The Elastic DAO Protocol is a governance protocol focused on fairness. The protocol was created by a team of DeFi natives, is 100% bootstrapped, and community-owned since day one. It combines different features:
A bonding curve
At its core, Elastic DAO is an elastic governance protocol that expands supply in response to the market demand and activity. The protocol focuses on allowing DAOs deployed on it to reward active participation and penalize bad actors.
The Elastic DAO Protocol model is based on two rules:
When an Elastic DAO is in high demand, the value and the token price will increase. All current participants end up with more tokens via positive rebasing, and each token is worth more.
When work is happening inside the DAO, the value backing each token decreases.
Every time the join function of ElasticDAO is called, the amount of ETH backing each of its governance token (EGT) increases. All members end up with more value. The total supply flourishes and is distributed to the token holders in the form of a proportional increase in number of tokens (rebase) and a rise in the price of the token.
Check out the steps to join ElasticDAO (link).
It is also possible to buy EGT on a Sushiswap AMM. Anyone who does so does not trigger a rebase, but has entered ElasticDAO as a member. Rebasing happens only when new tokens are minted via the join function.
ElasticDAO uses its treasury to continue developing the Elastic DAO Protocol and related tools (the platform). Every time there is activity inside the DAO, people get rewarded for their work by the shared treasury. This decreases the backing value of each EGT, making it cheaper for new members to enter ElasticDAO. New entrants expand the number of participants in the DAO, thereby making the ecosystem more decentralized. Overall, good decisions made regarding the future of the protocol will have the effect of increasing the vault's total value.
Elasticity comes from the market driven balance between the volume of work performed and the perceived future value of the protocol. During the early periods, while work is happening inside the DAO, it's easier for new members to join. Later, once the majority of the work has been completed and new DAOs are forming, entering becomes more expensive. This creates a natural equilibrium between decentralization and price speculation.
When people exit the DAO, they receive the amount of ETH backing each EGT burned. Burning EGT to redeem their value in ETH does not have a fee associated with it and can be done at any time. The value of the treasury and the total number of EGT outstanding decreases proportionally and is not associated with a negative rebase.
Furthermore, token holders have the option to sell their tokens on the Sushiswap AMM.