Upcoming TACO DAO SNS Decentralization Swap

[tirex]

The TACO DAO is preparing to launch its SNS DAO soon. The chefs invite the ICP community to discuss, ask questions, and/or propose changes in this forum post.

Token Utility

Shared Portfolio Governance

The core objective of the TACO DAO is to manage a diversified portfolio of digital assets, leveraging the collective intelligence of its community. To make portfolio trading both swift and intelligent, we will deploy the weighted voting framework on the TACO Interface. It enables TACO neuron holders to divide their desired percentage allocations across each trusted token the DAO adds to its portfolio. These votes are aggregated to shape the portfolio strategy. The resulting allocation objectives dictate the DAO’s trading algorithm.

Shared Portfolio Trading

The TACO DAO will execute one trade per minute (adjustable via governance). A weighted lottery determines priority, giving more chances to tokens that need rebalancing the most

Within this weighted lottery system, tokens are categorized into two distinct groups: those requiring reduction in portfolio share (where Target Allocation < Current Allocation) and those needing increased representation (where Target Allocation > Current Allocation). The selection algorithm independently draws one token from each category, with selection probability proportional to the magnitude of allocation imbalance. These two selected tokens—one to sell and one to buy—together establish the trading pair for the current rebalancing operation.

The trade amount is determined by a function with adjustable parameters

1. Base calculation

The base calculation takes the total portfolio value in $ICP and divides it by the total number of trades needed to fully rebalance the portfolio over the set rebalancing period (default: 1 week), based on the DAO’s trade frequency (default: 1 per minute).

2. To ensure trades are neither too small to be inefficient nor too large to disrupt markets, limits are applied:

• If the calculated trade size is below the minimum trade size (default: 2 $ICP), it is adjusted up to the minimum.
• If the calculated trade size exceeds the maximum trade size (default: 10 $ICP), it is capped at the maximum.

Finally, the DAO optimizes execution by comparing rates across ICPSwap and KongSwap and executing trades where the best deal is found

This function identifies which exchange (KongSwap or ICPSwap) will provide the maximum output amount for a given trade, while ensuring the price impact remains below the maximum allowed slippage threshold. It simply compares the expected output amounts from both exchanges, selects the one offering the highest return, and verifies that the slippage is acceptable before proceeding with the trade.

Salsa Season

The TACO Interface will host a platform dubbed Salsa Season: a cross-DAO, user-facing rewards platform designed to drive engagement and activity across the ICP ecosystem. This rewards program will consolidate rewards from multiple participating DAOs and distribute them to dApp users for their engagement, interactions, and contributions.

Salsa Season will run on a quarterly schedule, alternating between two-week active seasons and ten-week off-seasons. Participating projects will contribute TACO tokens during the off-season to join the rewards pool in the next active season.

The TACO token will serve as the rewards token distributed through Salsa Season. It is uniquely suited for this role as it represents the broader ecosystem and carries upside potential, encouraging users to hold. This structure offers an advantage over projects running their own standalone rewards programs – rather than each project’s token facing direct sell pressure, $TACO absorbs the impact.

Salsa Season provides multiple benefits as a unified rewards program:

• A central hub encourages users to explore rewards across multiple dApps

• Streamlined rewards collection

• DAOs can collaborate to focus efforts on a single, well-optimized rewards platform

• Centralized tracking enables incentives for engaging with combinations of dApps, personalized recommendations for future activity, and the creation of an ecosystem-wide leaderboard

Several projects have already signalled their intent to be early Salsa Season participants, including Dragginz, Sneed DAO, Windoge98, Neutrinite, KongSwap, Gold DAO, and Catalyze. We look forward to working with them and onboarding more teams.

We originally introduced Salsa Season here.

Mint Vault

A portion of the $TACO supply will be committed to the TACO Mint Vault, a reserve where counterparties can acquire $TACO in exchange for trusted tokens.

The contribution cap for each trusted project in the TACO Mint Vault is determined by multiplying the valuation of TACO tokens in the vault by the project’s allocation objective, then dividing by the total valuation of the main portfolio.

Once the DAO deems the supply in the Mint Vault to be sufficient, the portfolio will begin purchasing its target allocations from the vault. If the portfolio accumulates excess tokens, it can sell them back to the vault.

