New Ideas for Web3 Project Expansion: Advantages and Practices of the subDAO Model

In the Web3 field, there are not many projects that successfully expand into new businesses. Traditional projects often struggle to compete with emerging projects that focus on these new areas. However, the subDAO model combined with strong execution may provide a solution to this predicament. This article will take Magpie's expansion as an example to explore the best practices of subDAO.

Definition and Characteristics of subDAO

A qualified subDAO should possess the following characteristics:

1. Possessing independent tokens and the ability for autonomous expansion.
2. The parent DAO holds a significant proportion of the subDAO equity.
3. The mother DAO and subDAO achieve mutual benefit and win-win.

Taking Radiant's yield enhancer Radpie as an example, it will issue $RDP tokens, with the Magpie treasury holding 20%, and another 30% of the IDO allocation going to MGP. This arrangement means:

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

Advantages of the subDAO model

1. Credibility Inheritance: subDAO can inherit the credibility accumulated by the parent DAO, which is beneficial for project initiation and collaboration.
2. Growth Potential: Independent tokens provide ample budget for incentive growth.
3. Keeping up with the narrative: subDAO tokens can follow new trends, allowing the parent DAO to integrate into new narratives.
4. Resource Recycling: subDAO interacts within the parent DAO ecosystem to share resources and improve overall efficiency.
5. Governance Leverage: The mother DAO of the governance track can achieve leveraged governance through subDAOs.

Credibility Advantage

New projects in the cryptocurrency space often face trust crises, but subDAOs can quickly build trust by leveraging the reputation of their parent DAOs, reducing risk discounts and facilitating smoother cooperation. As successful cases accumulate, this reputational advantage will continue to strengthen.

growth and narrative advantages

The subDAO model solves the dilemma faced by old projects when launching new businesses. Independent tokens allow for significant incentives without affecting the price of the parent project’s tokens, while also keeping up with new narratives. For example, Penpie, as a subDAO of Magpie, not only avoids the issuance of more MGP but also closely ties itself to the popularity of Pendle.

ecological cycle

The subDAO model promotes resource circulation within the ecosystem. For example, the Pendle-related trading pool launched Wombat and participated in Bribe through MGP, directing the incentive expenditure of PNP to MGP holders. This internal circulation reduces external net spending and increases overall efficiency.

governance leverage

Taking Magpie as an example, it indirectly influenced 25% of the Pendle governance power by controlling 20% of the Penpie governance rights. This leverage effect allowed Magpie to gain influence in protocol governance far exceeding its actual stake proportion.

The Importance of Execution

Although the subDAO model has a bright future, realizing this vision still requires strong execution. MakerDAO's Spark project serves as a counterexample; despite the good concept, it has yet to become an effective subDAO due to a lack of follow-up development and clear tokenomics.

Conclusion

The subDAO model combines efficient execution with new growth paths for Web3 projects. It not only provides ample growth capital but also keeps up with market trends to achieve ecological linkage and resource sharing. As DeFi projects rapidly expand horizontally in this way, forming a complete ecosystem, they may be able to compete more effectively with large centralized exchanges, driving the industry forward.