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How Does Juicebox Work?

Sam Sklar
@_samsklar

Demystifying Juicebox

Background

Thousands of people have landed on Juicebox, myself included, and had absolutely no clue what the heck they were looking at. Many of them aped into Constitution DAO anyway, again myself included, because we can’t bear to miss out on those gains. 

Countless others hit this page and didn’t make it to the finish line. Some because they were assaulted by a UI that reminded them of their electrical engineering homework, others because the $100 gas fees were a bit steep given they only planned to commit $10 towards a fun cause.

Today we’re going to walk through each of the customization mechanisms step by step so that next time you contribute to a Juicebox project you can be an informed contributor. You may even walk away with enough knowledge to start your own Juicebox project - but why would you when you can use Barracuda ;) 

For our deep dive, we are going to look at MoonDAO

MoonDAO

MoonDAO was created in response to Jeff Bezos and Elon Musk using their personal wealth to play space cowboy. The community is committed to raising funds to send one of their members to space to “democratize” space access. You can read more about their mission here .

Now let’s get to the fundraising page. Looks complicated huh. We’ll start from the top left and work our way around.

Volume, In JuiceBox & In Wallet


In their own words…

Volume: “The total amount received by this project through Juicebox since it was created.”

Straightforward enough. Just the total raised (in eth) by the project to date.

In Juicebox: “The balance of this project in the Juicebox contract.”

In Wallet: “The balance of the wallet that owns this Juicebox project.”

The project owner has to proactively pull down funds from Juicebox into their wallet. In the graph below, you can see that the MoonDAO project owner withdrew the full amount 2 weeks in and hasn’t yet bothered to pull down the additional funds that have accrued since then.



If you’re an overachiever, you’ve noticed that we're a few eth short. 77.87+158.77 < 240. That’s because Juicebox takes a 5% cut of all funds raised at time of wallet distribution. That means for this project alone, the total Juicebox take is 12 eth or ~40k USD at the current price. Pretty steep for a fundraising landing page 👀

ERC20 Token


In their own words: “MOONEY ERC20 are distributed to anyone who pays this project. If the project has set a funding target, tokens can be redeemed for a portion of the project's overflow whether or not they have been claimed yet.”

Mooney tokens are the MoonDAO governance token. Your proportional ownership of the token represents your proportional vote to determine the future of the DAO. That has less to do with anything to do with Juicebox’s configuration  - I just deduced that from reading their manifesto. 

Mooney has not set a funding target which I will show later in the breakdown meaning overflow is not relevant for this project. A funding target is the total amount of eth the community needs to raise to fund the project. Were MoonDAO to have a funding target of 200 eth, given it’s raised 240 eth it would have 40 eth of overflow. 

In this hypothetical, contributors could claim a portion of the 40 eth overflow by burning their Mooney. The mechanics of redeeming overflow are possibly the most complex part of this entire document and will get its own dedicated section later. 

Total Supply is the total number of Mooney Tokens in existence. With an issue rate of 1M Mooney per eth, and 240 eth contributed, it’s no wonder there are 240M Mooney out there today. This will continue to go up as more people contribute to the project. 

Your Balance consists of the # of Mooney in your wallet, and the # that are claimable. When you contribute to a project on Juicebox, you pay gas fees to get your eth to the platform. To get the Mooney token to your wallet, you’d have to pay additional fees so rather than forcing you to do it immediately, you can leave your tokens with Juicebox for safekeeping. Mooney tokens that you paid for, but haven’t yet moved to your wallet, are claimable. 

Project Customizations


As I mentioned before, there’s no MoonDAO target. Were there, that would set the threshold over which all additional eth would enter the overflow. The fundraising duration and date should be self explanatory. Let’s get to the juicy stuff. Rather than post their description, I’ll paraphrase for ya. 

Discount Rate: Used to incentivize early contributors (read: create fomo to encourage people aping into a project early). If a project has multiple fundraising cycles - for example, MoonDAO starts and ends each fundraising cycle with the phases of the moon - the discount rate decreases the exchange ratio of MoonDAO to eth. A 20% discount ratio means that if 1 eth gets you 1M Mooney this month, 1 eth gets 800k Mooney next month and 640k the month after that. 

Bonding Curve: let’s punt this. I promise we’ll get to it in the next section. 

