2024-11-11

Published on Monday, November 11, 2024

By PermaDAO

In AO’s Permissionless Funding Ecosystem

Tags AO’s Permissionless Funding Ecosystem

What Builders Should Know: AO’s Permissionless Funding Ecosystem

Author: Kyle

Translator: Kyle

Reviewer: Marshal Orange

Source: Content Guild Translation

Stories of Web3 startups failing before they even launch likely play out every day. With rising global economic uncertainty, investors are becoming increasingly cautious about backing Web3 projects. Funding is crucial for a project's launch and growth, yet few know about AO's unique economic model. AO is pioneering a permissionless funding ecosystem, offering developers a promising pathway for growth.

The AO Economic Model: Foundation of an Innovative Funding Approach

AO’s whitepaper outlines an innovative economic model designed to attract developers to the ecosystem.

Fair Distribution, No Reservations: AO's token distribution mechanism is highly innovative. Unlike many projects that reserve large portions of tokens for teams or investors, AO has no pre-sales and no advisor allocations; 100% of tokens are allocated to the community. Specifically, 36% are allocated to AR token holders, incentivizing their contributions to securing AO's foundational layer on Arweave, while the remaining 64% incentivizes users who bridge external assets to the AO network to foster ecosystem growth.
Incentivizing Yield-Bearing Asset Bridges to AO: AO Network encourages users to bridge staked assets like $stETH and $DAI to the AO ecosystem. As a reward, users receive 64% of newly minted AO tokens.

As shown, AO adopts a decentralized fund management model that leverages user-staked assets to fuel ecosystem growth. This innovative approach to funding provides an equal playing field and a sustainable source of capital for all developers, allowing anyone to participate in building the AO ecosystem without barriers.

More Than Just Minting stETH and $DAI—It’s “Developer Minting”

The permissionless funding model of the AO ecosystem remains largely under-recognized. Outprog, one of AO's founders, has previously analyzed this funding model, coining it the “developer minting model” in his article Developer Minting: AO Economic Model Explained, where he delves into its operational mechanics.

Lock Cross-Chain Assets to Earn AO Tokens: Developers can create smart contracts on the AO Network, encouraging users to stake aoETH, aoDAI, and other cross-chain assets within these contracts. In doing so, developers earn AO tokens generated from these aoETH and aoDAI assets.
Project Value Dictates Returns: The success of a project directly determines the amount of aoETH users are willing to lock, which in turn affects the AO token yield developers earn. This mechanism incentivizes developers to build genuinely valuable applications, as only high-quality apps will attract users and generate sustained income for developers.

However, developers aren’t the only beneficiaries. For investors, the developer minting model offers a new investment avenue. Investors can stake aoETH or aoDAI in contracts, sharing in the project’s growth-generated returns. This approach lowers investment risk and allows investors to learn more about project development.

Veritas: The Project Responding to Permissionless Funding

Veritas is a standout project emerging from the Arweave India community hackathon, adhering to the developer minting model. It aims to create a decentralized, permissionless funding platform.

Veritas positions itself as the “funding aggregator” for the AO ecosystem, providing projects with an accessible funding channel. Through staking $aoEth to receive $AO tokens, Veritas enables projects to quickly raise capital. Users, in turn, gain early investment opportunities by staking $aoEth to earn native project tokens, essentially exchanging $AO for potentially higher returns.

Veritas has already launched its official website and partnered with multiple projects for onboarding. Additionally, Veritas recently developed a new “On-Chain Analytics Dashboard,” which provides users with a project overview (including team composition, token information, and milestones) and supports multidimensional analysis of token distribution, user metrics, and message activity. Going forward, Veritas will likely focus on launching its core staking function.

Conclusion

Through its unique economic model, AO has created a permissionless funding ecosystem. In essence, it is a developer minting mechanism where developers can secure funding by building valuable applications rather than relying on traditional funding channels. This innovative model not only creates unprecedented opportunities for all builders but also introduces new perspectives to the crypto’s development.

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Disclaimer: This article does not represent the views of PermaDAO. PermaDAO does not provide investment advice or endorse any projects. Readers should comply with their country's laws when engaging in Web3 activities.