►
Description
Part 1 of lecture "dxDAO - the First Crypto Exchange Run by a DAO".
This lecture covers the following topics:
- principles of a dutch exchange
- DutchX mechanism and open protocol
- GNO, OWL, MGN tokens in the dxDAO token economy with specific purpose
- interfaces for the protocol (slow.trade, fairDEX)
Learn more about dxDAO
https://blog.gnosis.pm/introducing-the-dxdao-27ec4301eced
https://dxdao.daostack.io/
https://blog.gnosis.pm/the-dutchx-take-part-in-the-arbitrage-opportunity-eeacc20ef6f
Lecture recorded at TokenEngineering Meetup Berlin in March 2019. https://www.meetup.com/Token-Engineering
—
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——
About Token Engineering:
The decentral nature of blockchain systems allows to rigiously rethink how the web economy works in the future. Economic incentives, tokens, reward value contribution and ensure a cryptoeconomic network to operate smoothly and thrive over time.
Creating such incentive-based tokenized ecosystems is hard.
How do we define the network objectives? How do we manifest that intent with token rewards and other crypto building blocks? How do we simulate and validate the design? How do we anticipate attacks and respond to them? How do we update the protocols? Given that these systems are wildly powerful, how can we better take responsibility for their design and deployment?
Token ecosystem design is becoming a new engineering discipline: Token Engineering. This implies a body of theory, practice, tools and a sense of responsibility. We aim to do this collectively as a community in a decentralized, permissionless, open-source fashion that all can contribute to and all can use.
A
Presentation
today
will
be
basically
about
two
systems
and
a
bunch
of
tokens,
two
systems
that
will
interact
with
which
each
other
so
one
hand
we
have
Dutch
X,
which
basically
is
a
decentralized
exchange
and
I
will
give
a
short
overview
of
how
it
works,
and
then
the
other
one
is
a
Dao
here.
Just
as
a
side
note,
I
will
come
back
to
this
once
in
a
while.
So
in
all
of
those
systems,
there
are
all
those
those
four
tokens
involved
in.
A
In
addition,
we
have
reputation,
which
is
not
a
token
I
will
kind
of
mention
the
tokens
like
one
time
upfront
and
but
I
of
course,
will
will
again
go
back
to
them
and
and
I
think.
The
main
topic
of
today
would
be
why
all
those
tokens,
what
are
the
individual
goals
of
those
tokens?
What
how
are
they're,
designed
and
kind
of
specifically
what
patterns
can
we
well?
Can
we
see
I,
think
I?
A
So
quite
quite
a
while
back
when
token
sales
were
not
a
big
thing
at
all,
though
back
then
they
were
like
maybe
five
or
six
just
happened,
and
until
that
until
then,
so
the
very
initial
idea
of
gnosis
tokens
was
to
build
a
membership
token.
So
something
like
if
you
are
participating
in
funding
it
and
you
have
like
you-
are
a
member
in
a
way
you
have
a
membership
token.
Then
you
can
use
it
for
free.
So
you
just
need
to
hold
this
token.
You
can
use
it
for
free
because
you
already
paid
we
introduced.
A
Used
to
actually
pay
fee
so
in
a
way
it's
kind
of
metering,
the
the
amount
or
the
the.
How
much
you
can
use
your
your
your
Gino.
So
so
you
have
Gino,
it
constantly
generates
those
all
those
those
free
credits
and-
and
in
that
sense
you
we
still
have
the
initial
premise
you
once
by
the
Gino
you
constantly,
you
constantly
can
generate
some
owl
and
in
that
sense
you
can
then
use
the
owl
in
per
net
or
yeah.
A
B
A
The
initial
idea
was
again,
you
have
Gino
and
you
can
use
it
for
free,
but
but
then
again
we
needed
to
have
some
form
of
you
can't
use
it
with
you.
You
have
some
restrictions
on
how
much
you
can
use
it,
and
that
is
measured
in
owl.
But
of
course
the
the
ideas
is
the
the
ideas,
of
course,
that
users
of
the
system
they
should
have
an
interest
in
in
holding
and
if
you
want
use,
use
genome.
A
So
those
two
tokens
are
a
little
bit
outside
of
of
they.
They
play
a
small
role,
role
or
specifically,
owl
plays
ro
in
in
the
in
the
Dutch
exchange,
but
those
those
two
days
also
basically
our
our
company
tokens
and
we
do
a
bunch
of
things.
We
do
a
wallet,
we
do
an
exchange,
we
do
prediction
markets
and
wherever
there's
a
fee,
all
will
always
be
used.
So
kind
of
the
main
focus
of
this
presentation
will
be
yeah,
those
two
actually,
but
still
they,
since
they
play
a
role.