Reserved MOONEY: This percentage of newly issued Mooney that goes to the project owners every time someone contributes. At 50%, of the 1M Mooney per eth, 500k goes to the contributor and 500k to the project creator.

Issue rate: We just explained this when talking about Discount Rates. This tells you how much Mooney you get per eth and how much Mooney goes to the project creator.

Token Minting: If this is enabled, the project creator can freely make more Mooney at any time and dilute the total supply without contributing to the treasury. You probably shouldn’t contribute to projects where this is enabled. 

Reconfiguration Strategy: Rules / limitations on how the creator can change the fundraising mechanisms over time. If there’s no strategy, the creator has full autonomy. 


Bonding Curve and Overflow Mechanisms

The Bonding Curve, which we glossed over earlier, dictates the rate at which governance tokens can be redeemed for their proportional share of overflow at any given time. It’s used as a mechanism to incentivize holding onto your tokens as the longer you hold the higher your potential redemption payout. 

Recall that the overflow is the difference between the total fundraise and the target. In our earlier example, we made up a 200 eth target for MoonDAO which puts them at 40 eth overflow given they’ve raised 240 eth so far. 

If the bonding curve is set to 100% (1:1 redemption), and I hold 1M Mooney of the 240M in circulation, I can burn my 1M Mooney for 

1/240 (my ratio of Mooney compared to the total) * 40 eth (total overflow)

= 1/6 eth

No matter how many people redeem Mooney for eth, my exchange rate remains the same. If 120M Mooney are redeemed for 20 eth (math not shown), my redemption is still

1/120 (new proportional ownership) * 20 eth (remaining overflow)

=1/6 eth


Now consider a scenario where the bonding curve is set to 50%.

I can burn my 1M Mooney for

1/240 (my ratio of Mooney compare to the total) * 40 eth (total overflow) * 50%

=1/12 eth


If I wait for 120M Mooney to be redeemed for overflow at a return of

120/240 (half of the total supply) * 40 eth (total overflow) * 50%

= 10 eth 


This means there are 120M Mooney remaining with 30 eth in the overflow. Now if I redeem my 1M Mooney, I get

1/120 (new proportional ownership) * 30 eth (remaining overflow) * 50%

= 1/8 eth


Meaning I was able to claim 1/8 eth, instead of 1/12 eth, by holding on to my stake for longer. 

One Way for Communities to Pay Out to the Contributors

Let’s say we started a DAO to buy watches, flip them for a profit, and pay out the profits to the community. On Day 1, we set a project with a target of 100 eth and raise exactly 100 eth. There’s no overflow and all of the funds go to the treasury (less that pesky 5% fee 🙄). The community identifies a collection at a great price, buys it, and sells the watches individually for double the cost. Now that there is 200 eth in the dao treasury, the project owner creates a new fundraising cycle with a target of 0, an issue rate of 0, and a bonding rate of 0%. The dao treasury then contributes all 200 eth into the project and it all goes directly to the overflow, allowing the community members to burn their token for double their investment. 

Thanks for allowing an aside - we’re on to the final stretch. 

Project Owner(s)

The project owners section shows the wallets and allocation %s of the contributed eth and reserved governance token. For MoonDAO there is one wallet holding all the funds. 

Buying Mooney


Here you can enter the amount of eth, or USD, you’d like to contribute to the project. You’ll see some final disclaimers and have the option to automatically claim the Mooney to your wallet or leave it in Juicebox to claim later. 

Activity Feed

Pretty self explanatory. Watch the money flow into a project under PAY. Watch people burn Mooney for eth under REDEEM. Watch the project owner payout from Juicebox to their wallet under WITHDRAW. Watch the project owner payout Mooney to their wallet under RESERVES



Conclusion

I hope this helps. While I have great respect for what the Juicebox team built, it shouldn’t require an 8 page tutorial to explain how a fundraising page works. In fact, I’d argue the level of complexity is dangerous given $5M dollars has flowed through this platform and I can confidently say many of the contributors behind those funds have little understanding of the implications of all of the configurations on this page. 

This is why we built Barracuda. It shouldn’t be this hard. We make it easy without ever glossing over complexity. We take every opportunity we can to educate our users. Web3 is supposed to be about transparency but if we can’t build inclusive customer experiences how can it be?