The Mint Vault enables the DAO to acquire trusted tokens more efficiently. It also provides a direct mechanism for trusted DAOs to acquire $TACO, diversifying their treasuries and enabling participation in Salsa Season. Distributing $TACO in exchange for trusted tokens onboards members into the TACO DAO, enhancing collective intelligence and strengthening the portfolio’s influence. The vault can be replenished with $TACO from the treasury or through additional minting.

Voting Rewards

The founders of the TACO DAO have consciously decided against implementing voting rewards at Genesis. This decision stems from a desire to ensure that every vote cast is driven by informed judgement and genuine intent, rather than the allure of incentives.

For Salsa Season, we intend to implement a competitive rewards framework that ranks participants on how their portfolio allocation votes perform in proportion to their voting power. This framework would assess which votes had the most positive influence on the portfolio. Those with the most effective strategies would gain additional voting power, reinforcing strong decision-making in portfolio trading.

The Next Evolution of DAO-Driven Asset Strategy

The TACO DAO pairs a sophisticated governance model with an adjustable, automated trading algorithm – giving members full control over decisions while ensuring efficient execution. The weighted voting framework allows members to express precise allocation preferences with minimal friction, transforming collective input into an optimized, self-executing directive.

This combination of accessibility, automation, and community-driven intelligence is what makes TACO DAO a unique force in decentralized portfolio management. We’ve looked around, and we have not found any comparable examples. We suspect this is due to the advanced properties of the Internet Computer Protocol, which enables deeply integrated governance and on-chain execution without the trade-offs seen on other blockchains.

Traders from around the world can join the TACO DAO and seamlessly contribute their insights and experience to our shared portfolio. This is something only a DAO can achieve. There is real potential to disrupt the global asset management industry by offering a decentralized, community-driven alternative to traditional funds.

Driving Growth Across the ICP Ecosystem

The TACO DAO is positioned to become a central force in the ICP ecosystem.

User Onboarding

• $TACO is an easy way to gain exposure to the cream of the ICP ecosystem, no need for extensive research or elaborate trading plans

• Salsa Season incentivises users to learn about and interact with the trusted tokens in our portfolio

Strengthening Liquidity & Market Efficiency

TACO DAO’s portfolio trading provides consistent, structured liquidity across multiple ICP tokens, reducing volatility and improving market depth.

Knowledge Sharing

Our community discusses, analyses, and evaluates projects, building a continuously improving collective intelligence network. The result? Actionable insights that projects can use to refine and grow.

Trust & Spotlight

Tokens selected by the TACO DAO undergo collective evaluation, ensuring that only trusted, well-researched projects make into the portfolio. This builds confidence in their legitimacy, providing a signal of quality for the broader ecosystem.

This process also spotlights promising projects that might otherwise be overlooked by VCs or hindered by minimal marketing. The TACO DAO helps them gain the recognition and traction they deserve.

Ecosystem-Wide Alignment

Rather than DAOs operating in silos, the TACO DAO creates a shared financial layer that connects projects across the ICP ecosystem. By holding $TACO in their treasuries, DAOs gain diversified exposure to the broader ecosystem, aligning their success with the success of ICP as a whole.

Roadmap

The roadmap is divided into 8 phases and can be found in the whitepaper. It remains open to modifications and individual objectives need not be pursued in a linear fashion.

The team’s long-term vision is to continuously expand both the range of assets we can trade and the governance tools available for managing them. This includes providing liquidity, locking neurons to earn voting rewards, trading NFTs, and enabling native token trading on other chains.

Technical Architecture

1. Internet Identity: TACO DAO participants connect their SNS neurons to the TACO Interface by adding a hotkey to their neurons using the NNS dApp.

2. Allocations: TACO DAO participants can set their allocations using the TACO Interface. This frontend provides tools for managing allocations and (un)following the allocations of other users.

3. Voting Power Calculation: Users receive voting power in the TACO Interface proportional to their TACO DAO SNS voting power. The Snapshot Canister tracks and periodically refreshes voting power.

4. Aggregated Allocations: The DAO Canister consolidates all weighted user preferences into a single portfolio allocation target and sends it to the Trading Canister for implementation.

5. Allocation + Balance Data: The Trading Canister provides balance and allocation information to the Minting Vault. This data enables precise calculation of the TACO token price by assessing the deviation of trusted token balances from their target allocations.