A
I
wanted
to
give
this
as
an
intro.
So
that's
exchange.
What
is
the
Dutch
exchange
or
stage
X
M?
It
is
a
trading
protocol,
a
trading
protocol
for
well,
usually
20
tokens
on
etherium,
but
not
kind
of
or
the
novel
yeah.
Another
thing
is
that
it
uses
option
mechanisms
so
most
trading
protocols
that
you
might
be
familiar
with
use
like
simple
limit
orders
or
continuous
double
option
to
be
precise
and
as
soon
as
the
new
order
comes
in
and
it
overlaps
well,
then
you
you
find
a
price.
A
So
this
is
a
continuous
double
auction
and
that
has
been
trite
or
that
people
are
using
that
for
Texas
for
decentralized
exchanges,
but
they
are
a
bunch
of
issues
with
this
model
applied
for
decentralized
exchanges
and
and
and
roughly
I
think.
The
main
reason
is
that,
or
one
of
the
main
reasons
are
there's
this
front-running
issue
just
just
to
get
an
understanding
who
has
heard
of
or
who's
aware
of,
the
front-running
issue
of
decentralized
exchanges,
okay,
so
yeah.
A
So
so
one
issue
is:
if
you
submit
your
order,
it's
it's
broadcasted
on
the
on
the
blockchain,
and
that
means
anyone
can
see
it
already,
but
it's
not
yet
executed.
So
if
I
say,
okay
want
to
buy
a
lot
of
tokens,
what
whatever
token
token
a
then
potentially
my
orders,
this
information
already
moves.
The
price
up,
I
I
buy
a
lot,
so
it
moves
the
price
up,
but
the
issue
is
in
a
decentralized
world.
I
broadcast
is
order,
so
anyone
can
see
it
and
act
on
that
information
already.
A
Definitely
do
that
if
you
minor
so
long
story
short,
is
the
dutch
auction
works
different
and
tried
the
tries
to
address
those
those
problems,
so
the
Dutch,
the
Dutch
exchange,
tries
to
solve
this
issue,
bye-bye
yeah
using
auctions.
The
other.
The
other
issue
here
is
that
it
costs
you
on
on
on
decentralized
exchange.
It
usually
costs
you
to
create
an
order,
so
even
something
that
normally
on
centralized
exchanges
you
everyone
is
used
to
that
it
is
free,
creating
an
order.
It
usually
doesn't
cost
you
anything
just
if
it's
if
it's
matched.
A
If
you
would
directly
build
this
on
on
aetherium,
then
even
placing
an
order
is
still
a
transaction
still
cost
gasps,
there's
costs
with
it
and
because
their
costs
was
that
that
means
that
market
making
is
just
much
more
expensive
so
usually
or
so
far.
The
decentralized
exchanges
that
we
have
seen
have
very
low
liquidity.
High
spreads,
they
say,
I
want
to
sell
token
a
and
maybe
you're
also
a
bunch
of
others
want
to
sell
token
a
then
all
of
us.
A
So
it
kind
of
tries
to
sell
for
the
highest
price.
No
one
wants
to
buy
so
it
goes.
It
goes
down
and
down
the
price
and
over
time
and
that
those
are
hours.
So
after
six
hours
it
reaches
the
previous
price.
That
is
roughly
the
market
price
over
time.
Bidders
that
say,
okay
I
want
to
buy
those
tokens
a
they,
they
can
submit
a
bid
and-
and
if
you
would
submit
your
bid
here,
then
the
the
point
in
time
where
you
submit
your
bid
defines
defines
the
price.
A
Submit,
let's
say:
yeah
five,
five
II,
sir.
The
price
then
continues
to
get
well,
it
continues
to
get
cheaper.
There
are
more
and
more
bidders
at
some
point
there
enough
bidders
to
buy
all
the
tokens
and
then
the
auction
is
cleared
and
we
have
a
single
clearing
price.
So
everyone
who
participated
either
as
a
seller
or
as
a
bidders
they
all
get
the
same
price.
A
So
the
advantages
of
this
mechanism
are,
are
they
they
don't
have
an
issue
is
from
trying
and
they
because
it's
kind
of
such
a
slow,
slow
process
and
that's
that's
by
the
way,
the
big
disadvantage
it
takes
quite
a
long
time
to
trade,
but
the
advantages
here
is
that
it
can
has
enough
time
to
to
well
come
up
with
with
enough
liquidity
and
some
something
we
did
recently
what
we
are
doing
right.
We
are,
we
we
well,
we
did
already
for
larger
auctions
and
we're
doing.
Six.
