New Approaches for Web3 Project Expansion: subDAO Model and Efficient Execution

In the Web3 space, the growth potential of a project is crucial for investment returns. However, there are not many projects that successfully expand into new business areas, and existing projects often struggle to compete with new projects that focus on those areas. In the face of this challenge, the subDAO model combined with efficient execution may be a solution. Below, we will explore best practices for subDAO by analyzing Magpie's expansion strategy.

Definition and Characteristics of subDAO

A qualified subDAO should possess the following characteristics:

1. Have independent tokens and the ability to expand autonomously.
2. The parent DAO holds a large amount of subDAO equity.
3. The main DAO and subDAO mutually benefit from each other.

Taking Radiant's yield enhancer Radpie as an example, it will issue $RDP tokens, of which the Magpie treasury will hold 20%, and another 30% of the IDO share will be allocated to MGP. This structure allows for:

• MGP holders can share in the IDO profits and future "$RDP" dividends.
• Magpie gains significant control over Radpie, thereby influencing the governance of Radiant.
• Radpie can quickly launch using the team resources of Magpie.

Advantages of the subDAO Model

1. Reputation Inheritance: Inherit the reputation accumulated by the parent DAO, making it easier to launch.
2. Growth Momentum: Independent tokens provide ample incentive growth budget.
3. Narrative Update: Keep up with new trends so that the mother DAO can also stay in line with market hotspots.
4. Resource Circulation: Interlinking and sharing resources within the mother DAO ecosystem to enhance efficiency.
5. Governance Leverage: The parent DAO of the governance track can achieve leveraged governance through subDAOs.

Reputation Heritage

New projects often face trust crises, but subDAOs can inherit the reputation of their parent DAOs, significantly reducing risk perception and facilitating smoother cooperation with KOLs and other projects. This reputation can also accumulate, paving the way for subsequent new subDAOs.

Growth Drivers and Narrative Updates

Web3 projects face aggressive customer acquisition and financing demands, and independent tokens are key to achieving this model. Established projects often find themselves in a dilemma when starting new businesses: a large issuance of tokens may lead to a price drop, while not issuing more makes it difficult to succeed in the competition.

The subDAO model can address this issue. For example, Penpie, as an independent project, not only did not issue additional MGP but also closely tied its narrative to Pendle. Although the price of MGP has not changed significantly on the surface, considering that similar project WMX recently plummeted by 70%, Penpie's contribution should not be underestimated.

Resource Recycling

The subDAO model can achieve resource circulation within the ecosystem. For example, the mPendle/Pendle trading pool has launched Wombat and is considering using Bribe through MGP to transfer the incentive expenditure of PNP to MGP holders. This internal circulation reduces external net expenditure and improves overall efficiency.

In addition, resource sharing among multiple projects can also reduce costs and increase efficiency. For example, Ankr obtains WOM incentives through Magpie Bribe, and Penpie has also successfully joined in. The ultimate goal of Magpie may be to circulate all incentive tokens through bribes within the ecosystem and to establish a more competitive bribery market through BD resource sharing.

Governance Leverage

In terms of governance rights, the subDAO model can achieve a leverage effect. Taking Magpie as an example, although it nominally controls only 20% of the Penpie governance rights, this 20% of votes may determine the overall voting direction of Penpie in key decisions, thereby affecting 25% of Pendle governance rights. This means that Magpie has gained approximately 5 times the leverage effect in protocol governance.

The Importance of Execution

Despite the excellent concept of the subDAO model, it ultimately relies on outstanding execution to be realized. MakerDAO's Spark project is a counterexample, as it has not shown any progress six months after its launch, highlighting the consequences of a lack of execution.

Conclusion

The subDAO model combines efficient execution capabilities, 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 synergy and resource sharing. This model is expected to help DeFi projects build a more complete system, enhancing their competitiveness against large centralized exchanges. With the development of this model, the DeFi sector may be on the verge of a qualitative leap.