The Drift Protocol just officially announced the launch of their new DAO with a new airdrop of their governance token called $DRIFT. 

In this article, we will be talking about what the DAO is and how will it govern the whole Drift Protocol Ecosystem, which is essentially a DeFi Ecosystem. 

What is the Drift DAO?

The DAO launch has confused many users in the Drift Protocol ecosystem since the protocol itself was launched in 2021. 

This raises questions on why all of a sudden, the team behind this project wanted to launch their own DAO, even though the project has been running for quite a while now. 

It was revealed through a publication on their blog post that the launch of this DAO is to grow their ecosystem bigger since the team thinks that to grow in the crypto space, the project needs to be more decentralised. 

The launch of its DAO is to increase the decentralisation aspect of the DAO, essentially making Drift more trustworthy among its users. 

This is a huge value for Drift while being a part of the Solana Ecosystem in the DAO and wanting to be more decentralised as the Solana Blockchain itself is known to be a semi-decentralised blockchain. 

While the existence of DAO does not ensure a fully decentralised ecosystem, the effort from Drift Protocol to create its DAO is one to applaud, as many decentralised exchanges and DeFi protocols seem to be shying away from the concept. 

One of which is Sushi, formerly known as SushiSwap, which has made headlines because of their new proposal to be less decentralised by erasing their DAO and changing it to be a Labs model which is essentially a centralised company that will run the project. 

There is no information yet about the DAO as it is still a new one that has not been launched yet in the Drift Protocol Ecosystem. 

Three Branches of its DAO

However, there are already some details, talking about the DAO itself, one of which is the existence of the three-branch mechanism and the governance token of the DAO, which is the $DRIFT Token. 

This is one to highlight, as a multi-branch mechanism is still rare in the DAO space. Most are still under development as there is little to no proof that the infrastructure will be more efficient than the regular ones. 

The Drift Protocol team is one of the ones who are exploring the DAO technology, essentially innovating the infrastructure. 

This is a huge point for the DAO Sector as it is one of the less developed sectors in the crypto space since there are little to no innovations in it. 

Unlike the DeFi Sector which continues to innovate with the existence of liquid staking or the NFT Sector which continues to innovate with the existence of Fractionalized and Ordinals NFTs, DAOs have not had any major innovation that put it back on the map among other sectors yet. 

This is why, if this project becomes a success, than DAOs might come back again as one of the leading sectors in the crypto space. 

Coming back to the multi-branch mechanism, the purpose of this innovation is to allocate each functionality into each Sub-DAO.

This is similar to a modular blockchain infrastructure, but instead of blockchain layers, some sub-DAOs function for their specific purposes. 

In the DriftDAO, there will be three branches in the DAO which are essentially sub-DAOs. These three are the Realms DAO, the Security Council, and the Futarchy DAO. 

Realms DAO

The Realms DAO will be in charge of looking over the development of the Drift Protocol Ecosystem. 

The DAO will focus on governing new proposals that are submitted by the team as well as the users and holders of the $DRIFT Token. 

This sub-DAO acts similarly to a regular DAO where all of voting will be done through this DAO, pushing the decentralisation value of the token forward. 

The proposals that are going to be discussed and voted through this DAO include changes in the $DRIFT Token Economics, changes to the Drift Protocol, and changes in the overall partnerships with external projects. 

All of this is done so that there will be no need for a centralised entity to decide single-handedly what the future of the Drift Protocol will be. 

The DAO will also distribute rewards for contributors that help the growth of the Drift Protocol and maintain the DAO’s treasury overall. 

There is one more key responsibility that the DAO will have, which is to select the Security Council, another sub-DAO of the Drift DAO infrastructure. 

Security Council 

The Security Council is a selected group of DAO members that will be responsible for monitoring and updating risk parameters in the Drift Protocol Ecosystem. 

The parameters include fees, maintaining margin ratios, and program updates, which essentially keep the decentralised exchange longevity intact. 

Fees, leverages, margin ratios, and liquidations are essential parts of a decentralised exchange, especially ones that introduce derivatives contracts in the platform. 

This is the job of the Security Council, which is to make sure that there are no faulty mechanisms that bad actors can exploit so the overall operational aspect of the Drift Protocol is kept safe. 

The Security Council will also be in charge of adding new markets, contracts, and assets to the platform, where the agreements will be done through the Realms DAO. 

This means that there will be no need to wait for an exchange to list the token that users want, as the users can submit their requests through a DAO Proposal, where the proposal will be voted on in the DAO. 

Futarchy DAO

The last sub-DAO is the Futarchy DAO, which is a new mechanism of DAOs that has only been implemented by one project, which is the MetaDAO.

The Futarchy DAO is a mechanism that lets the DAO members utilize a voting decision by predicting the outcome of a specific proposal. 

Users can speculate using their funds, similar to a derivatives contract, where each proposal is treated like a bet, where if they are correct, they will get a reward. 

The overall mechanism of this model is still new, which is why it will be interesting to see how it will be implemented on Drift. 

This sub-DAO will also be responsible for managing the DAO’s treasury, which is why there are potential rewards tied to it because of the Futarchy model. 

The DAO will be responsible for funding purposes, where the treasury funds can be allocated for funding developments on the Drift Protocol Ecosystem through the Futrachy DAO. 

Members will vote on proposals to agree or disagree on the allocation of the treasury funds for other projects that want to be a part of the Drift Protocol Ecosystem. 

There are more incentives for the members to vote as with the Futarchy Model, they will get a reward if their vote is the majority ones. 

$DRIFT Token Economics 

All of the activities in the DAO will be done through $DRIFT the governance token of the Drift Protocol Ecosystem.

The token will be launched through an airdrop, where the airdrop consists of 10% of the total supply, which stands at 1 Billion $DRIFT. 

There is no information yet about the airdrop and its snapshot, but one thing for sure is, that this is a retroactive airdrop, where the eligible users are loyal users of the Drift Protocol. 

It can be seen that the majority of the token will be held by the public which is a good sign for a token since it will be far from any insider market manipulation allegations. 

All of the tokens will have a vesting period of over five years, aside from the airdrop, which means that the “insiders” or the early contributors and the core team, cannot sell all of their tokens all of a sudden unless they rug-pulled the project. 

Conclusion  

Overall, it can be seen that Drift will give an innovation in the DAO Sector, so it will be interesting to see how it progresses moving forward. 

Eligibility for the airdrop seem to be over, however, there might be other rewards for users of the protocol going forward, which is why it will be good to try the Drift Protocol