The Daox Protocol and Ecosystem

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1 Created: October 5, 2017 Last updated: Aug 31, ABSTRACT Blockchain technology and the new crypto economy offered tremendous opportunities for investing and raising funds. As an outcome, we saw a skyrocketing growth of Initial Coin Offerings (ICOs) as the first widespread form of blockchain based investing. However, its current implementation (as crowdfunding, ICOs, or in other forms) has a number of problems which resulted in the uncertainty among the community, regulatory issues, uprising number of scams, speculative nature of utility tokens, and as a matter of fact, the majority of ICOs are simply created to raise funds. The reason for that is that the general public, with little or no previous experience in investing, got access to thousands of investment offers. Most people are simply not aware of how to evaluate startups and often become victims of ambitious promises or even scams. Many experts expect at least 97% of all ICO startups to fail within the next couple of years. 1

2 These and other problems are constraining factors for the vast amount of projects and investors that could participate in a new cryptoeconomy and significantly boost it. While regulatory work is definitely needed here, we believe that we should solve the problems with blockchain technology itself, while also keeping blockchain based investing transparent and completely open for everyone in the world, as it meant to be. This is why Daox is proposing an advanced open-source technological solution and a unified protocol that aims to fix all these problems, preserving the benefits of crypto, raising the efficiency of capital and establishing the basis for the future investment industry. The Daox Protocol allows for deploying Decentralized Autonomous Fundraising Organizations or Fundraising DAOs on the Ethereum blockchain network. Comparison of Fundraising DAOs vs other forms of investing Fundraising DAO is an Ethereum based modular application that combines all the best practices of VCs, crowdfunding, and ICOs. It is aimed at becoming a gold standard for all kinds of token sales. While the core of the Daox 2

3 Protocol was ultimately developed by the Daox core team, the further control over this protocol will be passed to the community. Basic Terms (a) Ethereum smart contracts: a contract in the sense of Solidity is a collection of code (its functions) and data (its state) that reside at a specific address on the Ethereum blockchain. (b) Decentralized Autonomous Organization (DAO): an organization that is run through rules encoded as computer programs called smart contracts. (c) Daox-based organization, Fundraising DAO: a DAO on the Ethereum blockchain, created using The Daox Protocol. (d) Daox Network: a service available at daox.network that is an interface for interaction with the Daox-based organizations. (e) Investor: a person who has transferred funds to a Daox-based organization. An investor is identified by his address on the Ethereum blockchain. (f) Tokens of Fundraising DAO: tokens distributed and transferred to the Ethereum address that has transferred funds to a Daox-based organization. (g) The executive team: project initiators who have created a Daox-based organization. Project initiators are identified by their address or multiple addresses on the Ethereum blockchain. 3

4 Table of Contents Basic Terms 3 1. The Protocol Vision How it Works Token sale using the Daox Protocol Withdrawing Funds Refund to Investors Daox Ecosystem What Problems are Solved by Daox Motivation Why Blockchain Why Ethereum Why DAO Advantages for Investors Advantages for Startups Brief Market Overview Daox Network Additional Features Daox Integrated Affiliate Network Know Your Customer Service Automated Legal Service The Wallet App Purpose of The Wallet App Introduction Key Features Daox Roadmap The DXC Token Uses of the DXC Token DXC Token Technical Features Legal Aspect of the DXC Token 44 4

5 7.4 DXC Decentralized Token Generation Event (or DAICO) DXC Token Metrics The Founding Team and Advisors Software Overview Components Smart Contracts Overview Initialization of DAO s special parameters 60 DAO modules 60 Technical Parameters 61 Crowdsale variables Crowdsale 65 Participating with Ether 65 Participating by means of DXCs 69 Crowdsale completion Votings 73 Voting 77 Regular 80 Withdrawal 82 Refund 85 Module The Bottomline 92 Legal Disclaimer 93 5

6 1. The Protocol The Daox Protocol is the new standard for all kinds of token sales that allows investors and startups deploy and interact via independent decentralized autonomous organizations (DAOs), enabling safety, efficiency, and decentralized decision making. 1.1 Vision Daox is proposing an advanced open-source technological solution and a unified protocol that is aimed at fixing the major problems related to token sales and crowdfunding. The Protocol allows for the deploying of decentralized autonomous fundraising organizations (Fundraising DAOs) on the Ethereum blockchain. These DAOs play the role of advanced intermediaries between startups and their investors, protecting interests of both sides and increasing the efficiency of the capital. They are like real world companies but instead of a legal body they have smart-contracts, instead of bank accounts they use cryptocurrencies, instead of shares there are tokens, and instead of the jurisdiction a borderless blockchain network. The features of each DAO could differ, but the major goal is to motivate all parties to do its best for the project success. One of the main principles of the protocol is that all the raised funds are stored in a DAO, instead of being at the disposal of a single individual (or group of individuals). The funds are released based on withdrawal proposals submitted by the startup team. If investors (token holders) of the startup find such proposals reasonable, they approve such requests. 6

