A. A DAO issue NFTs (ERC-721) for every funding round, with different investment terms, valuation, governance rights, etc. This NFT represents certain governance rights with a set market cap for this DAO. For example, an NFT for round A may represent 10% governance rights with 5% shares at $500K valuation, therefore the proposed starting bid for this NFT is $25K.

The reason why this is given as NFTs is to deliberately limit on-chain liquidity. The issue with on-chain funding models is that they tend to be extremely volatile, especially when tokens were fairly launched, because AMMs run on prediction market models and thereby are exposed to unlimited, uncontrolled liquidity. If shares themselves are non-fungible, however, there is no such thing as constant liquidity; you need an auction every time, significantly decreasing volatility.

B. To initiate a funding round, deposit this NFT onto a money market that supports NFT collateral. The money market will initiate borrow auctions on a fixed valuation exchange contract, but only for fungible shares derivatives of the proposed NFT. If auction fails to meet 100% value of proposed listing valuation, you can either lower LTV (for funding rounds in the future) or accept the winning bid & maintain proposed LTV (end this funding round).

Whoever participating in the round must deposit coins in return for newly minted shares, based on a FIFO queue model. One share unit is always equal to a fixed number of coins. If LTV is lowered FDV for shares remains the same, otherwise FDV is lowered.

Share units can either be ERC-20 or simple money market deposit positions without minted token derivatives. If you are minting ERC-20 (or a third party minting them by proxying contract calls), you are essentially building a pre-IPO contract for this funding round that may affect NFT liquidation events in the future.

The NFT is kept under custody of the money market contract, with shares unit holders exercising control over governance rights associated with it.

The DAO is never running a "funding round", rather it is "borrowing" coins from an undisclosed number of "donators", thereby never being subject to taxation as no exchange of value (or coins) ever occurred. ERC-20 tokens minted here, if ever minted, would be equivalent to bond tokens, although technically you never need to pay interest (although you can choose to if you are actually borrowing money), practically serving as preliminary investment shares for the DAO.

C. Deposited coins are sent over to the DAO's treasury. Deposit positions for everyone who proposed to mint this NFT are given pro-rata, which are rights over actual borrow positions (NFT + borrowed coins), practically having a total valuation equivalent to the NFT's proposed (or accepted) bid auction value.

What's interesting about those internal deposit positions is that they are effectively holding an ETF and/or partially collateralized synthetic asset composed of: (future NFT valuation) + (borrowed coins), of which TVL is equivalent to (borrowed coins) * (1 + 1 / LTV). When LTV is over liquidation threshold TVL would instantly become zero, and therefore this must satisfy POSITION_VALUATION > (borrowed coins) * (1 + 1 / LIQ_LTV), unless a liquidation event is triggered by sharesholders. This blocks NFT valuation arbitrage and oracle attacks in cases when the NFT itself is tokenized & available for trading on open markets, as liquid assets are already available with the position itself.

D. Sharesholders of deposit positions may choose to liquidate their entire positions on a governance proposal. In such a case, the NFT is put up on an auction. If there are no bids during the entire auction period, all shares are considered bankrupt. Otherwise, the money market distributes whatever coins returned from the auction pro-rata.

Liquidation events may be affected when valuation of shares on pre-IPO markets are too low for a sustained period of time, and sharesholders decide that it would be in the best interest for all holders to liquidate rather than selling them on-chain.

E. The NFT may be replaced with DAO shares tokens on governance when such an event is deemed necessary. This is equivalent to corporate IPO events.

DAO shares are exchanged with existing shares tokens. Old share tokens minted by the money market are burned.