Introducing another pillar of the Hedgey protocol, DAO-to-DAO (D2D) token swaps — a huge step toward DAO-DAO interoperability.
One of the major challenges that many DAOs face is the fact that their treasuries mostly consist of their own native token. If not done correctly, asset diversification can lead to dumping of the native token on the open market, resulting in a negative price impact.
While we initially though the strongest driver for D2D token swaps was treasury diversification, it became clear that DAOs view these swaps as a powerful collaboration tool to invest in other DAOs and participate in each others governance processes.
A DAO-to-DAO (D2D) token swap is exactly what it sounds like, a token swap between two DAOs. By trading native tokens with each other DAOs can: diversify their treasury, participate in each other’s governance and form strategic alliances thus, potentially yielding more powerful influence on the entire DeFi ecosystem. A key component of a D2D swap is that each DAOs tokens avoid the open market.
DAOs like GnosisDAO, Alchemix, Thales, Saddle, Sperax, Layer2DAO, and Agave have all been early adopters of DAO-to-DAO (D2D) swaps through Hedgey. Today, Hedgey V2 DAO-to-DAO swaps is available to everyone.
Hedgey D2D token swaps let DAOs and tokenized communities mutually swap tokens without an escrow. D2D swaps allow DAOs to participate in each other’s governance processes and staking opportunities, along with signaling their commitment to the partnership itself. DAOs can use our product to swap any amount of any two tokens and optionally lock them using Hedgey’s locked token NFT protocol. Locked tokens can retain Snapshot voting rights, be used for NFT-gating, along with many other benefits.
Here’s a high-level summary of the key step in a DAO-to-DAO token swap.
How to kick off your DAO’s next massive partnership
First step, find a DAO you’d like to swap with and join our DAO Builders Alpha group to start collaborating with a flurry of top-notch DAOs.
Once you have a swap lined up and ready to go, decide which DAO will initiate the swap. If your DAO is kicking off the swap, head over to our app.
From our app you’ll have three options to connect your wallet:
Our dedicated Safe app, directly through your Gnosis Multi-sig wallet
Once your wallet is connected, there are a few more details you need to fill in:
Choose the token and the amount of the token you’d like to send
Choose the token and the amount of the token you’d like to receive
Enter the wallet address that you’ll be swapping with
Choose whether swap unlocked or locked tokens
If you choose to swap locked tokens, select an unlock date
Upon completion of the swap, each DAO will receive NFTs that represent your locked tokens
After the unlock date, the NFT can be burned in exchange for the underlying tokens
All that’s left to do is approve the token you are sending and initiate the swap. After the transaction is complete, you’ll see the screen below and can send the link provided to the DAO you are swapping with.
You can view or cancel the swap you’ve created on the My Swaps page, and the other DAO will be able to complete the swap on that same page on our UI.
Once the swap is complete, you’ll be able to view the swap under the Historical Swaps section on the My Swaps page.
If your swap is locked, you’ll be able to view your locked tokens in your Portfolio. You can see an example of these NFTs below from the first DAO-to-DAO swap on Arbitrum between Layer2DAO and Sperax.
The first D2D token swap on the Hedgey protocol was executed between Gnosis DAO & Agave, executed by third-party Karpatkey. Combined $2.4 million in $GNO & $AGVE was exchanged and executed through a Snapshot proposal (you can also view the on-chain event here).
After this first swap, we saw DAOs want to use Hedgey DAO-to-DAO swaps to create powerful collaborations with other DAOs.
The Layer2DAO community came in strong, participating in the first D2D swap on Arbitrum, with Sperax, and the first on Optimism, with Thales.
The Hedgey protocol provides an array of unique tools that alleviate this problem amongst DAOs, and DAO-to-DAO token swaps is just the latest tool under the Hedgey umbrella. Hedgey helps DAOs prosper.
We’re pulling in tons of awesome DAOs into our Hedgey DAO Builders Alpha group. Hop in, introduce yourself, and get collaborating! You can also hop in our Discord and chat more with the team.