Understanding the crowdfunding platform Juicebox: The financial officers behind AssangeDAO and ConstitutionDAO

Original Author: 0xEliven, Foresight

Decentralized Autonomous Organizations (DAOs) are on the rise. A DAO aimed at rescuing Assange, AssangeDAO, has raised over 17,000 ETH, with Ethereum founder Vitalik Buterin participating in the donation. Recently, the ConstitutionDAO attempted to bid for a copy of the U.S. Constitution and raised 11,613 ETH, marking the beginning of the DAO craze.

Behind the noise lies a thought-provoking question: How should such enormous assets, often amounting to tens of millions of dollars, be managed ? This may be one of the main reasons why DAOs have long been highly anticipated by the crypto community but have yet to thrive. Both AssangeDAO and ConstitutionDAO coincidentally chose the same answer: Juicebox.

What kind of magic is Juicebox? How does it solve the longstanding problem of DAO treasury management? Besides that, what other upgraded features does it offer? By analyzing the operational mechanisms of Juicebox and the specific practices of AssangeDAO and ConstitutionDAO, we will answer these questions one by one.

Juicebox: Crowdfunding Platform and DAO Treasury Management Protocol

Juicebox is a governance-minimized protocol that provides community funding for individuals and projects. Its founder Jango explains in the project's documentation:

Juicebox is a business model as a service and programmable treasury for community-owned Ethereum projects. Independent artists, developers, DAOs, and more broadly, public goods, need a stylish way to capture the value they create, gain reliable cash flow from it, and then share it back with the world.

Specifically, Juicebox allows projects to commit to how they will allocate their cash flow before receiving donations, thus signaling to users how their money will be used in advance . Users will receive tokens from the project in return for funding projects on Juicebox by paying ETH.

For projects with predictable costs (such as employee salaries, service subscriptions, donations, etc.) and those that wish to automatically give back to the community upon success, Juicebox serves as a very straightforward and effective payment terminal and programmable treasury.

How to Manage DAO Treasury with Juicebox?

As a governance-minimized protocol, Juicebox provides a set of simple parameters that creators or project teams can customize when initiating fundraising to establish an economic model that suits their characteristics. These parameters mainly include fundraising period, fundraising goal, fund allocation, retention rate, discount rate, and bonding curve ratio.

• Fundraising Goal: The target amount for fundraising; funds exceeding the goal are referred to as overflow, and holders of project tokens can freely burn their tokens to redeem a portion of the overflow funds.
• Fundraising Period: The duration of the fundraising activity; projects can conduct multi-period fundraising, with different parameters set for different periods.
• Fund Allocation: When the project team withdraws funds from the Juicebox treasury contract, it decides how to allocate the funds to designated wallets or other projects on Juicebox. Additionally, 5% of the withdrawn funds will be donated to JuiceboxDAO as platform revenue.
• Retention Rate: When new donations generate tokens, a certain proportion (retention rate) of tokens will be allocated to a designated address.
• Discount Rate: When creating a project, a discount rate can be configured to incentivize early supporters. For each new fundraising period, the number of tokens rewarded for the same amount paid to the project will decrease according to the discount rate.
• Bonding Curve Ratio: The bonding curve rewards long-term holders of tokens. For example, with a 70% bonding curve configuration, burning 10% of the token supply will allow the holder to claim about 7% of the total overflow in ETH, leaving the rest for token holders to share.

Different types of projects can customize parameters based on their characteristics. For instance, a DAO fundraising for a specific auction may only need to set the fundraising period and goal; while a small team that needs to operate the project long-term will also need to set fund allocation, discount rate, and retention rate.

Practitioners: ConstitutionDAO, AssangeDAO, and JuiceboxDAO

Among the hundreds of projects listed on the Juicebox website, ConstitutionDAO, AssangeDAO, and JuiceboxDAO are undoubtedly the most outstanding three.

First Taste of Success: ConstitutionDAO

ConstitutionDAO was the first notable project on Juicebox, raising $45 million from 17,000 donors in just a few days. Although the bid for the Constitution failed, ConstitutionDAO announced its shutdown and refunded the funds through Juicebox. In a twist of fate, after becoming community-oriented, ConstitutionDAO achieved broader success, becoming a model for DAO practice and meme movements.

It can be said that Juicebox was discovered by the community under the halo of ConstitutionDAO. The fundraising for ConstitutionDAO has ended, and its fundraising period parameters are as shown in the image above, with a discount rate of 0% and a retention rate of 0%, meaning all assets in the treasury belong entirely to the donors.

Rising Star: AssangeDAO

AssangeDAO has just completed its second fundraising period, with a total funding amount of 17,422 ETH, surpassing ConstitutionDAO.

