DAO means Decentralized Autonomous Organization. A decentralized autonomous organization is one in which the stakeholders get to actively participate in the decision-making process of that organization. To make such decisions, stakeholders need to acquire voting rights and this is easily done by owning a governance token. A governance token hence gives them a say in the decision-making process by allowing them to vote on certain outcomes or innovations in an organization.
Having said that the goal of a DAO is to actively involve members of the community or rather stakeholders in the decision-making process of that organization, the incorporation of DAOs into Defi protocols cannot be overstated; Paribus being one. To make the best decisions that would affect users as well as the vision of the project (what’s a project without its users?) decisions need to be made in an all-inclusive manner where stakeholders and the core team make proposals on how to move the project forward, what steps to take and even the handling of certain issues that might befall the team.
We live in a blockchain technology-inspired age where everyone deserves to know what’s happening at each point in time. The goal at Paribus is to hand over the decision-making process totally to the stakeholders and retire the core team in the next five years. That’s what we are talking about. Automation!
WHY THE CASE FOR A DAO FOR PARIBUS
The future of lending is not only decentralized but autonomous too. Being a Defi lending protocol requires that you mitigate risk, provide great services to your users and be at the forefoot as far as tech innovation in the lending space is concerned. These must be done collectively to ensure that the project runs smoothly and efficiently while meeting its targets and set goals.
By implementing DAO, Paribus can easily carry me and you along as decisions, innovations, and problem-solving strategies are developed. To do this effectively, everyone is allowed to chip in ideas that can either solve problems or bring innovations or certain tweaks to the protocol. Users are allowed to voice out their ideas, and proposals are made in that way consensus could easily be used to opt for the decision that is more common among the stakeholders. The fuel that powers this voting right of stakeholders in the Paribus protocol is the PBX token.
HOW IS PBX USED IN THE PARIBUS ECOSYSTEM
Like every governance token, stakeholders wield the right to vote and influence decisions on the Paribus protocol by owning PBX tokens. Okay, this is how it works. A problem comes up, or a user observes a flaw or something that needs to be worked on within the protocol, the community comes together to pool ideas. It is worth noting that this pool of ideas gathered together by the community is garnered into proposals on which the community votes and the best idea is forwarded and worked upon by the core team. This proposal is usually the one with the highest number of votes. The whole process of voting and implementation is run and initiated by a smart contract which makes it trustless, censorship-resistant, and autonomous.
Also on Paribus, when a user wants to collateralize an asset and borrow against it, let’s say an NFT, a fee called “borrow fee” is initiated into the loan. This would appear on your dashboard on the protocol. The “borrow fee” is already hard-coded into the smart contract to stand at 0.2% (unless changed later on by proposals). Stakeholders who hodl the PBX token would be rewarded as part of a fee-sharing initiative which would see stakeholders earn a proportion of the fees collected in the protocol. Stakeholders would be rewarded according to the number of PBX tokens they hodl.
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