Spiral DAO, established in March 2023 is a Decentralized Autonomous Organization (DAO) focused on consolidating key DeFi governance tokens into a single, community-managed treasury. It employs an approach called 'Yield Bonding' to secure reward tokens and reduce market sell-off pressures. The DAO also issues its own SPR token as added incentives for Liquidity Providers (LPs). ^[1][2][13]

Overview

In contrast to yield aggregators like Yearn, Beefy, and Harvest, Spiral DAO focuses on aggregating liquidity. However, rather than continuously selling tokens earned from third-party protocols, Spiral DAO redirects and secures these tokens within its DAO. This strategy aims to alleviate the selling pressure and reduce the circulating supply of supported protocol tokens. ^[11][13]

Spiral DAO also dispenses native SPR reward tokens to users, offering an added incentive for Liquidity Providers (LPs) to participate by pooling their liquidity and contributing to the Spiral DAO treasury. This approach is referred to as 'Yield Bonding.' ^[13]

Staking/Yield bonding

Yield bonding is a model whereby the protocol distributes its own native tokens to users who provide certain other tokens, offering them at a discounted rate. For Spiral DAO's yield farmers, the protocol generates a greater amount of SPR (Spiral DAO's native token) compared to the rewards achievable through existing protocols, taking into account their higher value in USD. This extra yield effectively acts as a "discount" for acquiring Spiral DAO's native token. ^[3]

Treasury

Within Spiral DAO, the Treasury holds a collection of both governance tokens and stablecoins. The strategies governing these Treasury assets are subjected to voting by SPR token holders — a diverse group of individuals with experience in DeFi. This decentralized framework ensures efficient management of the assets. Ownership of SPR tokens corresponds to active participation in Spiral DAO's governance and Treasury. This role grants users the authority to contribute to significant decisions concerning the allocation and utilization of assets. ^[4][5]

Strategies

Spiral DAO allocates liquidity into different strategies to protect the Treasury from dilution, to identify, build, and deploy secure strategies to take advantage of profitable, sustainable yield sources, for efficient treasury management, and lastly, for fair exit if the market cap goes below backing.

Vote Incentives Market

Spiral DAO aims to lead the vote incentive marketplace for a more rational setup. All liquidity within the DAO will be in the form of POL (Protocol-Owned Liquidity), complemented by gauges for key protocols. This integration of POL and gauges enables Spiral DAO to directly channel most of the emissions from the incentivization market into its Treasury DAO. ^[6]

Spiral Lockers

Liquid lockers are a recognized DeFi innovation for extended token locks. They enable users to maintain liquidity while benefiting from long-term locks. Tokens locked in liquid lockers are represented by tokens that can be traded and transferred. ^[7]

Spiral DAO focuses on the two important features that users seek in liquid lockers: Deep liquidity whereby anyone can enter or exit the ecosystem without a huge price impact and impermanent loss. The more liquidity there is  —  the more rational the market is. The other feature is to keep voting power & earn vote incentives whereby users are not alienated from their voting power. ^[7]

MAV Spiral Locker

In exchange for locking MAV in a Spiral Locker, users receive a liquid version of veMAV — Spiral Maverick (sprMAV) token — a token retaining voting power on Maverick that is transferable and tradable. ^[8]

By staking sprMAV on Spiral DAO, users receive voting power that they can manage themselves or delegate. Users also receive additional sprMAV incentives. Voting is done biweekly, and users can either manage or delegate their voting power. ^[8]

Auctions

During an auction, Spiral DAO intends to sell the native DAO tokens (COIL) with a discount compared to the current market price in exchange for the assets Spiral DAO aims to acquire. ^[12]

Spiral DAO auctions are held in an overflow (oversubscription) manner whereby if the Treasury aims to raise $10 Million worth of tokens but raises only $5M — $5M will be sold, and the remaining $5M will be burnt. Also, if the Treasury targets to raise $5M and manages to get $20M in commitments — everyone will receive 75% of their commitments back and 25% in the form of COIL. ^[12]

Tokenomics

COIL and staked COIL tokens (SPR tokens) are the tokens used as a catalyst for protocol adoption, reward contributions, and aligning incentives between protocol stakeholders. ^[9]

COIL

The COIL token is the most liquid/target of Protocol Owned Liquidity (POL), it represents a portion of Treasury assets and is redeemable, it is a highly inflationary token and stackable in exchange for a high APR (2x of POL in gauges), COIL emissions dynamically adjust to COIL price movements, and it is distributed during auctions. ^[9]

COIL single staking

Token holders can stake their COIL tokens to receive COIL token rewards. This ensures that token holders are protected from dilution caused by the inflationary nature of COIL whilst receiving APR. In exchange for staking, COIL users receive a wrapped version of COIL — SPR, with each SPR representing a growing number of COIL tokens.

SPR

Spiral token represents governance power for all of the treasury assets, It is distributed for staking liquidity into Spiral DAO Convex/Balancer/Frax liquidity pools with additional yield, It is a staked version of COIL, it protects from COIL's inflationary pressure, it represents an increasing amount of COIL, and is lockable for profit-sharing in the future. ^[9]

Token Allocation

The Initial Treasury Offering which took place April 3-5, 2023, provided an opportunity for anyone to mint COIL and take part in Spiral DAO governance. The DAO adopted an Overflow model, which allowed users to subscribe to the ITO as much or as little as they wanted. The amount of COIL a user was allocated was determined by the percentage of their funds in all funds put in by other users at the time the sale ended. Any leftover funds were returned to users when they claimed their tokens after the sale. ^[14]

For the initial COIL distribution, 75% is allocated to Initial Treasury Offering participants, 5% to Launching Airdrop, and 20% to Protocol Owned Liquidity (POL) and the DAO. ^[10]

COIL, as well as SPR, has no upper cap on the total supply. A major amount of COIL is distributed towards COIL staking. The rest of the new issuance is from Yield Bonding. When the protocol emits 100 COIL tokens in Yield bonding, the protocol additionally mints 50 tokens that are distributed to Treasury — 15 tokens for DAO needs, POL maintenance — 15 tokens, and The team — 20 tokens under 6 months lock up. ^[10]

Airdrop

Spiral DAO conducted a 2-phase airdrop on April 29, 2023. The 1st Phase was the airdrop launch where Spiral DAO airdropped 3%~5% of the initial token supply towards existing Balancer, CRV, FXS, and SDT stakeholders as well as other DeFi users. ^[15]

42% of the airdrop was allocated to CRV/CVX users: vlCVX, veCRV, Convex LP, 25% to BAL/AURA users: veBAL, vlAURA, Aura LP, 7% to FXS stakeholders: veFXS, 3% to SDT stakeholders: veSDT, 7.6% to LobsterDAO NFT owners, 7.6% to Degenscore Beacon NFT owners, and 8.6% to Top-1000 DeBank profiles. ^[15]

The 2nd Phase was the Community building Airdrop done to encourage active members of community participation programs. A unique API was built for the event to track different on-chain activities — stake, share, boost. Users were also encouraged to be active members of the community and participate in Discord channel discussions. ^[15]