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:
DAO Power (a key metric for each user).
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:
Total DAO Power: 15,000 (5,000 + 10,000 + 0)
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.
Last updated