7 However, if the majority of investors do not see that the startup stick to its declared roadmap and obligations, they can simply vote for the refund. This functionality alone solves some of the major problems of token sales and crowdfunding. Not only we can get rid of scams because it is simply becoming unprofitable, but we also increase the success ratio due to the fact that the startup s team is way more motivated. The Daox Protocol is basically replicating the way joint-stock companies work, while also preserving all the benefits of crypto. Each Fundraising DAO created using the Daox Protocol is modular. Which means that its governance structure and functionality might be adjusted to the specific needs of different projects. For example, authors could set up a simple DAICO issuing utility tokens, or create an organization that will pay dividends, or even offer equity-based tokens. Imagine, building a DAO of blocks that are representing different features and functionality. All DAOs are entirely independent, including from Daox developers. All procedures related to the deployment of DAOs, token release, transfers, and the return of funds are based on the Ethereum smart-contracts and therefore could not be changed or removed. Neither the team of Daox developers nor any third parties have access to the collected funds that are stored in DAOs. In the same respect, no one can affect the predefined operating rules of any Daox-based organization except for its token holders. The source code of the Daox protocol is open and available for review and code contributions. 7

8 1.2 How it Works This section describes the concept of the Daox Protocol. Technical description, including detailed review of the source code can be found in the section 9.2 of this document. Each project in the Daox ecosystem is launched in the following steps: A. ICOs and crowdfunding campaigns are easily launched using the Daox Protocol. B. Each campaign then forms an Ethereum-based Fundraising DAO featuring its own ERC20 token. C. Each DAO holds the raised funds and is managed by the transparent voting of its token holders. Figure 1: Fundraising DAO concept Each startup and its investors establish their own Fundraising DAO and receive its tokens. Right after the DAO is formed, the governance procedures are accessible via any Ethereum client or the Daox Network. 8

9 1.2.1 Token sale using the Daox Protocol Each genuine Fundraising DAO could only be deployed using the Crowdsale DAO Factory smart-contract on the Ethereum blockchain. In this way it is guaranteed that the operating rules of the DAO remained unchanged. The deployment could be done either via the Daox Network in a user-friendly interface, or independently via any Ethereum client. Right after the DAO is created, its author receives its address on the Ethereum Blockchain. From that point on, the newly created DAO is completely independent and governed according to its rules. If the project was created using the Daox Network, the user also receives a unique address on daox.network. In return for funds transferred to the Ethereum address, the DAO transfers its tokens to the sender. Those tokens meet the ERC20 standard and can be immediately transferred to other addresses or be listed on cryptocurrency exchanges. Figure 2: Creating a DAO 9

10 Project initiators can assign a percentage of the total amount of tokens to the team members, advisors, bounty pool, etc. It is also possible to set up a lock-up or vesting period for the tokens issued during the establishment of a DAO. The crowdsale continues until the end date of campaign or the hard cap is reached. If the predefined minimum (soft cap) is not reached to the crowdsale end date, the DAO automatically returns all the funds back to its contributors Withdrawing Funds The executive team requests withdrawals, and investors decide whether to approve or decline them. Each such request consists of the amount of funds to be transferred, the voting time frame, the receiving Ethereum address, and a hash code of the inquiry text. In case the request is approved by more than 50% of all tokens participated in a voting, the funds will be automatically transferred to the specified Ethereum address. Figure 3: Withdrawing funds from DAO To avoid the reuse of tokens in a single inquiry, the tokens are frozen until the end of the voting. The frozen tokens do not lose their properties, except for the ability to be transferred to other Ethereum addresses. 10

11 1.2.3 Refund to Investors Every token holder can submit a proposal for activating the refund mode. Such a proposal should be approved by 90% of all the tokens, excluding the number of tokens distributed when the DAO was established. Figure 4: Refund to Investors If the voting is successful, the DAO is switched to the refund mode. The exchange is carried out proportionally to the number of tokens or the amount of contributions. The DAO also automatically switches to the refund mode if no withdrawals were approved within the period of 3 months. 11

12 1.3 Daox Ecosystem Right after the Daox and DXC token smart-contracts are deployed on the Ethereum blockchain, a completely independent and autonomous ecosystem is formed. Each DAO created using the Daox Protocol becomes a part of this ecosystem, that consists of investors, startups, developers, and third-party services integrated via the Daox Open API. The services and tools represented on the Daox Network (e.g. Integrated Affiliate Network) are third-party services, that participants of the ecosystem could optionally resort to. There is a marketplace for such services on the Daox.Network. Imagine hundreds of services for startups and investors that are easily accessible in a few clicks and also transparently rated by the community. For instance, a project can apply for rating report, or media publishing, or bounty campaign, or start banner advertising, right from the Daox Platform interface. An example of such service is bounty.daox.org So, on the one side there are investors and startups and on the other there are service providers, while DXC Token is powering interaction between them. 12

