launching a complete suite of products. Prime Launch has delayed public access due to technical issues that prevented the launch event from proceeding while using Prime Launch (initial launch) to bootstrap funding for Vesta Finance. Ratings, pools, and deals will be rolled out in the coming months.