A
More
is
1
million
died
challenge,
so
we
are
doing
in
10
10
auctions,
and
we
wanted
to
demonstrate
that
viruses
process.
It
is
possible
to
sell
currently
$100,000
worth
of
died
in
one
auction
and,
if
you
think
about
it,
that's
basically
like
putting
$100,000
market
order
into
into
into
an
exchange
and
currently
there's
no
decentralized
exchange
whatsoever
that
could
handle
$100,000
market
order
without
moving
the
price
easily
by
5
to
10%,
because
there's
not
just
just
just
not
enough
liquidity.
Here
we
demonstrated
that
we
could
place
$100,000
market
order
and
yeah
over
time.
A
B
A
Further,
it's
a
rough
week
here,
ok
cool,
then
yeah,
I,
I,
guess
I.
Did
there
already
a
bit
of
the
discussion
we
kind
of
wouldn't
make
a
statement,
whether
that
is
better
or
not
straight
up.
So
it's
it's
very
slow.
That's
a
big
disadvantage!
The
advantages
are
front-running
resistant,
completely
decentralized,
there's.
No!
All
of
that
runs
completely
on
smart
contracts,
there's
no
operator
or
relay
or
whatsoever.
A
So
every
time
you
trade
on
this
exchange-
and
specifically
you
trade
one
easier
worse
of
something
so
either
directly
one
either
or
corresponding
amount
in
tokens,
a
new
Magnolia
token
will
be
generated
or
minted.
So
there's
an
unlimited
amount.
There
will
always
is
people,
trade,
some
more
more
and
more
will
be
generated
and
what
it
does
is
it
reduces
your
fee
or
more
specifically,
the
liquidity
contribution,
how
it's,
how
it's
called
so
it
the
more
you
have
of
those
Magnolia
tokens.
A
A
So,
in
the
end,
the
Magnolia
token
is,
of
course,
in
token,
to
incentivize,
specifically
market
makers,
because
they
they
then
pay
the
lowest
fee,
which
or
more
specifically,
they
even
get
the
feet
or
get
some
fees
where
they
pay
a
negative
fee,
because
in
in
the
system
of
the
Dutch
exchange,
all
the
fees
that
are
take
are
distributed.
The
mountains,
the
other
traders.
That
means
effectively,
if,
if
all
of
you
or
if
all
of
you
pay
Hanks
fee
and
all
of
you
pay
a
lower
fee,
then
it's
all
put
into
the
same
pot.
A
A
Does
it
make
sense
if
please,
if
there
are
questions
or
is
there
yeah,
just
just
ask
one
thing
I
want
to
highlight
is
we
could
have
choosen
a
design
where,
whereas
the
Magnolia
holder,
you
passively,
earn
a
fee,
so
you
could
have
an
ownership
or
some
token
where
well
I
mean
simplest
one.
Is
you
have
something
like
and
yeah
ownership
token
and
those
who
who
have
it
just
get?
If
you
have
5%
you
get
5%
of
the
fees.
A
B
A
So
so,
in
one
option
in
one
option,
the
fees
or
the
fees
are
distributed
to
everyone
within
the
auction.
So
so
you
always,
you
always
buy
the
folder.
You
always
only
get
something
if
you
participate
and
in
the
way
you
you
are
kind
of
are
getting
a
net
benefit
is
by
just
having
a
very
low
rate.
You
have
to
pay
into
the
pot,
but
you
will
get
something
out
of
the
pot,
but
you
never
get
something
out
of
the
pot
of
you.
If
you
don't.
C
A
I
mean
if
you,
if
you
do
nothing
with
them
first,
you
don't
get
any
fees,
because
you
only
get
some
if
you
participate,
but
also
your
Magnolias
will
be
in
a
way
dilute
it
away
because
they
are
always
continuously
once
minted,
and
your
fee
rate
in
the
end
depends
on
your
percentage
of
how
much
manolio
you
have
of
the
total
supply.
So
if
you
have
wealth
10%
and
you
don't
try,
then
you
of
course
over
time
will
only
have
5%
of
them.
D
A
D
A
The
thing
you
can
do
in
theory
is
participate
yourself,
as
a
buyer,
so
so
I
mean
basically
buy
back
your
own
tokens.
If
the
price
goes
too
low,
the
its
yeah
it
I
mean
in
the
end
our
answer
is,
of
course
or,
but
we
try
to
try
hard
to
bring
enough
liquidity
and
we
do
to
make
sure
early
enough
or
basically
went
hit
market
price
that
that
there
are
enough
buyers.
A
The
the
the
big
advantage
is
that
it
is
that
it
is
a
credible
commitment
if
you're
selling
here
so
so
our
our
thinking
is
as
a
market
maker
you
have.