AssangeDAO set both the discount rate and retention tokens to 0%, and like ConstitutionDAO, AssangeDAO did not reserve tokens for team members. It is worth noting that AssangeDAO did not set a fundraising goal, and users cannot redeem the overflow ETH.

Advanced Play: JuiceboxDAO in Practice

JuiceboxDAO is the DAO organization that supports the operation of the Juicebox protocol. As an early practitioner, JuiceboxDAO initiated crowdfunding on Juicebox. Unlike AssangeDAO and ConstitutionDAO, JuiceboxDAO is designed to sustain the development of the Juicebox protocol, requiring long-term payments for salaries, hardware, and other operational costs. JuiceboxDAO has set up a more complex and flexible fund allocation scheme.

JuiceboxDAO is currently in its 14th fundraising round, with the following parameter settings:

• There is a clear target amount and duration to cover the project's operational costs during this period;
• The discount rate is 10%, and the bonding curve ratio is 70%, to incentivize early donors and long-term holders of project tokens;
• 50% of tokens are retained, with 50% of newly donated tokens sent to a designated address.

JuiceboxDAO has clearly defined and publicly disclosed the distribution method for withdrawing funds and retaining tokens.

Approximately $210,000 will be withdrawn from the Juicebox treasury contract and allocated to project team members and project owners (contract address), among others.

The retained 49,179,978 JBX tokens will be distributed to project team members and project owners as shown in the image above.

Token Economics: The Magic of Price Fluctuations

The fundraising for ConstitutionDAO and AssangeDAO adopted a fixed ratio issuance model, with 1 ETH exchanging for 1 million project tokens. As long as the fundraising period has not ended, anyone can mint new tokens at a fixed cost by donating, with the price determined by the exchange ratio set by the project. However, after the crowdfunding ends, as in the case of ConstitutionDAO, the price is entirely determined by the market.

In a more complex situation, such as JuiceboxDAO, its crowdfunding has not yet ended, but due to the discount rate, the price of the JBX token will be influenced by both the market and the crowdfunding mechanism. At this point, there are two ways to obtain JBX: donation and secondary market purchase; there are also two ways to exit JBX: redemption and secondary market sale. Assuming:

• The price for minting JBX through donation ETH is A (buying JBX)
• The secondary market buy/sell price on Uniswap is B (buying/selling JBX)
• The price for burning JBX to redeem ETH is C (selling JBX)

Then, it must hold that A > B > C, otherwise, there will be arbitrage opportunities in the market. Referring to the current actual situation, A is 1/105440 ETH, B is 1/402747 ETH, and C is 1/590000 ETH. Generally, both buyers and sellers will choose to transact in the secondary market, which is more advantageous.

A will continue to grow due to the existence of the discount rate throughout the crowdfunding period. C will rise when funds are injected into the treasury and fall when funds are withdrawn from the treasury, while C is also affected by the bonding curve. Observing the actual situation of JuiceboxDAO, all funds raised by projects on Juicebox must donate 5% to JuiceboxDAO to mint JBX. JuiceboxDAO currently has good cash flow, with the speed of funds being injected into the treasury far exceeding the speed of withdrawal, thus C is increasing. Ultimately, B is also rising within a fluctuating range.

However, if a project operates poorly and assets in the treasury are continuously used to pay operational costs, the opposite situation may occur.

JuiceboxDAO provides a good example of DAO treasury management that can be referenced by various project-based DAOs. At the same time, JuiceboxDAO has also actively played a role in community governance during its operation, adjusting and refining parameters across different crowdfunding periods. The management of DAO treasuries using the Juicebox protocol is still a fresh experiment, and different projects need to continuously explore based on their own situations.

Modular Era, DAOs Expanding Their Horizons

Juicebox offers a new solution for DAO treasury management by pre-committing the funds and their intended use before raising funds from the community. From the current operational situation, it has attracted hundreds of crowdfunding projects and has seen the emergence of ConstitutionDAO and AssangeDAO, which have garnered attention from the entire crypto community. The governance experiment of Juicebox is progressing rapidly and has begun to show its potential. However, a well-functioning DAO requires more than just Juicebox; there are many other issues to address.

How can the assets raised by Juicebox ensure security and proper use once withdrawn to the project wallet? How to conduct community governance? A possible answer to the former question is the Gnosis Safe multi-signature wallet, while a possible answer to the latter question is the Snapshot voting tool. Of course, there are many solutions.

It is evident that modular solutions are becoming prevalent in various fields of the crypto world, and this applies to both DeFi and DAOs. Therefore, the prosperous era of DAOs may no longer be far away.