13 Figure 5: Daox Ecosystem Overview 13

14 1.4 What Problems are Solved by Daox The Daox Protocol and Daox Ecosystem is solving most of the major problems related to token sales and crowdfunding for both sides: investors and startup teams. Scams Problem: The easiness of launching an ICO and high level of anonymity in crypto is making a lot of space for scams. Solution: Token holders of the project can vote for the return of the remaining funds if the project turns out to be a scam. Low motivated founders Problem: When the startup team receives the total amount of funding at once, their motivation decreases dramatically. Solution: The startup team is highly motivated to succeed to keep getting financing for their project. Value of tokens Problem: Tokens of early-stage startups are not backed by any assets other than the team s obligations. Solution: Tokens are backed by the raised funds that reside in a DAO, as token holders can get a refund. Misuse of funds Problem: Investors can t see the purposes of expenditures. This opens a lot of space for misuse of funds. 14

15 Solution: The startup team has to submit proposals indicating the purposes of withdrawal. Frequent failures Problem: Experts expect that 97% of all ICO startups will fail within the next few years. In 2018, only 1 out of 5 projects makes it to exchanges. Solution: Due to many improvements in the way token sales are conducted, it is expected that the success ratio will be at least 4x higher. Lack of transparency Problem: Because of the lack of a unified standard for token sales, investors cannot verify how tokens are distributed. Solution: With a unified standard token sale contributors can easily see how many tokens are distributed in exchange for crypto and what discounts are given. Highly competitive environment Problem: There are thousands of ICOs and founders has to have big marketing budget to stand out. Solution: Since the risks for investors are lower, it is easier to attract sufficient attention even without marketing spendings. Complexity of technology Problem: Each startup has to either resort to expensive third-party token sale solutions, or spend time and resources to make their own. Solution: Daox Protocol is an open source and zero commission framework that doesn t even require any special knowledge to run an ICO. 15

16 Hacker attacks Problem: Every noticeable token sale attracts a lot of attention of hackers looking to steal the raised crypto. Solution: All the raised funds reside in a DAO that is being managed by the transparent voting of token holders. Inefficient ICO marketing Problem: Each startup has to resort to hundreds of different services, not being able to assess the effectiveness of each of them. Solution: Each startup becomes part of the ecosystem which allows access to solutions and services using the DXC token. Excessive time input Problem: Instead of working on the product, the whole startup team spends about 6 months to conduct the token sale. Solution: With the ready-made solution and the whole ecosystem of services and tools, token sales are made easy. 16

17 2. Motivation This section briefly describes the grounds for decision-making, while developing and planning Daox. 2.1 Why Blockchain Blockchain technology completes a variety of tasks that would either be done with a significant loss of efficiency or would not be able to be implemented at all. Shown below is a list of the main Daox features that could not function without the use of blockchain: (a) Use of cryptocurrencies: one of the principal goals for Daox is to simplify the process of attracting and distributing the funds in crowdfunding, when neither borders nor jurisdictions matter. This would be impossible to implement through traditional financial institutions. (b) Absolute independence: in order to reach the required level of credibility towards the new ecosystem, the complete elimination of an intermediary between investors and project authors is required. This became possible only with the use of blockchain, which in this case serves as an unconditional warranty that the rules described in the source code will be complied with and will not be modified. (c) Transparent voting: when it comes to centrally-controlled systems, there is always a possibility of administrative interventions. Due to all the services and data of Daox being in a decentralized blockchain network, the potential influence of administrative resources is 17

18 eliminated, which means total credibility can be reached for the process of voting. (d) Unstoppable app: when placing funds in any kind of a system, users expect this system to be highly reliable. Since Daox is entirely on the blockchain, there is no threat that its work will be stopped. This kind of an application is also called the Unstoppable app. (e) Hard-and-fast rules: in order to implement the ideas of crowdfunding that are being proposed by Daox, it is essential to follow the predetermined rules closely. That is why the source code for Daox smart contracts is open and described in details, and since the code is placed in the blockchain network, it guarantees its invariability. These are the 5 main objectives that the Daox team accomplishes by means of the blockchain technology. In addition, the use of the blockchain allows for the improvement in efficiency of the other features related to the performance of the ecosystem (for instance, Integrated Affiliate Network). 2.2 Why Ethereum Currently, that platform is the most widespread for raising funds and running dapps. Additionally, the blockchain-space of that network has a high degree of credibility. 2.3 Why DAO The DAO approach to fundraising appears to be the most transparent and fair method of using the collected funds. This approach had never been possible before the blockchain and cryptocurrencies became widespread, due to the lack of technical opportunity to establish transparent voting and the secure storage of funds. 18

