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Cult DAO is a community-driven autonomous organization seeking to contribute towards a decentralized future. The project aims to constantly fill and send out its DAO treasury and fund investments in various technologies building tomorrow’s decentralized world.
This Cult DAO review looks closer at the project’s features and long-term plans. Read on to discover how to take part in this initiative!
What is Cult DAO?
Cult DAO is a blockchain-based, non-governmental and non-profit organization. Its purpose is to empower those working towards a decentralized world. To this end, it plans to fund projects or investees that accelerate the mainstream adoption of decentralized applications.
Those seeking funding from Cult DAO must share the team’s objectives, such as:
- Fight against centralization.
- Further the cause of decentralization.
- Directly benefit a noble cause.
The protocol has a tradable and liquid token, CULT, which users need to access most of the platform’s features. Every CULT transaction comes with a 0.4% tax, which goes towards the DAO treasury. In time, the funds from the treasury will help fund investments in decentralized technologies.
Additionally, the protocol has a Proof-of-Stake token, dCULT. Users staking their CULT tokens into the DAO receive dCULT, which they can swap back at any time. In return, they receive the amount of staked CULT tokens plus any rewards available at that specific time.
Unlike other DeFi projects, Cult DAO does not operate under the control of one or a group of entities. Furthermore, the team behind the project cannot change it, access its liquidity, or edit its smart contracts. Centralized organizations, such as the government, cannot stop, regulate or interfere with its activity. Instead, it is the entire DAO community that can only dictate what is funded .
How Cult DAO Works
Cult DAO divides its users into two categories depending on how many CULT tokens they have staked. For instance, the Top-50 CULT stakers (dCULT owners) are the protocol’s “Guardians.” Meanwhile, the rest of the users go by the name The Many.
The Guardians have the crucial task of safeguarding the proposals that The Many bring to them and vote on. They have a larger token share. However, they cannot influence and vote the proposals they put before The Many.
According to the Cult DAO Manifesto, the protocol should work as follows:
Users interact and trade with the CULT token within the DAO. The protocol only takes a 0.4% tax on each transaction. As a result, almost all transactions should clear on standard DEX slippage settings.
The protocol accumulates the taxes in the DAO treasury. There, it builds up to a USD value matching the market value of 15.5 Ethereum.
CULT holders can stake their tokens for dCULT. The top-50 dCULT holders become guardians and the only users who can table proposals. All the dCULT holders below them are The Many, and they can vote on what the Guardians propose.
The proposals can come from almost anyone, including community members, VCs, and users from anywhere across the political spectrum. However, each proposal must abide by the DAO’s criteria to fight against centralization. They must also contain the following:
- The total supply of the investee protocol token
- A percentage of the total supply as a return offer for the 13 ETH investment
- The tokenomics
- An audit of the token and any contracts, if the proposal contains them
- The burn and distribution plan, which is the vesting schedule for the investee protocols’ token.
Here’s a hypothetical example of how tabling a proposal in Cult DAO will work.
Suppose a protocol, e.g. ABC DAO, promises 1.2% of its $ABC token. The vesting schedule can be daily, weekly, fortnightly, or monthly, but it cannot exceed 18 months. In our case, ABC DAO chooses a vesting schedule of once a month for 12 months.
On repayment, the investee company swaps 0.1% of its supply (1.2% over 12 months) of $ABC for $CULT. ABC DAO then sends half of the CULT to a burn wallet. Next, it sends the other half to the DAO, reaching the dCULT holders.
A proposal needs The Many’s approval and reach the 15.5 ETH value to pass. Then, it automatically sends 13 ETH to the proposal wallet address and 2.5 ETH to a burn wallet.
If the proposal does not obtain approval, the CULT will continue to build up past the 15.5 ETH level. However, it will auto-send once a proposal passes approval.
Burning and Redistribution
Cult DAO follows a hyper-deflationary economic model. This helps the CULT token increase in value as its circulating supply drops. Also, it prevents the Cult community from making the same mistakes of the centralized economic systems of the past.
The protocol burns 10,000 tokens out of every 60,000 it raises. Also, it has a half-and-half redistribution model that implies 50% burning and 50% proportional distribution to the dCULT holders. This happens whenever an investee company sells its tokens for CULT.
Lastly, CULT DAO claims its smart contracts and token have passed audits and burned their keys. Also, the protocol’s liquidity is under lock for 265 years, and its contracts are not upgradeable.
The project’s staking app is available here.
Like many DeFi projects, Cult DAO steers in the opposite direction of traditional centralized institutions. However, it takes the path towards a decentralized world a step further. Its goal to fund and support those who further the cause of decentralization is rare, if not unique. We will follow its development closely and see how quickly it can grow that much-needed CULT community.
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