DigixDAO was the decentralized autonomous organization responsible for governing the Digix project, a network for tokenizing physical assets like gold, through managing funds allocation decisions. DigixGlobal, the legal company initially leading the project, released two tokens, the Digix gold token (DGX), which represents ownership of one gram of secured gold, and the Digix DAO token (DGD), which confered holders voting rights. DigixGlobal transfered project governance to DGD holders, who managed the project’s direction by voting on milestone-based proposals for how Digix’s treasury funds were allocated—these funds included some 466,648 ETH raised by token sale. Digix’s main goal for the DAO was to empower end users by actively involving token holders in shaping the asset tokenisation business’s direction Anthony Eufemio, Digix’s CTO, was the first person to send a transaction on the mainnet, and Digix was the first DAO crowdfunded on the Ethereum Network.
In January 2020, DGD holders voted to implement the 'Project Ragnarok', a smart-contract based treasury dissolution mechanism, with 96.7% of the token supply cast in support and 52 votes cast. Digix, which was against dissolution, abstained from the vote. The Ragnarok smart contract returned ETH to DGD holders at a rate of 0.19 ETH per DGD, and functionally ended the DAO, although Digix intents to continue support for its physically collateralized stablecoins.
Digix’s asset back tokens are supported by a proprietary Proof-of-Provenance protocol (PoP) that accurately tracks changes in ownership of the project’s stored gold. Details of an asset’s provenance are stored on integrated interplanetary file storage (IPFS) technology, and the network’s smart contracts are built on Ethereum. When an asset, like gold or platinum, enters Digix’s custody, a proof-of-provenance “card” is issued on the blockchain containing provenance evidence— vendor, custodian and auditor chain-of-custody signatures, purchase receipts, audit documentation, the bar’s serial number, depository receipts, the timestamp of card creation, etc. A “minter” smart contract can then be deployed to produce DGX tokens that are exchangeable over the Ethereum platform, yet which can also be sent to a “recaster” smart contract that removes the tokens from circulation and provides the user with a PoP card used to redeem stored gold.
Digix charges DGX holders a 0.60% demurrage fee for storing and securing the gold that backs the token, as well as a 0.13% fee on transactions. While the DAO was active, holders of DGD who actively participated in project governance were compensated with a portion of these fees. DigixDAO’s governance model had four roles:
- Participants. Are token holders who lock a minimum amount of DGD to participate in governance that quarter. Participants can comment on funds allocation proposals and their iterations, vote to initially fund a proposal, and vote to continue funding a proposal after a milestone deadline. Participants who complete KYC process can initiate proposals, which progress to a voting stage only after moderator approval. Participants taking an active role in governance earn non-transferable ‘quarter’ and ‘reputation’ points, which are used to determine the participant’s compensation and eligibility for moderator status.
- Moderators. Are participants whose ‘reputation points’ surpass a minimum threshold. Moderators are compensated from a separate moderator pool, and can earn ‘moderator quarter’ points used to measure activeness. Moderators are permitted to endorse pre-proposals, thus moving them to the draft phase, and to vote, amongst moderators, on whether a draft proposal should be scheduled for general vote.
- Founders. Are address controlled by the Digix team. Founders can assign or remove addresses from the ‘Policy and Regulatory Legal Department’ (PRL), as well as initiate two special classes of proposals: proposals for changing the parameters used in the governance model, and proposals for dissolving the organization.
- ‘PRLs’. Are founder-managed addresses permitted to pause or stop proposal funding on policy, regulatory, or legal grounds. Participant approved proposals do not receive funding if PRLs find the proposal in conflict. PRLs must update their opinions once before each funding round.
DigixDAO’s token, DGD, conferd holder's governance and contribution rights, while DGX is designed to be a currency whose value is stabilized by the collateralized gold. As compensation for their role in managing Digix, token holders that actively participate in governance received a portion of the organization's demurrage and transaction fees. Holders of DGX are entitled to repossess the collateralized asset in Singapore, where Digix stores its assets.
Two million DGD were issued during DigixDAOs token sale, which completed March 30, 2016 and raised 466, 648 ETH. The majority of tokens, 85%, were distributed to the public, with DigixGlobal retaining the 15%. Token holders will decide, as part of DigixDAO governance, whether to replenish DAO funds by issuing additional DGD. The amount of DGX tokens in circulation varies, with asset addition and redemption changing total supply.