19 The DAO concept serves as an absolute and unbiased guarantee, promising that the interests of both parties will be respected, as well as serving as the intermediary. It is important to notice that when designing rules for Daox organizations, the interests of both parties were taken into account in equal measure, investors and project authors alike. Some of the main positive aspects of applying that approach are given below Advantages for Investors (a) Safety: all the proceeds raised and stored following the principles of Daox are protected from misuse and unauthorized withdrawal. The finances are securely stored in Ethereum smart contracts and could only be used on project development. Therefore, scams and any other fraudulent activity are almost completely eliminated. (b) Value of Tokens : the funds raised via Daox principles are kept at investors disposition; the way they are managed further on is determined by voting. Therefore, even upon transferring funds to the project, the investor owns an asset as the digital share of a DAO (a token). (c) Project team is motivated: when the startup team does not receive all the funds at once, but rather gets tranches as work proceeds, the level of motivation rises significantly. This in turn increases the chances of success of the startup. This is one of the reasons why the funds are being transferred as tranches when it comes to traditional forms of investment, and it is indeed needed to be implemented in crowdfunding and ICOs. 19

20 (d) Transparency : project initiators may get funds gradually by publishing proposals, whereby this procedure can only take place when approved by the majority of investors. (e) Lowering the risks : according to Daox principles, each Daox-based organization has a functionality to return investments, if the investors decide that the founding members fail to achieve the assigned goals Advantages for Startups (a) Ready-made solution : by using a simple step-by-step interface a startup is able to launch its crowdfunding campaign and tokens. No programming or other skills are required. (b) Investors heightened interest: attracting funds according to Daox principles confirms the team s intentions to achieve success rather than collect funds. This has a positive impact on fundraising process, since the team gets more credibility. (c) Engagement in the daox.org community : investors follow updates on new projects, which appear on the daox.org platform. Project initiators may get a prompt reaction from the community, right after their campaign is launched. (d) Independence: each project can use Daox smart contracts regardless of daox.org platform or any other service, and it is possible to attract funds through any source. (e) Safety: all the funds are securely stored in an independent organization on the Ethereum blockchain. That is why it is impossible to steal them or get them in any other illegal way. 20

21 (f) Transparency for team members: the DAO concept solves the problem of trust among the team members. This is due to the following factors. First, all members get the amount of tokens (their share of a startup) known beforehand, and second, for each member the proceeds are being applied in a transparent way and do not belong to a single person. 21

22 3. Brief Market Overview In the year 2017, the volume of venture capital investment in Europe, Canada, China, India, Israel, Japan and the USA amounted approximately to 161 billion US dollars. The crowdfunding market is estimated at $50 billion (excluding p2p lending). Around $6.7 billion was raised by means of ICOs. Figure 6: venture capital investment market according to Dow Jones, from 2015 to 2018 Figure 7: crowdfunding market according to TechNavio (excluding p2p lending), from 2015 to

23 ICOs are notable for the biggest rate of growth: in comparison with the year 2016, the amount of funds raised by means of this tool has increased twenty-fold. What is more, 2018 is expected to see almost three-fold growth. Figure 8: forecast for the ICO market in

24 4. Daox Network Daox Network is a group of software that allows for the interaction with the Daox Protocol and Daox ecosystem through a simple and user-friendly interface. The whole process of deploying DAOs and interacting with them is done in a user-friendly application called Daox Network ( ). Startups can build their DAOs, with their own ERC20 tokens and start ICOs in a matter of minutes. Besides that, there is a marketplace of services and tools that are integrated via the Daox Open API. Imagine hundreds of different services for startups and investors that are easily accessible in a few clicks. For instance, a project can apply for rating report, or media publishing, or bounty campaign, or start banner advertising, right from the Daox Network interface. In addition, Daox Network is a tool for the interaction between project authors, investors, developers and service providers. The Daox Network is compatible with any up-to-date mobile or desktop browser. Shown below are the main features implemented on the Network that are already available: - Registration and user profile - Creation of a DAO - Settings and launch of a fundraising campaign - Creation and distribution of tokens - Review of a fundraising campaign and a DAO - Purchasing DAO tokens with Ether (ETH) - Purchasing DAO tokens with DXC tokens - Negotiation of requests and consideration of projects 24

25 - Proposals (withdrawal requests, other types of proposals) - Review, discussion, and participation in a proposal - Integration of services and widgets via the Daox Open API - Interaction with features of the DXC token - Generation of Ethereum addresses for users - Storage of tokens and ether 25

26 Figure 9: screenshot of the first step in creating a DAO 26

27 Figure 10: screenshot of the project s overview 27

28 Figure 11: screenshot of the process of creation of a proposal 28

29 Figure 12: screenshot of the funds withdrawal request 29

30 Figure 13: Screenshot of the proposal/voting discussion 30

31 4.1. Additional Features This section describes implementation of the main tools that are already released or being prepared to be released by the community and developers of Daox. The Daox ecosystem is entirely open, which is why any developer or service provider can integrate their services to the Daox Network (c. 4 ). Additional features are introduced in order to simplify the process of holding the campaign, as well as to improve overall efficiency for the users of the ecosystem Daox Integrated Affiliate Network Any project launched on the Daox Network can participate in the Daox Integrated Affiliate Network. How it Works When a crowdfunding campaign is launched on the platform, project initiators can activate their participation in the Integrated Affiliate Network. This network operates according to the Cost Per Sale (CPS) principle. The core of that principle is that a party advertising a product (a publisher), gets a reward from an advertiser (a crowdfunding campaign in this case) in case the advertisement leads to a purchase. Sales are being tracked owing to the fact that publishers are given a unique link containing their tracking number. After a visitor follows the link, the system will bind this visitor to a specific publisher. In case the visitor supports the campaign (purchases tokens of the project), the publisher gets a fixed percentage as remuneration. 31