If
someone
sells
here,
then
you
have
a
guarantee
that
this
demand
for
selling
will
come.
So
the
market
maker
can
already
start
trading
on
other
exchanges
and
and
and
kind
of
have
the
guarantee
that
this
will
definitely
comment
and
the
user
can't
just
just
cancel
it.
So
we
would
say
there
are
advantages
by
yeah,
making
it
not
not
possible
to
cancel.
A
So
we
can't
currently
trade
a
security
tokens
here
or
basically
we
we
don't
have
the
we
don't
have
any
additional
yeah.
We
don't
do
kyc,
we
don't
do
those
things.
I
think
it
is
possible
to
to
to
to
build
kind
of
stuff
rounded
and
it
have
something
like
an
operator,
the
that
would
make
sure
that
those
requirements
are
fulfilled.
A
So
in
the
end,
it's
up
to
those
who,
who
adds
a
token
to
make
sure
they
are
it's
in
a
way.
There
is
responsibility,
whether
the
token
is
a
security
or
not.
We
are
not
running
the
contract.
I
mean
we
developed
the
contract,
but
there
is
nothing.
We
have
no
role,
we
have
no
role
whatsoever
in
in
operating
or
is
it
we
have?
No,
we
we
don't
have
kind
of
special
upgrade
rides
or
we
don't
have.
We
don't
I
mean
there
is
in
other
decentralized
exchanges.
A
A
So
one
is
the
smart
contracts
and
we
would
say
it's
an
open
protocol
like
like
cerium
and
people
can
do
with
this
protocol,
whatever
they
want
on
top
of
it,
there
is,
there
are
well
websites
that
are
operated
and
I.
Well,
can
maybe
sure
I
mean
okay.
I
can
show
you
the
front
end.
How
that
trading
looks
like
this
is
something
we
can
do
right
now
demo.
A
Maybe,
however,
they
can
also
do
it
later.
I
I
mean
you
can
yeah
little
bit
short.
You
show
it
I
mean
so
so
yeah.
This
distinguish
two
things.
So
one
is
the
protocol
itself,
but
the
other
one
is
website
and
we
have
actually
or
yeah
well
website,
which
obviously
has
an
operator
or
someone
hosting
it
and
and
on
this
website,
of
course,
we
have
or
it's
it's
it's
it's
a
company.
We
are
closely
related
with
with
and,
of
course,
this
website
has
its
own
rules
so
I'm
just
making
this
distinction
between
the
protocol
itself.
A
There
are
different
interfaces
to
this
protocol
and
those
interfaces,
those
websites
they
are
centrally
hosted
and,
of
course
operate
of
website.
They
have
the
legal
obligations
and,
for
example,
I
know
this.
This
operator
would
never
they
have
their
own
whitelist.
They
only
show
specific
tokens,
although
in
the
contract
anyone
could
add
any
tokens,
but
they
of
course
make
sure
that
they
only
list
non
security
tokens
here
and
actually
they
do
block
some
some
countries
and
and
make
sure
they
meet
all
the
legal
requirements,
so
I
mean
just
show
it
shortly.
A
I
can
kind
of
just
specify
here
what
token
I
want
to
deposit
and
what
token
I
want
to
receive,
or
what
talk
and
I
want
to
sell
and
what
token
I
want
to
receive.
I'd
just
specify
now
I
want
to
deposit
easier
and
perceive
dowse
tech,
tokens
or
Gen
tokens,
which
will
also
play
a
small
role.
Here
we
go
further
yeah
and,
and
then
some
submit
that
and.
A
A
A
Yeah,
and-
and
that's
it
so
here
by
the
way
you
can
see
what
I
described
so
I
participated
was
Easter.
Oh
I
do
have
all
tokens,
so
those
tokens
so
I
could
use
them
to
pay
half
of
my
liquidity
contribution.
You
can
yeah
in
this
protocol.
You
can
use
was
this.
You
can
reduce
your
fee.
Was
this.
You
can
pay
that
to
half
of
the
fee,
but
what
I
just
did
and
now
I
just
either
the
option
has
not
yet
started.
A
Yeah
and
now
I
see
okay
option
would
start
soon
run
for
roughly
six
hours
and
after
after
it's
over
then
and
can
of
course
claim
whatever
yeah
the
amount
of
Jen.
How
much
I
get
that,
of
course
flexible
and
depends
on
the
final
clearing
price,
maybe
just
to
show
you
the
other
side
of
it.
So
that
was
that
was
how
you
participate.
