DAO Coders to raise additional funds for development costs of its DAO-NET and Alternative to Tyranny (A2T) product lines would like to sell t-shirts, caps and other merchandise, with community generated slogans, memes and artwork, online using ADA with a publicly known portion of the purchase price being automatically redirected to the community creator.
The rapid volatility of ADA exchange rates are not suited to merchandise manufacturers who are dealing in fiat currency costs. A possible solution would be to price merchandise in a stable coin however since DAO Coders operates primarily using an ADA budget this would result in multiple cryptocurrency exchanges which are time consuming and inefficient.
The proposed solution starts with partnering with one or more merchandise vendors willing to accept payment in a stable coin or cryptocurrency that can be paired with ADA. If a vendor was willing to accept payment in ADA then this would greatly simplify this solution but none were found while researching this proposal.
DAO Coders will create a smart contract that will use a third party oracle to determine the exchange rate between ADA and the stable coin or cryptocurrency that the merchandise is priced in. The smart contract will provide the real time price to the purchaser along with the division of ADA between DAO Coders (or other DAO/organization), the content creator and the merchandise Vendor. If the transaction is executed then the smart contract will send the appropriate ADA to DAO Coders and the content creator while the vendor ADA will be directed through an appropriate exchange process before being sent to the Merchandise Vendor.
An example transaction:
- community member Amy creates a funny meme for DAO-NET and uses the smart contract to setup T-Shirt sales with a 2 ADA surcharge to herself as the content creator and a 2 ADA surcharge to DAO Coders the organization which she wishes to support on each sale.
- Bob's Custom T-Shirts agrees to the smart contract with a base purchase price 20 USDT (Tether)
- Cathy wants to buy the funny meme T-shirt from Bob's Custom T-Shirts using the smart contract
- The smart contract checks with the oracle and determines that 20 USDT at current exchange rates is 24 ADA
- Cathy sees a purchase price of 28 ADA with 24 ADA going to the vendor, 2 ADA going to the Creator and 2 ADA going to support DAO Coders plus the transaction fee
- Cathy agrees to the purchase which sends 2 ADA to Amy's Shelley address, 2 ADA to DAO Coder's Shelley address and 24 ADA to another smart contract that converts the ADA into 20 USDT and sends the USDT on to Bob's wallet
The proposed smart contract is intended to be readily usable by any DAO within DAO-NET as a means of fund raising and as open source software could be used by other Cardano community members.
The long term strategy is to have multiple income streams for DAO Coders to support the DAO-NET and A2T product lines including in this case merchandising revenue. This same merchandising solution is also intended to be used by DAOs within DAO-NET and game developers within A2T to fund their development costs. Third party organizations will also be welcome to use the solution and they will be encouraged to direct a small portion of their sales towards future enhancement and support costs of the solution however it will not be a requirement.
Raising funds for development costs addresses the challenge of meeting real business needs while most of the key metrics in the challenge directly align with the project including # of Cardano Dapps supporting business solutions, # of existing companies proposing Cardano-based solutions, # of partnerships / joint ventures created between companies, $ additional funding from other sources for the funded proposals and % growth in mainnet / testnet activity due to business solutions.
The outcome of the project will be communicated in a Town Hall and professionally marketed if the DAO-NET & A2T Marketing proposal is funded.
The use of a third party oracle to determine the exchange rate between ADA and a stable coin or other cryptocurrency and the amount of time that price is valid is a very large challenge, as is automating the process for converting ADA and redirecting the new currency to the vendor.
Alternative solutions may be required for instance using fiat currency merchandise pricing and an oracle for current ADA pricing in that fiat currency to determine the real time ADA price. ADA could then be transferred to the vendor who would need to manually convert the ADA to fiat currency in a timely fashion.
The objective is to automate the process as much as possible to be close to real time and minimize pricing volatility risk. It is doubtful that the process of converting ADA to fiat currency can be automated which is why the conversion to a stable coin is the preferred option.
Djed may offer some solution options that will simplify this proposal and these will be actively investigated as part of the project.