32 Operating Peculiarities It is obvious that it might take more than one session for the visitor to decide whether to purchase tokens or not, as it might take a considerable amount of time to get acquainted with the project data. That is why the Post Click period is provided, which amounts to 90 days for all campaigns. This way, information about the visitor is stored in the system, and even if the sale takes place in a month, the publisher still gets rewarded. However, when it comes to affiliate networks, there is a common issue, when the same user is led through different sources by two or more publishers at different times. As a result of this, the Integrated Affiliate Network has a Last Click Wins rule, according to which compensation goes to the publisher who owns the link that the user followed for the last time. Campaign Launch It only takes 2 steps to launch an advertising campaign in the Integrated Affiliate Network: 1. Authors of the campaign set a payout for each sale. 2. Authors of the campaign are transferring DXC tokens on a special Ethereum contract, which will make payments to the publishers. Payments between publishers and advertisers could only be made by means of the DXC token. After funds are transferred to the deposit contract, the advertising campaign is enlisted in a catalogue and becomes available for all the users of the platform. From then onward, any registered user can get his own unique tracking link and start earning referral rewards, providing advertisement and sales for a crowdfunding campaign. 32

33 In case all the funds on the deposit of the campaign are spent, project participation in the Integrated Affiliate Network will be suspended and publishers will get corresponding notifications. Publishers Each member of the Daox ecosystem can become a publisher in the IAN. Each IAN publisher gets access to a catalogue of currently available offers, detailed statistics, and information on payments. Payments are made upon request and transferred to the Ethereum address that is specified in the profile. For the projects to participate in the Integrated Affiliate Network, a commission fee of 5% of a publisher s reward is charged. Let us consider how it works by the following example: 1. Project authors set remuneration at 10% from the token sale. 2. The investor following the tracking link purchased tokens for a total amount of 1 ETH. 3. A publisher gets a reward in DXC tokens. The amount of the reward is equivalent to 0.1 ETH in this case. 4. DXC tokens equivalent to ETH are taken off the project's deposit. Commission is necessary to maintain the support desk and quality assurance service. Neither of these services is able to change the way the affiliate network operates or influence its terms, but their main goal is to ultimately improve the experience for both parties. 33

34 The Bottomline Owing to the Integrated Affiliate Network, marketing objectives are addressed in a simple and accessible way. Now, project founders can focus entirely on a product quality and feel confident about the marketing of their crowdfunding campaign. At the same time, enthusiasts and experts from across the globe can easily start making profits by promoting projects they like Know Your Customer Service The Know Your Client (KYC) functionality is being implemented on the Daox Network. Each project can activate this mode and select the degree of verification. This procedure is required for the identification of investors who participate in the crowdfunding campaigns. If a team of a project launched on the daox.org platform would prefer to have KYC procedures activated, they can either resort to an in-built KYC service or use any other service available, as they wish. How it Works In case the KYC service is activated in the settings of the crowdfunding campaign, the Ethereum contract will only apply funds from the confirmed addresses. When transferring the funds right before the address is displayed, the potential investor will be notified about the prerequisite of undergoing the KYC procedure. The system will require the necessary data, and soon the investor s account will be verified. All the data collected during the verification process is available in the personal account of the project authors in encrypted form. Thus, a one-time decipher key is given when the KYC mode is activated. This key is never stored on Daox servers. Therefore, data leakage is entirely excluded. 34

35 Provided that the funds are transferred to an Ethereum address of the crowdfunding campaign from an unverified address, they will be automatically returned to the sender (in case the KYC is activated). Price of the Service For the service to operate, the project initiators are adding to the deposit by transferring DXC tokens to the Ethereum contract. Each verification charges a fee; the charge rate is set when the KYC mode is being activated for each crowdfunding campaign individually. The KYC service fees can only be paid using DXC tokens Automated Legal Service The project team will need the standard set of documents while running the crowdfunding campaign, for example Terms and Conditions. Although it is advised to reach out to a competent person to draft such papers, the Daox ecosystem will have an automated service for that. How it Works Authors of the crowdfunding campaign will be offered to select a list of the required documents in a special section of their personal accounts, upon which they will fill out a form in a user-friendly interface. After that, the Legal Service will automatically generate the required documents, which will be available for downloading. The list of available documents and their quality are subject to a process of continual improvement and modification. 35

