Transforming into a DAO — What Does That Involve?

Transforming into a DAO — What Does That Involve?

For those of you who follow the Digitex Futures project, you’ll have heard the news by now. In Adam’s video update yesterday, you saw he threw another curveball at the community by announcing that Digitex Ltd is becoming a Decentralized Autonomous Organization, also known as a DAO.

Now that you’ve had a moment to digest that, you may be wondering how it will work and what our motivation is. Let’s see if I can answer some questions.

The Birth of the DigiDAO Token (DGDAO)

On October 1, 2019, Digitex Futures will create 1,000,000,000 (one billion) DigiDAO tokens (DGDAO). These tokens will be locked into a smart contract called the Digitex DAO Smart Contract for a period of five years and released daily to Digitex (DGTX) token holders.

This means that over time (not overnight) ownership of the Digitex Futures exchange will be transferred to its traders. They will then have exclusive voting and ownership rights through a system of decentralized governance by blockchain.

The Number Crunch

Out of the one billion tokens issued, 800 million will be released to Digitex (DGTX) holders. This represents 80% of the entire supply of DigiDAO (DGDAO) tokens. As founder and CEO, Adam Todd will be retaining 20% of the token supply.

Each Digitex (DGTX) token held on the Digitex Futures exchange will receive an equal share of the 438,356 DigiDAO (DGDAO) tokens distributed daily.

In the first year, 360 million DigiDAO (DGDAO) tokens will be released. 200 million will be for the Digitex CEO and 160 million for the token holders. In other words, after 12 months, Adam will hold 200 million DigiDAO (DGDAO) tokens, while the public will own 160 million in total.

This means that during the first year, the company will still effectively be controlled by Adam since he will hold more tokens than any other member, giving him the final vote on any decision making.

After the second year, the public will own more tokens than him as he will have capped out his maximum amount of 200 million — and the public will own 320 million.

Adam’s proportional influence over the company will gradually diminish over the five-year period until all DigiDAO (DGDAO) tokens are in circulation.

Transferring Ownership of Digitex Futures to Its Traders

The DigiDAO (DGDAO) token will represent all voting and ownership rights. This means that the Digitex (DGTX) token will remain a utility token needed for trading on the exchange. Only Digitex (DGTX) tokens that are held on the Digitex Futures exchange will be eligible to receive DigiDAO (DGDAO) tokens.

To be clear, this is not an ICO or an STO. The DigiDAO (DGDAO) tokens are not being sold but given freely to Digitex (DGTX) token holders who keep their tokens in their exchange accounts.

Users can withdraw their Digitex (DGTX) tokens at any time and are under no obligation to keep them in their exchange account. However, Digitex (DGTX) tokens that are not held in the exchange will not receive their proportional share of DigiDAO (DGDAO) tokens.

This will have a two-fold effect. Firstly, it will encourage traders to buy and hold Digitex (DGTX) tokens for the long-term and secondly, it will restrict the supply of Digitex (DGTX) tokens thereby increasing its value.

DigiDAO (DGDAO) Token Value

It will be the traders who determine the value of the DigiDAO (DGDAO) token when it is listed on the Digitex Futures exchange spot market. That said, we anticipate that the value of the DigiDAO (DGDAO) will be closely tied to the value of Digitex (DGTX). As the price of Digitex (DGTX) token increases, so will the price of the DigiDAO (DGDAO), and vice versa.

To start with, on the Digitex Futures exchange spot market, we will list a DGDAO/ETH spot market and a DGDAO/DGTX spot market.

The Fine Print

U.S. citizens and residents are not able to open an account on the Digitex Futures exchange and are therefore not eligible to receive DigiDAO (DGDAO) tokens. All account holders must undergo KYC to withdraw their DigiDAO (DGDAO) tokens from the exchange.

In Summary

Converting the Digitex Futures exchange into a DAO provides investors and traders with an additional incentive to buy and hold Digitex (DGTX) tokens on the exchange. This five-year plan shows a solid commitment from us to the longevity of the exchange as well as the Ethereum blockchain and continued innovation.

Adam will be holding an AMA on Wednesday 19th June and 11 am EST to answer any questions that you may have. We’re looking forward to sharing more with you about this bold new step!

Transforming into a DAO — What Does That Involve? was originally published in Hacker Noon on Medium, where people are continuing the conversation by highlighting and responding to this story.