Kalium DAO Pricing

Contract Name: Kalium DAO
Version: 1.0
License: MIT
Review Date: [Insert Date]
Reviewed By: [Insert Name or Firm]

1. Overview of DAO Logic

The Kalium DAO smart contract enables decentralised governance through the issuance and use of fungible governance tokens. Participants purchase tokens using Ether, which entitles them to vote on proposals. Proposals contain fractional allotments of DAO-controlled funds, which are disbursed based on the level of support.

The contract design focuses on:

• Low operational gas cost.
• Accessibility to non-blockchain members.
• Compact data structures (e.g., bytes6, uint32) for gas savings.
• Batch operations (e.g., batch voting) to reduce the frequency of transactions.

2. Cost Points

This section outlines the primary cost-generating operations within the contract. These can be divided into initial, recurring, and conditional cost types.

Initial Cost Point

Recurring Cost Points

Conditional Cost Points

3. Gas Cost Table (to be populated)

[$^\dagger$]: Reoccurring use of function reduces overhead.

[$^{\dagger\dagger}$]: Votes with all False elections result in lower gas usage due to skipped computation of allotment.

4. Total Summary of Costs

One-Time Costs

• Deployment:
  Initial cost to deploy the contract. Only occurs once. Should be considered as capital expenditure in DAO launch budgeting.

Ongoing Operational Costs

• Token Purchases:
  Paid by individual members. Not borne by the DAO itself.

• Proposal Creation:
  Paid by the owner; expected to occur regularly depending on the governance cadence.

• Voting (Batch):
  Significant recurring cost. Scales with:

  • Number of voters in the batch.
  • Proportion of true votes.
  • Frequency of proposals.

• Withdrawals:
  Low-frequency cost tied to DAO fund movement. Should be minimised through strategic timing.

• Token Price Adjustments:
  Rare. Only required in response to economic/demand changes or inflation control.

• Allotment Rate Adjustments:
  Rare. Only required in response to regulate expected end of DAO life span.

5. Operational Estimates

Contract Deployment

• Occurs: Once
• Cost Responsibility: Contract owner
• Gas Impact: Highest single-time cost

Token Purchases

• Occurs: Any time a user sends ETH
• Cost Responsibility: Member
• Volume: Unbounded, demand-driven
• Considerations: Token acquisition can be batched in UI layer to reduce user costs

Proposal Creation

• Occurs: Once per proposal
• Cost Responsibility: Administration
• Volume: Governance-dependent
• Considerations: Proposals should be bundled where possible

Batch Voting

• Occurs: Once per proposal
• Cost Responsibility: Administration
• Volume: Recurring
• Considerations: Optimise batch sizes to balance gas and coverage

Fund Withdrawals

• Occurs: As needed
• Cost Responsibility: Administration
• Volume: Periodic
• Considerations: Accumulate sufficient discretionary funds before withdrawal

6. Critical Mass Analysis

Breakeven Point

To sustain DAO operations, the income from token sales and value unlocked via proposal allotments must exceed gas expenditures incurred by the owner.

Factors Influencing Critical Mass:

• Token price (see below)
• Number of members
• Voting frequency [Epoch Cadence]
• Gas prices on the network [Parasitic Load]
• Expected lifespan of the Kalium DAO

You may define a minimum required token supply or member base to justify DAO operational sustainability.

7. Price of Token

• Initial Token Price: Set in constructor; minimum value enforced to be ≥ 1 Wei.
• Adjustability: Administration can update price via updateTokenPrice()
• Strategy Notes:
  • A low price encourages participation but reduces per-token value
  • A high price increases treasury funding per purchase but may discourage user onboarding
  • An initial token price must be set to balance these considerations and to maximise parasitic load margin for the target contract lifespan

8. Allotment Pricing

• Initial Allotment Rate: Set in constructor; maximum value enforced to be 10% of DAO total balance.
• Adjustability: Administration can update allotment rate via updateAllotment()
• Function: Governs how much Ether is allocated to discretionaryFunds upon proposal approval
• Implications:
  • Larger allotments enable faster treasury accrual
  • Smaller allotments preserve token value and slow fund release
  • Used to manage proposal fund allocation and control burn rate of total contract balance

Initial DAO Pricing

Epoch

The Epoch is defined as a single proposal - voting execution of the Kalium DAO. This includes and sub functionality which is required in order execute a single election on the Kalium DAO. In order to reach an estimated life span of two (2) years an estimated 50 Epochs need to be completed (assuming a standard rate of one proposal fortnightly).

Parasitic Load

The parasitic load is defined as the sacrificial component of the DAO’s total balance which is required to maintain the operation of the DAO.

This metric is determined by summing the total cost elements in one epoch:

Where:

• $B$ is a single batch of votes
• $n$ is the number of batches in the epoch

Allotment rate

The allotment rate is the rate at which the DAO funds are allocated to the discretionary fund for withdrawal. this allotment feature is a measure of contract security as it regulates how fast funds are depleted form the contract and how much of the DAO’s asset value is allocated to a given proposal. The amount that is allotted to the discretionary fund is proportional to the number of active votes on a proposal and the number of votes in-favour of the active proposal. this ensures funds are distributed based on public support and popularity. If funds do not receive significant attention or approval then the allocated amount to be withdrawn is restricted.

Token Price

Token prices are set based on the careful considerations of economic factors in order to attract a significant member count whilst still providing sufficient funds and contract capital.

Pricing The Kalium DAO

Using these pricing factors a careful financial operating window can be achieved. Applying the known gas rates and keeping the maximum batch size at 300 members, the following parasitic load profile can be obtained.

Using the parasitic load per epoch and knowing that there will be an estimated 50 epochs until maturation, the minimum token price can be calculated.

[$^{\dagger\dagger\dagger}$]: Assuming a Gas rate of 1 Gwei for simplicity

Additionally given the maturity date the minimum average target allotment can be determined in order to deplete the DAO contract funds by maturity.

This yields a minimum average allotment rate of $2.00\%$. Although Allotment rates can vary depending on the current demand for funds, cost of represented proposal and modified contract maturity.

Appendix

Key Considerations

• Gas Optimisation: Highly optimised contract using manual error handling and short identifiers
• Security: Only Administration can move funds; user risk limited to token purchasing
• Upgradeability: Not upgradeable; immutable once deployed
• Scalability: Capable of handling moderate user bases via batched voting and compact state