36 Price of the Service This service is offered to all DXC token holders and members of the Daox ecosystem at no additional costs; however, it does not provide any guarantees. 36

37 5. The Wallet App The Daox Wallet is an app, that allows users to interact with the Daox-based organizations, trade tokens, and buy DXCs by means of a simplified interface. The main goal of this tool is to make crowdfunding via cryptocurrencies widely available, simple, and popular among general public. 5.1 Purpose of The Wallet App Introduction Despite obvious advantages of the crypto economy, there is an issue of low usership of cryptocurrencies in the society. As was mentioned earlier, one of the principle goals for Daox is to encourage non-blockchain projects to raise funds using cryptocurrencies. However, it becomes obvious that if a project is not related either to a crypto economy or the blockchain technology, then cryptocurrencies are uncommon among the target audience of its backers. A user-friendly app The Daox Wallet is created in order to address that issue. The goal for the app is to create a seamless tool for all users, including those who had no previous experience with cryptocurrencies. 5.2 Key Features The key features of The Wallet include a possibility to interact with Daox-based organizations and purchase DXC tokens that are used to participate in crowdfunding campaigns. 37

38 Authors of the crowdfunding campaign see no difference as to whether it should be transferred through the Ethereum wallet, daox.org or The Wallet app. In either case, the project receives cryptocurrency from a user of an Ethereum address. At the same time, the user of The Wallet app sees the whole procedure in a much simpler way. Firstly, it is as easy to register in the app as it is in any messenger. Secondly, the user will have a possibility to purchase DXCs through the app; consequently, it will become possible to participate in the crowdfunding campaign by means of fiat money. This way, a crowdfunding campaign gets all the benefits of the new crypto economy while maintaining the simplicity of participation for its backers, which is as easy as on traditional crowdfunding platforms, such as Kickstarter. Considering all this, The Daox Wallet will become a seamless portal to crypto economy and crowdfunding for the average user. This is a tool that enables anyone to invest, for example, $1 dollar in a project, from any part of the world and get a tokenized share. And the whole procedure is as simple as sending a message. In turn, project initiators will get an opportunity to attract backers and investors, while being sure that the interaction with their crowdfunding campaign is made to be as simple as possible for users; therefore, they would have a high conversion ratio. 38

39 6. Daox Roadmap 39

40 40

41 41

42 7. The DXC Token The DXC token (Daox coin) will be released right after the public launch of the Daox Network, and it will be for sale during the Decentralized Token Generation Event (cf. 7.4 ). 7.1 Uses of the DXC Token DXC is the native token of the Fundraising DAO Protocol, Daox Ecosystem and Platform. It is an ERC20 utility token that is aimed to fuel the economy around the protocol and ideas of fair and open blockchain based investing of the future. (a) Functional Part of Fundraising DAO Protocol Each Fundraising DAO could only be deployed by using some amount of DXCs that will form the initial account of a DAO. This account is used to set variables and to connect functional modules or services that are being introduced by third-party developers. This is how the growing community of developers is incentivised to contribute code to the Fundraising DAO protocol in a completely decentralized way. (b) Daox Marketplace for ICOs and Investors There is a marketplace of services and tools that are integrated via the Daox Open API. Imagine hundreds of services for startups and investors that are easily accessible in a few clicks and also transparently rated by the community. For instance, a project can apply for rating report, or media publishing, or bounty campaign, or start banner advertising, right from the Daox Network interface. An example of such service is bounty.daox.org. 42

43 (c) Daox Network and Wallet App The DXC token is used to get access to the services provided on the Daox Network. Although the Daox Network does not charge any commission from the projects or investors, it offers different promotional services, such as, featuring projects, targeted ads, lists, support, etc. Besides that, DXC token is the main token of the Daox Wallet app that is aimed to take crypto funding mainstream. (d) Early Participation in ICOs 2.0 The DXC token is the only token that is used to participate in the limited Initial Tokensale Stage of Fundraising DAOs. The funds raised during this stage are held on a separate account and are accessible for the project team immediately and without withdrawal requests. However, this funds could only be transferred to the integrated service providers. Thus, the majority of Fundraising DAOs will run DXC-presale stage to fund their ICO campaigns. Consequently, DXC token holders will get the priority access to the ICOs based on Fundraising DAO protocol. 7.2 DXC Token Technical Features The token is ERC20 compatible and has a number of additional features: (a) Features that enables for the interaction between users, third-party services and service providers (Daox Open API). For this, the code of the DXC implements functions that allow to automate the exchange of the DXC tokens for access to services. (b) Features that enables for the use of DXCs as a tool to participate in DAOs that are created within Daox smart-contracts. 43