6. Portfolio Balances: The Minting Vault shares its token holdings with the Trading Canister, facilitating accurate portfolio calculations and management.

7. Trusted Token Conversion: ICP ecosystem users sell their trusted tokens to acquire $TACO.

8. TACO Issuance: The Minting Vault Canister issues $TACO in exchange for these trusted tokens.

9. Price Data: Integrated exchanges provide real-time price and slippage data to inform trading strategies.

10. Trade Execution: The Trading Canister executes optimized trades on the integrated exchanges.

Initial Token Distribution

Neuron basket: 5 neuron basket, 1 week interval

Of the 2, 048, 408 $TACO for developers & seed, only the founders’ allocation of 999, 999 $TACO will be locked. This allocation will have a dissolve delay of 1 month, and vest in nine distributions over time, with vesting periods of 0 months, 2 months, 5 months, 8 months, 11 months, 14 months, 17 months, 20 months, and 23 months.

• 75% of $ICP raised in our SNS decentralisation swap will go into the portfolio
• 25% of $ICP raised in our SNS decentralisation swap will fund our roadmap

Funding Target

• 100, 000 ICP minimum direct participation
• 1, 000, 000 ICP maximum direct participation

Maximum Funds will be requested from the community fund based upon the direct commitment.

Security Audit

Since the DAO is the foundation of this project, no product has been launched yet.

TACO DAO’s security audit, conducted by @afat, is well underway. Upon completion, we will open source the project and finalize the sns_init.yaml configuration, before making our proposal to decentralize to the NNS.

More Info

tacodao.com

Whitepaper

Pitch Deck

Discord

OpenChat

X

Nuance

sns_init.yaml

[jennifertran]

Hello @tirex, can you please confirm that you will include no dapp canisters in the SNS launch?

[BIKETACO]

Hey Jennifer,

Apologies for any confusion that might have been caused by leaving that field blank.

I can confirm that a number of dapp canisters will be included in our SNS launch. As mentioned in our post, these canisters along with our open sourced code will be shared next week upon completion of our audit.

Hope that makes sense!

[tirex]

Hello @jennifertran, I’ve added them in the latest commit. The WASM code has not yet been assigned to the canisters; this will occur soon after the final audits, as mentioned by @BIKETACO.

[tirex]

Our DAO Backend code is now available on GitHub!

The repo includes the DAO, neuron snapshot canister, and helper modules - with Treasury and Mint Vault coming after our final audits.

GitHub - tacodaoicp/DAO_Backend: A decentralized autonomous organization (DAO) framework built on the Internet Computer Protocol, designed for continuous allocation voting and treasury management.

[jennifertran]

Thank you for adding the code! Could you update the format? It’s not compatible with the current SNS tokenomics analyzer.

Check a format such as: cecil-sns/sns/sns_init.yaml at master · Cecil-DAO/cecil-sns · GitHub

[tacodaoicp]

Hey Jennifer, we’ve updated the yaml. Please let us know if there are any other issues, thank you!

[jordn01]

Let’s salsa!!!

[MForum]

Love the idea, like a decentralized mutual fund. Best of luck team.

[timk11]

Is the security audit now available for viewing?

[jennifertran]

Hello all,

Which canisters are currently open-sourced? It looks like the DAO, SNS snapshot, and trading canisters are open-sourced.

# DAO canister
- ywhqf-eyaaa-aaaad-qg6tq-cai
# SNS snapshot canister
- zvlzd-qaaaa-aaaad-qg6va-cai
# Trading canister
- z4is7-giaaa-aaaad-qg6uq-cai
# Mint vault canister
- z3jul-lqaaa-aaaad-qg6ua-cai
# ICRC treasury
- 2fytf-maaaa-aaaad-qg65a-cai 

You should have all of the code open-sourced for at least two weeks including the mint vault and ICRC treasury canisters.

[BIKETACO]

@jennifertran

You should have all of the code open-sourced for at least two weeks including the mint vault and ICRC treasury canisters.

The security audit is complete but it is currently saved to a private repo where the code was originally written. We are working with Afat (Austin) to make his findings public. Apologies for the delay.

