Deep Dive: AladdinDAO’s Governance Mechanism and Incentives Design

A three sided marketplace

Talent hunters attract the Best Brains

Talent hunters are responsible for attracting and recommending potential boule candidates for the DAO. The first batch of talent hunters — the initial backers of AladdinDAO — are responsible for bootstrapping the talent network. Each of the initial talent hunters can invite up to 5 boule members (it can include themselves). In order to be appointed, the invited members must be elected by the DAO through a decentralized governance process.

Strategy developers

Strategy developers at AladdinDAO are responsible for conducting technical integration of liquidity mining programs to the platform and writing strategy contracts. In addition to ALD incentives, strategy developers at AladdinDAO also get part of the performance fee from mining rewards.

Marketplace incentives alignment

AladdinDAO has two game-theoretical structures designed to make sure that talent hunters and boule members’ interests are aligned with Aladdin users for the long haul.

  1. The project they reject becomes an underperforming pool

How are incentives calculated?

To understand how performance of boule members is measured, we have four principals:

  1. Relative profits of listed pools. The relative profit of each pool is its adjusted profit minus the average of adjusted profits of all listed pools.
  2. Voter weight of boule member i in pool j. If boule member i voted “Yes” for pool j and N members in total voted “Yes” at the same time, then the voter weight of member i in pool j is 1/N. If boule member i voted “No” in pool j and M members in total voted “No”, then the voter weight of boule member i in pool j is -1/M.
  3. Contribution Value (CV) of boule members. CV of each member is the sum of relative profits of the pools they voted for, weighted by the corresponding voter weights.

How to get listed on AladdinDAO?

Any project can apply to AladdinDAO for yield farming curation services.

  1. The percentage of “Yes” votes is 20% more than the percentage of “No” votes
  1. Over 51% agreement

What is unique about AladdinDAO?

There are 3 mining mechanisms on AladdinDAO.

  1. Proof of Brain Power: boule members compete to curate the most profitable liquidity mining programs. They are incentivized based on these liquidity pools’ performance and returns generated for the Aladdin community.
  2. Proof of Liquidity: mining users enjoy the curation and one stop shop liquidity mining services and get incentives based on their share of the liquidity contribution to the platform.

Incentives Structure

AladdinDAO can be seen as a yield farming curation service governed by a DAO. Aladdin users enjoy the one stop-shop yield farming services while providing liquidity services to the selected DeFi projects. AladdinDAO uses game theory to build a three player marketplace for DeFi projects, DAO and miners.

A new financial instrument to trade human intelligence

Blockchain is a human and capital coordination technology. It enables the creation and distribution of financial assets around the world at minimum cost. It also empowers many new types of financial assets to be created which were not previously possible. It is a perfect playground for the digital economy while all valuable data points can be turned into measurable and tradable financial instruments.

How does AladdinDAO create orders from chaos?

Crypto is chaotic. Do you still remember the Big Data Protocol drama and many scams brought to the community? The root cause of these projects is information asymmetry.

Appendix

Examples of incentives calculation

For example, we have 3 Boule Members (Alice, Bob and Susan), they voted for 3 projects (A, B and C). A, B and C have been listed on AladdinDAO for 80 days, 50 days and 20 days respectively. In this epoch, A, B and C have generated $1m, $2m and $3m profit for Aladdin users. DAO Mining releases 27.36/per block, total 2,736,000 ALD per epoch (100000 block). Based on the above algorithms, below charts show the allocation of ALD rewards from the Boule Member incentives and Talent Hunter incentives.

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