A
We
called
as
a
seller
so
so
kind
of
up
front
before
the
auction
during
the
auction,
when,
when
the
price
is
falling
down,
that's
a
different
website
or
a
different
project
called
FedEx,
but
they
bid
created
an
interface
to
participate
during
the
option
and
here's
you're,
seeing
the
options
that
are
currently
running
or
currently
live.
And
you
see
here
always
the
current
price
and
this
price
will.
A
C
A
The
starting
price
is
two
times
the
previous
price
two
times
the
previous
clearing
price,
the
front
from
the
pre,
the
first
price,
all
right
yeah.
So
so,
oh
can
you
can
we
switch
back
to
the
presentation
so
yeah
so
yeah?
If
you
add
the
token
the
first
time,
then
whoever
else
it
has
to
define
it
and
yeah
we
have
some.
A
There
is
some
small
issue
here,
so
so
someone
could
DDoS
the
system
and
and
add
a
token
added
completely
to
low
price,
for
example,
and
then
because
kind
of
per
token.
We
only
have
this
all
might
always
only
one
option
running
per
token.
So
if
you
would
edit
to
edit
to
started
at
the
too
low
price,
you
kind
of
no
one
would
start
to
fund
or
start
to
put
money
into
the
next
option.
A
C
A
Know
the
price
graph
is
is
predefined.
It's
a
1
divided
by
n
formula,
the
it
I
don't
know
by
heart
the
formula
but
roughly
1,
divided
by
n
plus
some
offset,
but
it's
it's
I
mean
it
was
really
this
function.
You
saw
the
I.
Sorry
it's
it's
exactly.
This
function
here,
yeah
this
function
that
falls
quite
sharply
in
the
beginning
and
then
kind
of
becomes
somewhat
linear
and
goes
all
the
way
after
24
hours.
It
is
zero.
After
six
hours
it
hits
the
previous
price
and
starts
again.
It's
double
the
pre
double
the
previous
price.
D
A
So
so
so,
if
everyone,
if
you
somehow,
could
manage
to
prevent
anyone
on
ethereum
to
stop
using
this
auction
of
course,
then
that
then
then
yeah
the
price
would
fall
down
all
the
way.
But
of
course
the
idea
is
you
can't
I
mean
that's
our
hope
that
you
can't
coordinate
everyone
in
etherium
and
even
if
you
could,
if
you
kind
of,
would
agree
with
in
this
room
that
everyone
or
let's
say
only
this
room
could
participate
for
some
reason
and
the
incentive
for
anyone
individually
to
cheat.
A
So
let's
say
we
all
agreed
to
wait
whatever
until
here
the
incentive
for
me
to
bit
like
just
five
minutes
earlier,
it's
very
high
because
then
I
can
buy
everything
at
this
low
price.
So
if
I
start
doing
that,
you
well
you
may
be
fat,
you
do
even
earlier
and
earlier
and
earlier,
and
so
so.
In
the
end,
we
we
believe
that
such
a
collusion,
because
it's
completely
open
anyone
in
this
room,
couldn't
participate
it's
fairly
slow.
We
believe
that
kind
of
collusion
is
not
possible
but
well
see.
D
A
So
so
the
use
cases
are
well
trading
trading
tokens,
obviously
so
and,
and
specifically
I
would
say
tokens
that
are
not
super
liquid.
So
most.
So,
if
you
look
at
the
200
or
not
where
I
have
500
top
list
tokens
on
corn
market
cap,
maybe
the
top
10
or
maybe
the
top
15-
are
kind
of
liquid
enough
that
you
could
actually
sell.
Let's
say
20
50
thousand
words
of
token
relatively
easy
like
just
because
there
are
exchanges.
There
is
enough
volume
below
that.
A
Most
of
the
I
mean
the
the
trading
volume
per
trade
is,
is
very
I
mean
if
you
trade
more
than
$1,000
worth
of
a
token.
It's
already
you
have
already
slippage.
So
what
happens
in
fact
is
that
a
lot
of
those
tokens
are
then
traded,
just
OTC.
So
so
people
trading
larger
amount
say
they
call
OTC
traders,
and
we
think
that
this
is
a
good
alternative
to
OTC
trading.
A
So
that's
one
answer:
alternative
currency
trading,
but
also
you
don't
really
have
you
don't
if
there's
the
order
book,
it's
one
contract,
you
can't
like
easily
have
a
strategy
like
look
at
the
price
and
compare
it
and
so
on.
So
you
want
to
have
this
simple
mechanism
where
you
dump
the
token
into
and
then
let
just
let
the
mechanism
find
a
fair
price
and
in
the
end
you
you
get
the
token
back
that
you
wanted
and
also
as
a
smart
contract.