Deconstructing DAO investment: Will DAO become the “next” big asset class after NFT?

More and more Ethernet Square enthusiasts believe, DAOs (decentralized self-government organizations) may be the future of work, cultural communities and human tissues. Therefore, some people believe that DAOs will usher in mainstream breakthroughs like DeFi (decentralized finance) and NFTs (non-homogeneous tokens). 

On a basic level, this argument makes sense. After all, DeFi took off based on its concept of “as an inevitable successor to the traditional financial system”, and NFTs have also soared in popularity because people believe they are the digital generation of art. Therefore, when the organization rules are transparently programmed into the DAOs on the blockchain, there should be opportunities when they seek to replace the outdated hierarchical structure of traditional centralized enterprises, right? 

Unfortunately, betting on this trend is not as simple as betting on some tokens . 

At a MCON 2021 conference with the theme of DAO held last week, more than 300 attendees personally selected by the conference organizers gathered in a large brewery in Denver (Denver, USA) to discuss the future of DAOs. The Ethereum community is a group that sincerely believes that it has the ability to build smart contract solutions to solve many problems in the world. Even if the Ethereum community is sometimes overly optimistic, the prospects for DAOs are optimistic, and people’s emotions are also high. of. 

Yearn Finance’s core contributor  Tracheopteryx  said, “If you look at DeFi, you will find it is a financial bet for the future; NFTs may be bet on art, real estate or property of any kind – it is Betting on the future of property. But  DAOs are betting on the future of human organization, which is a bigger thing .” 

However, as far as outsiders are concerned, DAOs are hardly understood . When it comes to DeFi and NFTs, mainstream media, financial experts, and regulators occasionally have some understanding, but DAOs are still a strange concept to them to a large extent-the most familiar to blockchain novices may be notorious” The DAO ” attack. The DAO is an early DAO investment experiment that failed due to a hacker attack in 2016. 

Today, there is even some definitional debate about what DAO is. This acronym usually refers to the management of an organization and  (occasionally but not necessarily)  an affiliated fund pool through some chain rules . 

Ameen Soleimani is the pioneer of the early DAO and the founder of SpankChain. He jokingly referred to the DAO as a ” beautiful budget committee ” or ” group chat using a joint bank account .” 

Tracheopteryx said frankly: “We don’t even know what’DAO’ means, so there are many competing definitions. We understand every part of DAO, but we are still piecing together all of them.” 

However, despite these loose lexical rules, in recent years, DAOs have made greater progress in technology and development than any other blockchain field : many DeFi and NFT projects are governed by DAO; In the current total market value of approximately US$2 trillion in cryptocurrencies, a large part of the value is managed by DAOs; thanks to the efforts of organizations such as Colony, Aragon, and Coordinape, DAOs related tools and functions have been significantly upgraded ; Opolis is a welfare and wages cooperative for independent workers. The platform can even help full-time DAO workers get medical care. 


In the medium to long term, the vision proposed by DAOs may appeal to any investor.

Tracheopteryx explains: “Imagine when the Dutch East India Company was founded, if you could bet (invest) in the concept of the company at that time, imagine how big this field could develop on our planet at that time. DAOs are the future of companies and organizations…this is a much larger market.” 

However, as many experts have said, betting on the future of DAOs is a very difficult proposition.

DAO infrastructure

 For months, DAO supporters have been promoting DAOs as the “next” asset class that will emerge after NFTs . 


Kevin   Owocki, the founder of Gitcoin, a donation organization that operates in the form of DAO,  said: “I do see a lot of interest and enthusiasm for DAOs that we have never seen before. I think DAOs are the coordination of capital and culture. I look forward to it. How will DAOs develop.” 

Kevin continued: 

“If we succeed, MetaFactory will overturn Shopify; if we succeed, Friends With Benefits will overturn Y Combinator; if we succeed, Gitcoin will overturn LinkedIn. This is a cultural turmoil, and thousands of DAOs experiments are flourishing. , Only 10 will succeed, but the successful DAOs will be huge.”

 However, picking these winners is a risky job, and targeting entities that provide infrastructure for DAOs may be a way to increase the odds of winning . 

For example, SpankChain founder Ameen Soleimani pointed out that DAO tool manufacturers such as RaidGuild and DAOHaus, as well as voting platform Tally, etc., are all options to choose from. 

However, for investors seeking to deploy large amounts of capital in this area, things may not be smooth sailing, because not all of the above-mentioned projects have investable Tokens . 

In addition, Soleimani warned that the upside of DAO infrastructure investment may also be limited . He said: “The strange thing is that these (infrastructure) projects themselves may not perform as well as some DAOs.” 

He compared this phenomenon with the choice between directly investing in NFTs or buying NFT platform tokens (such as Rarible’s RARI). Although NFTs can reap multiple returns within a few weeks, as of this writing, RARI has fallen by 52% in 30 days. 

Bill Warren, executive director of Opolis, said that one way that big-name investors can take is to adopt a “crowd wisdom” approach-” funding funds, ” that is, investing in DAOs that actively manage their portfolios . He said:

 “They will invest money in investment DAOs like MetaCartel Ventures and say,’We realize that this group of people are better at picking winners than the 12 Stanford University graduates.'” 

However, if you only look at DAOs from an investment perspective, some things will be overlooked . Warren warned: 

“I don’t think DAOs are asset classes in the traditional sense. DAOs are communities, and communities own assets — some of them have real-world value because you can sell them for a lot of money, and some communities have good and feel better Vague values ​​because they connect you to other people.”