44 7.3 Legal Aspect of the DXC Token DXC tokens are neither currency, valuable security nor currency swap, security swap or any other financial instrument. DXC does not grant any rights to manage the Daox developer company or any subsidiary Daox companies. DXC tokens do not entitle investors to derive profits or receive dividends from the business of the Daox company. The DXC token is used solely for the interaction with the elements of the Daox ecosystem and as a means of access to the platform services; consequently, it is a Utility token. This being the case, DXC tokens are not and cannot be deemed as securities, and they are not registered in any government enterprise as securities and should not be regarded as such. 7.4 DXC Decentralized Token Generation Event (or DAICO) In accordance with the concept and ideas of fair crowdfunding that is being proposed by the Daox project itself, the total amount of cryptocurrency raised during the Decentralized TGE will be placed in a decentralized autonomous organization, established on the daox.org platform. Consequently, DXC token holders will be able to control expenditures, hence the risks will be almost entirely eliminated. If the majority of DXC token holders are not happy with the way the project unfolds, they can vote for a full refund of the remaining proceeds. 44

45 All the tokens that will not be distributed during the Token Generation Event will be burnt. SOFT CAP HARD CAP TOTAL SUPPLY DELIVERY DATE 3000 ETH ETH 150M DXC Immediately after purchase Tokens will be transferred without delays or a lock-up period. The DXC Token generation event would be conducted starting from September 5th, During this time period, DXC tokens would be transferred in exchange for fiat money to the bank account and Ether to the Ethereum address of the DAO created on the Daox Network. The sale is not limited by a minimum threshold and is accessible for anyone in accordance with the laws of country of residence. 45

46 7.5 DXC Token Metrics 46

47 8. The Founding Team and Advisors Alex Kuvaytsev Project Lead Startup entrepreneur with more than 10-years experience. Background in IT business, management and consulting different projects. Keen on innovation, blockchain and fintech. Master s degree in financial management. MBA from Hult International Business School, San-Francisco, CA. Jordan Pool Media Director Jordan brings a lengthy background in live television, digital media production and creative marketing to the team. He understands the importance of digital media marketing and is excited to creatively communicate the value and vision of Daox to the world. / 47

48 Alex Shevlyakov Product Lead More than 12 years of experience in developing tech products. Formerly a product lead for dozens of products, each with excellent quality. Passionate about perfect design and usability. Master s degree in computer science. Enju Lu ( 呂恩汝 ) Asian Markets PR More than 7 years of experience in sales at an international marketing and trading company. Master s degree in journalism. Specialist in Public Relation, Linguistics, International Marketing. 48

49 Anton Vityazev Tech Lead More than 5 years in web development. High-load and complex systems architect. Blockchain expert. Master's degree in cybersecurity. Kirill Bulgakov Smart Contracts Developer Backend and smart contracts developer, inspired by dapps and blockchain technology. Natural language processing researcher and ML developer in the past. Oleg Adamov Mobile Developer Experienced mobile engineer with more than 10 years in programming. Participated in the development of a product with a multi-million user base. Master s degree in Mathematics. 49

50 Kevin Kimick Marketing Strategist Serial entrepreneur, growth marketer and digital strategist. CEO and co-founder of SOHO Digital a company that builds custom software (including blockchain development), designs & builds premium websites, strategizes growth marketing plans, and provides marketing analytics and automation services. Bachelor s degree in business administration and management from Baruch College, City University of New York (CUNY). Artyom Molchanov Data Scientist / AI Researcher Artyom's background is Data Science and AI research. He has developed various AI-based solutions for Russia's largest bank, Sberbank. Artyom will be a tech lead for data related technologies in Daox. He has a Bachelor's degree in Computer Software Engineering / 50

51 Gleb Plotnikov UI/UX Designer Founder of Yutani (a Belarus-based design firm). More than 10 years experience in design and UX. Have developed UI/UX for hundreds of amazing projects, including well-known brands. Nina Mikhailenko Community Manager Work experience as a project coordinator, community manager and translator at different conferences and workshops. Master s degree in Linguistics, study program in the University of Tromsø, Fulbright program in the USA / 51

52 Natalie Dudkina Key Partnership Manager Over 10 years experience in development of the work streams with KEY customers and clients in various economic domains. Negotiation of cooperation and contract terms with compliance of the company s policy, ethics and interests. Three degrees: Management, Economist, Philologist / Elena Novozhilova Key Partnership Manager During the last 8 years, Elena held executive positions in e-commerce and advertising companies worldwide. Elena is responsible for partnership development and business event management at Daox. Master's degree in management. 52

53 Oleg Gaidul Adviser, investor Serial entrepreneur and investor. Founder of Spacemind Capital, EnventVR, AD1, and other successful startups with a yearly turnover of more than $50M. Tech visionary and a fan of decentralization. Besides of more than 12 years of managing experience, he is also a tech guy and a former software developer. Master s degree in management Keith Teare Adviser Executive Chair at Accelerated Digital Ventures. A leading figure past and present in many important companies, including Archimedes Labs, Minds and Machines Inc, MedCo, EasyNet and RealNames to name just a small few. Keith is also one of the co-founders of Techcrunch. 53