[Lorimer]

I have rejected this proposal to ’ Create Service Nervous System (SNS)’ proposal, as it attempts to make use of the Neurons Fund. More context here →

I Suggest Rejecting Any and All 'Create Service Nervous System (SNS)' Proposals that use the Neurons' Fund Until the System is Fit for Purpose

I was called out earlier today in a way that I take to heart. This is a well-meaning post, and I responded to it here → The Neurons’ Fund is certainly open to abuse, and there’s nothing that can be done to protect it during the community syndication voting phase of SNS launches (the ones described above). Instead it’s what happens next, when the decentralisation sale is taking place. This is where the Neuron’s Fund is open to abuse. You can never be sure beforehand that the proposer of a…

If you’d like to follow my vote on similar proposals of this sort, consider setting your neuron to follow the LORIMER known neuron on the ‘SNS & Neurons’ Fund’ topic.

---

Some points of interest

12.5% of the NNS has already adopted this proposal, yet the known neurons that have voted have nowhere near this kind of VP. This isn’t a very common scenario. It means there are some heavy hitters voting in favour of this project proactively. Interesting, that’s all (particularly given how new and untested it is - it was only open-sourced a few days ago).

Given the large (but anonymous) NNS VP that has so far voted in favour of this, it’s not unreasonable to expect that there’s ICP going spare to chuck at this decentralisation sale (potentially just for the sake of boosting the Neurons Fund bounty and withdrawing it). The source code was only recently open sourced, and there’s practically no repo history.

---

I don’t wish to upset developers who may be innocent and have put hard work into this. I think a proposal that doesn’t attempt to make use of the Neurons Fund would be more acceptable.

[BIKETACO]

IMPORTANT:

We have come to understand that the timing is wrong for a legitimate project such as ours to raise funds.

We have decided to request that Dfinity vote ‘no’ on our proposal to decentralize so that we can further establish our brand and demonstrate our product to those who would like to see it.

We’ll be back in a month with another proposal. Thanks in advance for those of you who take the time to get to know us between now and then.

[skilesare]

A few words about the TACO DAO audit and audits in general.

First, I’m biased because I do them and get paid for them, but I think that if you are doing a motoko project you should REALLY consider doing an audit. If you can’t afford an audit(they can be expensive because the auditor is putting a bit of personal risk on the table with each audit) at least reach out and ask for a review. Those can be much simpler, cheaper, and often completed in a day or two.

Second, here is the audit. It is currently in a pull request but I expect it will get pulled in soon enough.

The TACO DAO team reached out to me late last year about doing an audit for their upcoming SNS. I love doing audits because they are an opportunity to learn and an opportunity to view the world through someone else’s eyes.

In this case, it was really a cool experience. The first bit of code I was given was…well…let’s…see…it was AMBITIOUS. @tirex delivered it and you could tell he had thrown his whole self into the problem at hand and had just absolutely tackled it.

Like tackling anything, it can be a messy affair with broken bones, grass stains, and a bunch of stuff lying around on the floor. The code wasn’t wrong it was just all over the place and full of enthusiasm. So I went back with some extensive comments and then I got a few questions and then things went quiet for a bit. Then this year I got a second batch of code and a bit of a revamped strategy and the amount of growth, clean-up, and general professionalism in the second batch was extraordinary to see.

I not only saw @tirex’s viewpoint I also got to see his growth as a motoko programmer. I hope he won’t mind me telling the story because it is meant to inspire. Motoko is a cool language and one can get dangerous with it quickly and can get good at it with just a bit of hard work and determination.

Particularly, @tirex tackled the spam and ingress problem with much more attention to detail and determination than I’ve seen anyone else attempt. We’ve been a bit (un)lucky on the IC with nothing really getting ‘big’ enough for someone to really try to ddos it. I don’t think there is a “perfect” way to handle this problem at this point but the one that TACO DAO has put in place is one that I’d advise most motoko projects look at and learn from. If your service gets popular enough and has enough value, someone is going to come at you and try a cycle drain attack. Having a mitigation strategy is super important.

@tirex and I had a few conversations about some of the potential issues I found and I think both he and I learned some things.

Thanks to the TACO DAO team for entrusting me with this important task and good luck with your DAO when you launch!

[Dogecorruption]

But we should do some Taco Together sometime! Really disappointed, I won’t be able to own a Taco!