Umoja’s Initial Freelance Offering
Using DAO bounties to bootstrap governance token liquidity
TLDR: Umoja’s $rUMJA token will be distributed via an incentivized bounty payment system, giving token holders higher bounty application preference & larger bounty payment bonuses.
Umoja is a decentralized credit protocol that crowdsources loan funding and collateral to provide affordable financing to African institutions and retail borrowers. Our purpose is to ‘democratize DeFi credit’ globally.
To do so, the protocol’s token, $UMJA, plays a major role. The token ensures that loan underwriters (i.e., “Approvers”) are financially aligned with their loan approval decisions, helps incentivize stakeholders to lock their lending liquidity in the protocol, and helps protect collateral providers from borrower default risk.
However, our core development team are strong believers of Sheria Liquidity (SL), which refers to a process that ensures undeniable utility of the protocol’s governance token, thus making it a digital commodity, and not a security.
But how does Umoja bootstrap liquidity from its token while also remaining SL compliant? Simple, by using a pre-liquidity strategy that introduces the Initial Freelance Offering (IFO) model.
Initial Freelance Offering (IFO)
Sometimes, its best to go back to the basics. To do so, look nowhere but the pragmatic, real-world needs of your community and those they seek to help.
Thus, we know a few things:
- A traditional token launch is not Sheria Liquidity compliant. We know that just releasing the token, and setting up a liquidity pool would violate our Sheria Liquidity tenants. Thus, we need to find an alternative approach.
- We’re entering a global recession. We know that the world has been gradually slipping into a global recession, particularly as the American federal interest rate has increased 1,900% since the start of the COVID-19 pandemic, which has raised the cost of capital globally & caused inflation.
- All communities need income. We know because of increased financial pressures, now, more than ever, is it important for people to find work to maintain their financial wellness.
Given the aforementioned constraints, our team came up with a way to bootstrap protocol liquidity while sustainably serving the financial wellness of our community: An Initial Freelance Offer (IFO).
What is an IFO?
An IFO is a liquidity-bootstrapping model that maintains creditability of the launching token’s utility, by using the token as a medium of exchange for completing the DAO bounties.
Simply put, IFO’s launch tokens by paying DAO-bounty freelancers in the protocol’s native token. More specifically, IFO’s use future-of-work platforms, such as DeWork, as a token distribution mechanism that ties earning high liquidity tokens (such as ETH & USDC) with earning illiquid tokens (such as the protocol’s launching token) in exchange for completing protocol (DAO) bounties.
The secret ingredient? DAO-bounty freelancers that have more of the illiquid, launching token earn a X% premium on all bounties they complete, and are provided priority application status over those who don’t hold tokens (or hold less).
The tokens paid out to bounty hunter should come from the project’s “Community Airdrop” and/or “Reserve” token allocations (in our opinion).
IFO provide an innovative way to generate real-world value for DAO community members, particularly at the infancy stages of the project. Here’s a few of the benefits:
- Straightforward Jobs. Community members can find an easy source of income where tasks are small and straightforward to complete.
- No Gimmick Income. Community members earn liquid tokens (e.g., USD, ETH, etc.) as payment for task completion, but also receive a bonus amount of illiquid tokens (i.e., the protocol’s token) for being active in the community. The only then the community member must provide is their time to complete the task.
- Increased Protocol Productivity. The more DAO tasks that are completed, the more likely that the protocol advances toward its goals (if tasks are aligned correctly) and its ecosystem grows.
- Creates a Skilled DAO Membership. Good bounties attract a talented DAO community, as only verified DAO community members can access and complete the Bounties.
- Increased Liquidity. The utility of the token immediately becomes earning a premium payment on completed tasks (unlocking task bonuses), which increases natural demand for the token. With a large enough community of freelancers, the token’s liquidity can substantially increase over a short amount of time because there will always be demand for the token to earn more money in exchange.
Eventually, the freelancer community will get large enough to begin transacting within itself (i.e., purchasing “work bonus tokens” from each other) at a price that is below the increased amount of pay they stand to gain by having more tokens. IFO’s don’t need to have arbitrarily set time periods, and, even better, protocol token liquidity increases with bounty demand and thus, token market value (i.e., price). The token cannot be called a security, as each participant is literally working to access it (it is only initially distributed through bounty payments), and tokens exchanged between stakeholders is a retail transaction of its own.
Umoja will be launching its pre-liquidity token, $rUMJA, via the world’s first Initial Freelance Offering. The $rUMJA token will be redeemable for $UMJA tokens once they launch at a 1:1 ratio, and all $rUMJA tokens distributed will be debited from the protocols initial token supply (specifically from the Reserve and Community Airdrop token allocations).
The IFO Flywheel
1. Complete DAO Bounties to Earn Money. The protocol DAO (or core developer team if the DAO hasn’t been set up yet) ****should create many bounties to accelerate the construction and growth of their open source ecosystem. There should be a budget of high liquidity tokens (e.g., BTC, ETH, USDC, DAI, etc.) to serve as the base payment method for each bounty, and a budget of protocol tokens that will be disbursed as bounty bonuses (on each bounty).
2. Attract DAO Members (Bounty Hunters). More retail investors will be attracted to work in the DAO’s ecosystem to bounty hunt. The vast amount of bounties should be targeted at expanding the DAO’s community to have an exponential community growth effect. The psychology of the IFO DAO Growth flywheel should be the following:
- Want to earn money?
- Complete a bounty.
- *Bounty instructs to invite others who want to earn money.
3. Disburse Protocol Tokens for Work. As bounty hunters complete bounties and grow the community by doing so, they are also increasing the circulating token supply of of the protocol token. At an early stage, the tokens are seen as a value-less bonus.
4. Create Exclusivity Using Circulating Protocol Tokens. The DAO should provide token holders with exclusivity rights to increase the FOMO of non-token holders (i.e., verified community members not completing bounties). Examples of potential rights may include:
- Token Gated Discord Channel Access
- Higher Bounty Base Pay (Pay token holders XX% More on the same bounties!)
- Provide Token-Holding Bounty Hunters with Bounty Application Preference
5. Increase Pre-Liquidity Demand. Non-token holders will develop FOMO and do more bounties for both more base pay and protocol tokens.
Join the Financing Revolution & Become Shujaa
Umoja can only reach its vision of providing over $100 billion in MSME financing through partnership and community participation. To join the Umoja DAO and become a shujaa (i.e., “warrior” in Swahili), learn more here.
