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Overview

Investors get 4 days to commit USDC to a raise. Sales have a discretionary cap, which means that the founder can choose how much of the USDC committed goes to the project. Allocations and refunds are given pro rata. For example, if a project receives $2M in committments and the founder caps the sale at $1M, everyone would get their share of the tokens and half of their USDC back. 10M tokens are distributed proportionally among all participants.

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Why a discretionary cap?

The purpose of the discretionary cap is to allow believers to participate while preventing projects from over-raising. If you look at other launch mechanisms, they all have issues:
  • Capped first-come-first-serve launches can be sniped
  • Capped pro rata launches can be gamed - if you see a sale is 2x oversubscribed, you may put up 2x the USDC, which makes it even more oversubscribed - which leads to poor UX for believers
  • Uncapped sales are more likely to over-raise
  • Dutch auctions are too complicated

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What happens when a sale is successful?

If a sale is successful, the following happens:
  1. All USDC goes to a market-governed treasury.
  2. The authority to mint new tokens is transferred to the treasury.
  3. That treasury provides 20% of the USDC and 2.9M tokens to liquidity pools. In effect the project will buy back tokens below the ICO price and sell them above the ICO price.
The team can then spend their configured monthly budget out of the treasury. To make larger spends or issue new tokens, they need to raise governance proposals.

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What happens when a sale fails to reach its minimum?

When a project fails to reach its minimum, everyone is refunded their USDC back.

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How are teams incentivized?

Teams can optionally decide to have up to 12.9 tokens (50% of initial supply) allocated to a price-based performance package. This package is split into 5 equal tranches: one that unlocks at 2x ICO price, one that unlocks at 4x ICO price, and so on for 8x, 16x, and 32x. The minimum unlock time on these tranches is at least 18 months from ICO date but can be extended by the founder. Teams may also forego this route and instead figure out incentives later, as MetaDAO did.
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