New Strategies for Web3 Project Expansion: Advantages and Practices of the subDAO Model

In the Web3 field, there are not many projects that can successfully expand into new businesses. Traditional projects often struggle to compete with emerging projects that focus on the new domain when venturing into it. However, the subDAO model seems to provide a solution to this problem. This article will take Magpie as an example to explore the application of the subDAO model in the expansion of Web3 projects.

Definition and Characteristics of subDAO

A qualified subDAO should possess the following characteristics:

1. Have independent tokens and autonomous expansion capabilities
2. The parent DAO holds a significant proportion of subDAO equity.
3. The relationship between both parties is mutually beneficial.

Taking Magpie's subDAO - Radiant's yield booster Radpie as an example. Radpie will issue $RDP tokens, of which 20% will be held by the Magpie treasury, and another 30% of the IDO share will be allocated to MGP. This means:

• MGP holders can share IDO profits
• MGP holders will enjoy the "dividends" of $RDP in the future.
• Magpie gains significant control over Radpie, thereby influencing the governance of Radiant.
• Radpie can quickly launch using the resources of the Magpie team.

Advantages of subDAO Model

1. Reputation Inheritance: subDAO inherits the reputation of the parent DAO, which is beneficial for rapid initiation and collaboration.
2. Growth Momentum: Independent tokens provide ample incentive budgets.
3. Narrative Update: subDAO keeps up with new trends, allowing the parent DAO to also stay in line with market trends.
4. Resource Circulation: Internal ecological linkage and resource sharing to enhance overall efficiency.
5. Leverage Effect: The parent DAO of the governance track can achieve leveraged governance through subDAOs.

Reputation Inheritance

New projects often face a trust crisis, but subDAOs can quickly establish market confidence by leveraging the credibility of the parent DAO. This intangible asset can be sustainably accumulated, paving the way for subsequent new subDAOs.

Growth Momentum and Narrative Update

Traditional projects often find themselves in a dilemma when launching new businesses: a large issuance of tokens may lead to a price drop, while not issuing new tokens makes it difficult to compete. The subDAO model solves this problem by issuing new tokens.

Taking StakeDAO as an example, although it integrates multiple projects, the effect is limited. In contrast, Magpie's subDAO Penpie successfully binds Pendle's hot narrative, bringing new growth points to the parent project.

Resource Circulation

The subDAO model promotes resource circulation within the ecosystem. For example, the Penpie/Pendle trading pool launched Wombat and considers participating in the Bribe through MGP, directing the incentive expenditure of PNP towards MGP holders. This internal circulation reduces net external expenditure and improves overall efficiency.

leverage effect

Taking Magpie as an example, it indirectly influences 25% of Pendle's governance rights by controlling 20% of Penpie's governance rights. This leverage effect is particularly evident in protocol governance, allowing the parent DAO to exert greater influence with a smaller equity share.

The Importance of Execution Capability

Although the subDAO model has bright prospects, its ultimate success still depends on the execution ability of the team. MakerDAO's Spark project is a counterexample; despite having six months, progress has been slow, and a true subDAO has yet to be formed.

Conclusion

The subDAO model combines strong execution capabilities to open new growth paths for Web3 projects. It not only provides ample growth budgets and fresh narratives but also achieves ecological linkage and resource sharing. As DeFi projects rapidly expand horizontally in this way, they may be able to form a complete system that competes with large centralized exchanges, driving the industry forward.