The decentralized nature of DAOs and their dependence on vibrant, committed communities can be at odds with investors who are just in it for the virtual Benjamins.
A growing number of Ethereum enthusiasts believe that decentralized autonomous organizations (DAOs) could be the future of work, cultural communities and human organization. As such, some think that DAOs, like decentralized finance (DeFi) and non-fungible tokens (NFTs) before them, are due for a mainstream breakthrough.
On a basic level the thesis makes sense. After all, DeFi took off on the idea that it’s the inevitable successor to the traditional financial system while NFTs are soaring on the belief that they are the digital generation’s art world. So why shouldn’t DAOs, with their rules of organization programmed transparently onto blockchains, have their moment as they seek to replace the outdated hierarchical structures of centralized corporations?
Unfortunately, placing a bet on that trend playing out isn’t as cut and dry as buying some tokens.
At the MCON conference last week, over 300 attendees selected by the organizers met at a sprawling Denver brewery to discuss the future of DAOs. Even by the at-times Pollyannaish standards of the Ethereum community – a group that sincerely believes itself capable of building smart-contractual solutions to many of the world’s problems – the outlook was rosy and the mood upbeat.
“The way I’ve been thinking about it, if you look at DeFi it’s a bet on the future of finance. NFTs are a bet on – I’m not exactly sure. It could be art, it could be real estate, it could be any type of property – it’s a bet on the future of property,” Yearn.Finance core contributor and noted DAO air traffic controller “Tracheopteryx” told CoinDesk. “But DAOs are a bet on the future of human organization itself, which is an even bigger thing.”
And yet, among outsiders DAOs are scarcely understood. Mainstream media, financial pundits and regulators occasionally have some functional literacy when it comes to DeFi and NFTs, but DAOs largely remain a foreign concept – perhaps most well known to blockchain novices for the notorious hack of “The DAO,” an early DAO investment experiment that collapsed in 2016.
Today, there’s even some definitional debate about what a DAO is exactly. The acronym generally refers to a collection of on-chain rules governing an organizational body as well as – occasionally, but not necessarily – an attached pool of funds.
Ameen Soleimani, an early DAO pioneer and the founder of SpankChain, jokingly refers to them as “glorified budget committees” or “group chats with a joint bank account.”
“We don’t even know what ‘a DAO’ even means. There’s tons of competing definitions,” said Tracheopteryx. “We understand pieces of it but we’re still piecing it all together.”
For all the loose lexical rules, however, in recent years DAOs have arguably made more technical and developmental strides than any other blockchain sector. Many DeFi and NFT projects are DAO-governed; a large and growing percentage of the roughly $2 trillion total cryptocurrency market cap is managed by the entities. Tooling and functionality have seen significant upgrades with work from organizations like Colony , Aragon and Coordinape . Opolis , a benefits and payroll cooperative, can even help full-time DAO workers get health care. On a medium- to long-term time horizon, DAOs present the kind of vision that could entice any investor.
“Imagine if you could have bet on the concept of a corporation when the Dutch East India Company launched, imagine how much that concept space has grown on the planet in that time. And DAOs are the future of the corporation, of organization … it’s a much, much bigger market,” said Tracheopteryx.
As a number of experts told CoinDesk, however, betting on the future of DAOs is a surprisingly tricky proposition.
For months, DAO proponents have been hyping the organizations as the “next” asset class to rise after NFTs. New podcast just dropped w/ @Cooopahtroopa that you need to listen to this weekend:
•DAOs emerging as next big trend in crypto
•How to invest/participate
•VCs buying into DAOs
•Never selling his punk
•LOOT NFT drop
Alpha that costs 0 ETH to mint: https://t.co/YsKK0RB2T9 — Luke Martin (@VentureCoinist) September 4, 2021 “I do see a lot of interest and heat around DAOs that we haven’t seen before. I think of DAOs as the coordination of capital and culture. I’ll be interested to see how they grow,” said Kevin Owocki, CEO at DAO-run grants organization Gitcoin.
“If we’re successful, MetaFactory will disrupt Shopify, if we’re successful Friends With Benefits will disrupt Y Combinator, if we’re successful then Gitcoin will […]
source DAOs May Be the Future of Work, but Don’t Bet on Them Being the Next Big Asset Class
Protected by Patchstack