54 George Kimionis Adviser Serial entrepreneur and investor with multiple founded companies and multiple exits. More than 15 years of working experience in Fintech and Banking. CEO of Coinomi, the industry's leading multi-asset wallet with native support for more than 500 assets and millions of users. CEO of Cryptean. Crypto-currencies enthusiast. Special Forces Veteran. Strong technical background. Early adopter and contributor in Bitcoin and other open-source projects. Andrea Brignone Adviser Andrea has vast experience in financial markets and cybersecurity. He is an author of almost 200 articles on finance and computer science. During his career, Andrea co-founded noticeable companies and cometees: European Financial Marketing Association (EFMA), Milipol, Protexarms Group. He is also a former chairman of Special Interest Group for Information Security of the European Community. 54

55 Mihai Milea Adviser Over 10 years of experience in global Forex & CFD brokerages, holding various strategic positions in Technology and Digital Marketing. Directly involved in the delivery of innovative projects within the brokerage space and achieving a positive ROI. Expert in mining cryptocurrencies and an avid crypto investor. Msc in Cybersecurity. 3/ Kyle Asman Adviser Kyle has extensive experience helping clients raise capital in the finance, banking, regulatory consulting space, and most recently, developed complex international tax structures in the tax advisory space. Kyle has held investment banking regulatory consulting and transfer pricing roles at Liquidity Energy, Duff and Phelps, and Ryan LLC, a global tax firm. He is also a VC investor in multiple startups and co-founder of Bx3 Consulting. 55

56 Dr. Walter Tonetto Adviser Technopreneur and ASEAN expert. Visiting Professor for the Univ of Tokyo & Waseda. Co-Founder of Indoblockchain.id. Network of Captains of Industry in Indonesia and SE Asia. President SE Asia of Finteix Pte. Singapore. Chief Strategist for Indigen. Advisor to the CCEG, The University of Northampton. Co-Founder of Snapfood. DISCLAIMER: This section is to be updated in the next versions of the document. We have a great advisory team and new amazing team members coming. 56

57 9. Software Overview This section describes the Daox Network and the Ethereum smart-contracts software and source code that form the basis of the ecosystem. This part does not describe any software or code that is used to carry out the DXC Token generation event (cf. 7.4 ). 9.1 Components (a) Daox Ethereum smart contracts: this is a set of contracts that enables the performance of all the services for Daox-based organizations, such as receiving and withdrawing funds, generating tokens, and voting on proposals etc. (b) Daox Network backend: this is a software stored on the centralized servers that enables the interaction with Daox Ethereum smart contracts in a convenient way. 9.2 Smart Contracts Overview All smart contracts linked to Daox are open-source and available in the repository under the following link: We know that when using a fundraising platform, it is vitally important to have a complete level of confidence that all the features work properly and comply with the announced concept, and funds are always safe. That is why we not only publish the source code but also offer its detailed description. This part includes a list of major functions and code highlights in order to make the navigation in the code easier when being analysed by tech experts. 57

58 Everyone can make sure that the code in smart-contracts complies with all the announced features, which are as follows: (a) Fair and transparent voting (b) Safety of the collected proceeds and lack of access to them by third parties (c) Refunds functionality (d) Complete independence from the Daox Network or third parties In this section, by DAO we mean Daox-based organization (a DAO created using Daox smart contracts on the Ethereum blockchain) Creation of DAO All DAOs are created with a special factory contract that is called CrowdsaleDAOFactory. The factory keeps settings that are constant for all DAOs, which in turn are transferred to each organization when they are being established. For the establishment of new DAOs createcrowdsaledao function is used. The source code of this function is given below: function createcrowdsaledao ( string _name, string _description) public { address dao = DAODeployer.deployCrowdsaleDAO(_name, _description, servicecontractaddress, votingfactorycontractaddress); require (dao.call(bytes4(keccak256( "setstatemodule(address)" )), modules[ 0 ])); require (dao.call(bytes4(keccak256( "setpaymentmodule(address)" )), modules[ 1 ])); require (dao.call(bytes4(keccak256( "setvotingdecisionmodule(address)" )), modules[ 2 ])); require (dao.call(bytes4(keccak256( "setcrowdsalemodule(address)" )), modules[ 3 ])); 58

59 DAODeployer.transferOwnership(dao, msg.sender); DAOs[dao] = _name; CrowdsaleDAOCreated(dao, _name); This function uses the DAODeployer library for uploading an organization with defined parameters to the Ethereum network. The name, description as well as two addresses and transferred as parameters: 1. The Voting Factory address is needed to create proposals in case the crowdsale is successful. 2. The address of the service contract is used to send commissions to the the platform. An important note: the commission is charged only from payments transferred via the daox.org interface and when using Ether (ETH). No commission is charged from investments made by means of the DXC token. After that, the addresses of different modules are added to the newly created organization; they will be closely described further on. For different parameters to be assigned correctly in the contract s storage, a change of ownership to an address initiating this code is required (most often this is a special account owned by Daox). As a result of an execution of the function an individual contract CrowdsaleDAO is created. 59