Has SafeDAO Set the New Standard for Launching Governance Tokens?

Leading Ethereum-based digital asset management platform Safe — formerly Gnosis Safe — has launched its governance token, SAFE, following its latest rebrand.

The SAFE token will be used to ensure the decentralized governance of SafeDAO.

The token can now be claimed via an airdrop facilitated by Safe’s core team, appointed Safe guardians, investors who participated in the protocol’s $100 million fundraise and 55,000 Safe users. Eligible users will have until Dec. 27, 2022, at 12:00 pm CET to claim their tokens.

The launch of SafeDAO’s SAFE token was unlike traditional airdrops.

The token provides retroactive rewards that would partially vest over a four-year period, and core contributors will be given “backloaded vesting” for their token allocations.

Nick Ducoff, a venture partner at G20 Ventures, complemented the approach SafeDAO took, and tweeted that this should become the new standard for DAO token launches.

Ducoff told Blockworks that the four-year vest with a one-year cliff and ensuing monthly vesting is already a market standard in traditional tech companies that should be used by DAOs.

“Part-time contributors and bounties probably should have little to no vesting, because it is often the only payment those contributors are receiving for their services, and many need to be able to sell them — even if they believe in the organization — to pay bills and eat,” Ducoff said.

Added Ducoff: “We want a more diverse contributor base, so we shouldn’t limit contributors to those that can long hold a token and don’t need the money, but we also want contributors who are building for the long-term value of the DAO.”

Drawing on the likes of ENS and Lookshare, Ducoff said without vesting options of airdropped tokens, it is possible that token recipients would sell immediately, causing prices to drop. 

“You could argue that’s ok, because they went from short-term holders to long-term holders, but while ENS found a group of long-term holders and delegates, LooksRare eventually petered out,” he said.

The SAFE airdrop is also only eligible to contributors or delegates within the ecosystem, and DAO participants will be asked to review and sign legal documents.

Ducoff believes DAO governance should involve a legal process because “while employee/core contributor contributions are likely inherently owned by the DAO, contributions by contractors are not without clear assignment of IP [intellectual property],” he said. 

And the initial airdrop of SAFE tokens will be non-transferable, and it will be up to the community to determine whether that changes.

A move that Ducoff believes can help the token pass the Howey Test — an SEC method to determine whether a financial instrument, including a digital asset, is a regulated security.

“I’d be cautious about discussing when the future vote about transferability might occur — and keep it rather opaque such that people are taking these tokens with no expectation of profit,” he said.

Although Ducoff thinks that SafeDAO’s approach to launching its governance token is a good starting point, he acknowledges that the market is still in its early stages. 

“These are all experiments,” he said. “They will learn from it and adjust – and because of the composability and transparency of the blockchain, others can learn too, accelerating the innovation in the space.”

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