A New Direction for Web3 Project Expansion: subDAO Model

In the Web3 space, it is rare to find projects that successfully achieve business expansion. Traditional projects often struggle to compete with emerging projects that focus on this area when exploring new business. However, the subDAO model, combined with efficient execution, may provide a solution to this dilemma. This article will explore the best practices of subDAO using Magpie as an example.

Definition and Characteristics of subDAO

A qualified subDAO should have the following characteristics:

1. Have independent tokens and expansion capabilities.
2. The parent DAO holds a significant proportion of the subDAO equity.
3. There is a mutually beneficial relationship between the parent DAO and subDAO.

Taking Magpie's subDAO - Radiant's yield booster Radpie as an example. Radpie will issue $RDP tokens, of which the Magpie treasury will hold 20%, and another 30% of the IDO allocation will be distributed to MGP. This means:

• MGP holders can share in the IDO profits.
• MGP holders will enjoy "dividends" of $RDP in the future.
• Magpie has significant control over Radpie, thereby influencing the governance of Radiant.
• Radpie can quickly launch by leveraging the team resources of Magpie.

Advantages of subDAO model

1. Reputation Inheritance: subDAO inherits the reputation of the parent DAO, facilitating project initiation.
2. Growth potential: Independent tokens provide ample incentive budgets.
3. Narrative Follow-up: subDAO tokens closely follow new trends, allowing the parent DAO to keep up with market hotspots.
4. Resource Circulation: subDAO interacts and shares resources within the parent DAO ecosystem, enhancing efficiency.
5. Governance Leverage: The parent DAO of the governance track can achieve leveraged governance through subDAOs.

credibility advantage

New projects often face a trust crisis, but subDAO can inherit the reputation of the parent DAO, significantly reducing this risk. This accumulation of reputation is sustainable and contributes to the future development of subDAO.

Growth and Narrative Advantages

Traditional projects often find themselves in a dilemma when launching new businesses: a large increase in token issuance may lead to a price drop, while not issuing new tokens makes it difficult to compete. The subDAO model resolves this issue by issuing new tokens while staying in line with market trends.

For example, Magpie's Penpie ($PNP), as an independent project, not only avoided the increase of $MGP but also successfully bound Pendle's market narrative. Although the price of $MGP seems to have remained relatively stable, considering that similar projects like WMX have recently dropped by 70%, the contributions of Penpie are evident.

ecological cycle

The subDAO model promotes resource circulation within the ecosystem. For example, the Pendle trading pool launched Wombat and is considering using MGP for Bribe, directing the incentive expenditure of PNP towards MGP holders. This internal circulation reduces external net expenditure and improves ecological efficiency.

At the same time, resource sharing among multiple projects has also reduced costs and enhanced competitiveness. The ultimate goal of Magpie may be to circulate all incentive tokens within the ecosystem through bribe, achieving mutual benefit.

Governance Leverage

Taking Magpie as an example, it indirectly affects 25% of Pendle's governance power by controlling 20% of Penpie's governance rights. This leverage effect is particularly evident in protocol governance, giving Magpie nearly 25% influence in Pendle's decision-making.

The Importance of Execution

Although the subDAO model has broad prospects, its success still relies on the execution capability of the team. For example, the MakerDAO Spark project has not yet seen results six months after its launch, highlighting the crucial role of execution.

Conclusion

The subDAO model combines efficient execution capacity, opening up new growth paths for Web3 projects. It not only provides ample growth budgets and the ability to keep up with market trends but also achieves ecological interconnection and resource sharing. This model is expected to help DeFi projects build more complete systems and enhance their competitiveness with centralized exchanges.