# Private Offering System ## **Guaranteed Allocation Option** Since most users choose this option, and it’s easier to understand, let’s first focus on the **Guaranteed Allocation** and leave the **Lottery** mechanism for later, as it introduces additional complexity. Excessive deposits are automatically returned to the users at the end of the offering. In **Hybrid Offerings**, user allocations are determined by two factors: 1. **DAO Power** (a key metric for each user). 2. The amount of **DAO** deposited. The total allocation is split into two parts: * **Guaranteed Allocation** * **Excessive Allocation** ### **Guaranteed Allocation** Calculation The **Guaranteed Allocation** is calculated using the following formula:\ **User’s DAO Power × Total Allocation × Guaranteed Ratio / Total DAO Power registered** Where: * **DAO Power** refers to the power each user has within the system. * **Total Allocation** is the target raise amount (the maximum amount the project aims to raise). * **Guaranteed Ratio** is typically a number between 0.8 and 1, but it’s generally close to 0.98. It depends on the total **DAO Power** and deposited amounts. ### **Excessive Allocation** Calculation Once a user’s **Guaranteed Allocation** is determined, any contributions exceeding this amount are subject to an **Excessive Allocation**: **(User's Contributed Amount - Guaranteed Allocation) × Total Excessive Allocation / Total Excessive Contribution Amount** Where: * **Total Excessive Allocation** = Difference between the **Total Allocation** and the sum of all **Guaranteed Allocations**. * **Total Excessive Contribution Amount** = Difference between the **Total Contributed Amount** and the sum of all **Guaranteed Allocations**. > **Note:** The **Guaranteed Ratio** is derived from the ratio between total **DAO Power** and the total deposited amount. The exact calculation is complex but not essential for most users. *** ### **Example** For clarity, let’s walk through an example. Assume that no users have chosen the **Lottery** option, and everyone deposited at least their **Guaranteed Allocation**: * Total Allocation: 1000 DAO * **Guaranteed Ratio**: 0.98 (pre-calculated) **Users:** * Alice deposits 500 DAO and has 5000 **DAO Power**. * Bob deposits 700 DAO and has 10,000 **DAO Power**. * Carl deposits 800 DAO but has 0 **DAO Power**. **Step-by-Step Calculation:** 1. **Total DAO Power**: 15,000 (5,000 + 10,000 + 0) 2. **Total Contributions**: 2,000 DAO (500 + 700 + 800) **Guaranteed Allocations:** * Alice's Guaranteed Allocation = 5000 × 980 / 15,000 = 326.66 DAO * Bob's Guaranteed Allocation = 10,000 × 980 / 15,000 = 646.8 DAO * Carl's Guaranteed Allocation = 0 DAO (due to 0 **DAO Power**) **Excessive Contributions**: * **Total Excessive Contribution Amount** = 2,000 - (326.66 + 646.8) = 1026.54 DAO * **Total Excessive Allocation** = 1000 - (326.66 + 646.8) = 26.54 DAO **Excessive Allocations**: * Alice’s Excessive Allocation = 173.34 × 26.54 / 1026.54 = 4.48 DAO * Bob’s Excessive Allocation = 53.2 × 26.54 / 1026.54 = 1.37 DAO * Carl’s Excessive Allocation = 800 × 26.54 / 1026.54 = 20.68 DAO **Final Allocations** (Guaranteed + Excessive): * Alice: 326.66 + 4.48 = **331.14 DAO** * Bob: 646.8 + 1.37 = **648.17 DAO** * Carl: 0 + 20.68 = **20.68 DAO** **What if Bob Deposited Only 500 DAO?** If Bob had deposited just 500 DAO, his final allocation would be 500 DAO, and the remaining portion of his **Guaranteed Allocation** (146.8 DAO) would be added to the **Excessive Pool**, increasing both the **Total Excessive Contribution Amount** and the **Total Excessive Allocation**. *** ## **Lottery Option** Now, let’s dive into the **Lottery System**. Users who opt for the lottery must deposit a multiple of the **Ticket Size** (usually 100 DAO). Each user participating in the lottery receives a **Weighting**, which determines their position in the lottery. The **Weighting** calculation is similar to that used for **Guaranteed Allocations**, but with some differences that we won’t cover here. ### **User's Position in the Lottery** A user’s position in the lottery is determined by the sum of all previous users' **Weightings**. The user’s range starts from the sum of previous users’ **Weightings** and ends at the sum of previous plus their own **Weighting**. For example, if there are already 10 users in the lottery with a total **Weighting** of 1000, and the current user has a **Weighting** of 100, their position will be between 1000 and 1100. If a random number is generated within this range, they win one ticket. Users can win additional tickets if more numbers fall within their range. ### **On-Chain Transparency** The entire lottery process is fully on-chain and transparent. At the end of the offering, the lottery result is calculated off-chain, and the winners are fed into the smart contract. The smart contract then verifies that the lottery result is accurate. ### **How Does It Work?** * A sequence of user addresses (winners) is submitted to the smart contract. * The smart contract loops through the user addresses, calculating a **Random Number** (explained below) for each user and checking if it lies within their lottery range. * If the **Random Number** falls within the user’s lottery position, the smart contract assigns 1 ticket to that user. * This process repeats until the **Total Number of Tickets** is distributed. #### **How Are Random Numbers Generated?** The first **Random Number** is based on the keccak hash of the block’s timestamp and block difficulty when the lottery is executed (after the offering ends). Each subsequent **Random Number** is based on a hash of the previous hash. Every **Random Number** falls between 0 and the **Total Weighting** (sum of all users’ **Weightings**). #### **Total Number of Tickets Calculation** Rather than over-complicating the explanation with formulas, just understand that the **Total Allocation** is split into a **Guaranteed Pool** and a **Lottery Pool**, based on the ratio of the amounts deposited through the **Guaranteed** and **Lottery** options. The **Total Number of Tickets** is then determined by the size of the **Lottery Pool** and the **Ticket Size**. *** ### **Example of a Simple Lottery** Let’s assume the **Total Number of Tickets** is 5, and the **Ticket Size** is 100 DAO, making the **Lottery Pool** 500 DAO. **Users:** * Alice’s **Weighting** in the lottery is 100, placing her in the 0-100 range. * Bob’s **Weighting** in the lottery is 200, placing him in the 100-300 range. * Carl’s **Weighting** in the lottery is 400, placing him in the 300-700 range. **Generated Sequence of Winning Tickets (for example):** * Alice, Alice, Bob, Carl, Carl. **Verification by the Smart Contract:** * For Alice, the smart contract verifies that the **Random Number** is between 0 and 100. * For Bob, it verifies that the **Random Number** is between 100 and 300. * For Carl, it verifies that the **Random Number** is between 300 and 700. **Final Allocations:** * Alice wins 2 tickets (200 DAO allocation). * Bob wins 1 ticket (100 DAO allocation). * Carl wins 2 tickets (200 DAO allocation). *** The source code for our hybrid offering contract is available on [bscscan](https://bscscan.com/address/0x0530c78b8f5cf1b5e7f9c787a88e53c74197fe02#code).