 He took MetaCartel as an example. The establishment of the DAO organization that distributes grants has obvious donation intentions. Warren said that over time, MetaCartel has become one of his closest DAOs, because as its funding decreases, the community has become stronger. 

cultural conflict

 In addition to DAO-related technological advancements, panelists at the meeting also discussed the social layer of DAOs. Many experts said that investors who are motivated solely by interests may not understand who will join DAOs and the benefits they can get after joining, so they may not be able to fully understand DAOs. 

Kevin Owocki, the founder of Gitcoin, said: “There is a group of Gen Z people who feel that late capitalism is terrible. In the economy we take over, climate change is a big problem, misinformation is a big problem, we don’t trust our system, we have We are creating a new culture that is built around the needs, values ​​and ideas of our generation .” 

He continued: 

” If you don’t understand the culture of Ethereum, you can’t understand its technology . So there may be a group of venture capitalists (VCs) who are appointing some low-level analysts to learn the culture of Ethereum. Fang culture is incompatible.”

 During the meeting, this incompatibility was fully demonstrated. For example, an investor put forward the term “minimum viable community,” which is a strange language mashup that applies the language of analytical investors to indescribable human organizations. Many of the indicators that make DAOs feasible, including the enthusiasm of the community, the power of memes, etc., are fundamentally immeasurable , which makes the classic form of investment analysis meaningless . 

So far, the performance of the major funds participating in DAOs has been mixed . 

Some companies, such as ParaFi and Delphi, actively participate in the DAO’s engineering work and put forward governance proposals for the DeFi protocol governed by the DAO. Similarly, investment giant Andreessen Horowitz ( a16z ) recently launched a token delegation plan for its DeFi investment  (that is, a16z delegates the voting rights of some DeFi protocols (including Uniswap , Compound, etc.) in its investment to a third party), but This plan of a16z follows two controversial DAO proposals on the Uniswap Governance Forum. 

An angel investor, who asked not to be named, likened this phenomenon to the Taliban’s discovery of American Blackhawk helicopters after the U.S. withdrawal from Afghanistan; assuming these might be very powerful tools, the venture capitalists first Must learn how to use them . 

“There is friction here, because every time you try to control something that is decentralized, you will either destroy the community you are trying to control, or you won’t be able to get what you originally wanted from them,” Bill Warren, executive director of Opolis Said. He added: 

” I think in the end VCs will be very disappointed . I think a VC wants to invest in a platform like DAOHaus, which will make them crash. This thing is completely open source, and from a traditional point of view, its only Its competitive advantage is the community , that is, people believe in it and feel that they own it. But if suddenly, 50% of its tokens are owned by a certain entity, then this advantage will disappear.”

 Part of this friction also comes from the fact that if successful, DAOs will replace venture capital firms . It’s like the Web2 organization is trying to invest in a Web3 successor that may be destined to kill them. 

Super cycle cycle

 Another reason why DAOs may not usher in a major capital rotation is that, judging from many indicators, the DAO super cycle has already begun-but it may not appear on CoinGecko’s ranking. 

Many early DAO participants, including Moloch DAO “callers” and MetaCartel donors who have experienced early experiments, are currently booming and have also spawned the entire project’s family tree. 

SpankChain founder Ameen Soleimani said: “Many people who have gone through this process have been at the top of this wave. They can continue to build communities dedicated to other things. Take  Joseph Delong  as an example. He was an Eth of ConsenSys. 2.0 developer, he voluntarily decided to join Moloch DAO and used his 100 ETH to fund the development of Eth 2.0-that was his own thing. Now he is a member of the leadership.” 

Joseph Delong is currently the CTO of Sushiswap , a DeFi platform , and this position has given him important community influence. 

Similarly, Soleimani talked about  Cooper Turley  (@Cooopahtroopa), Moloch DAO once paid for Cooper to write a year-end blog. Today, Cooper has become a key figure in DAO organizations such as Fire Eyes and Friends With Benefits. 

This is an unusual form of investment , even closer to establishing a network- lending financial and social capital to a DAO organization, and then reaping the rewards through the opportunities generated from it . 

These opportunities in turn have expanded the DAO ecosystem. Both Warren and Soleimani pointed out that DAO members usually continue to form new organizations, which may have different missions, goals, and needs -these needs will drive new investments in DAO infrastructure. 

In short, investors who want to allocate funds passively will ultimately be unable to grasp this trend; only those who are in it can perceive changes and cycles.

“Contribution Mining”

 In the end, despite the small number of tools and platforms available for investment (although their number is increasing), every expert who spoke with CoinDesk agreed that the best way to create value from this emerging vertical is to actively participate. Also known as “contribution mining” ( contribution mining ) . 

Warren joked: ” If venture capitalists try to invest in DAOs without joining any DAOs, it would be a stupid approach .” 

There are many guides on how to join a DAO  , but Tracheopteryx said that the process is not as complicated as interacting with a DeFi contract-investors only need to find a camp they like, and then chop wood or carry water. 


 Tracheopteryx said: “The answer is actually very simple,’What are you interested in? What is your belief? Who has the same values ​​with you? Is there anyone in this DAO who has the same interests as you?’ Just join its Discord and find the start. The way to contribute is fine.” 

After all, revolutions don’t necessarily require investment, they need to be down-to-earth—and, as Soleimani puts it, this opportunity to revolutionize the way human organization is structured is as exciting as the economic rewards: 

“I believe developers will figure out a way. We are just getting started. We have just demonstrated the capabilities of DAO. It can already be better in some areas, and we just need to prove that it can be better in other areas . There are limitless opportunities in this design space, and we can create structures that are more meaningful than existing structures.”

No matter how good the future of a particular DAO organization looks, if you want to benefit from it, you need to be involved .

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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