Original source: Global Coin Research
Original compilation: Baize Research Institute
Throughout history, the struggle to democratize financial power has been ongoing. The story of the financial industry is replete with examples of the few exercising power over the many. From the medieval merchant guilds that controlled trade and excluded outsiders to the 20th century Wall Street magnates who often acted as gatekeepers to wealth, the financial world is characterized by persistentcontinuing power imbalance.
A new chapter has arrived, and the investment DAO (Investment DAO) has begun to take shape in its development in recent years. The goal is to democratize investing, break down the barriers of traditional finance, and empower the many, not the few. Through blockchain technology, these DAO organizations pool resources and invest collectively, providing individuals with a new and more inclusive way of investing.
In this article, we will delve into various aspects of investing in DAOs and their potential, revealing the future of decentralized, inclusive, and democratic investing.
Why do you need to invest in DAO?
To truly understand the revolution brought about by investing in DAOs, we must first understand their unique characteristics and benefits.
Venture Capital (VC) and Investing in DAOs——Each has a unique style and plays different functions in the financial ecosystem.
VC represents the traditional investment landscape, which is characterized bycentralized decision-making. The advantage of this model is thatquick decisionandprofessional knowledge. However, the limitations of VC are obvious, as its membership is usually limited to accredited investors, excluding a large proportion of potential contributors.
In addition, VC decision-making lacks the diverse insights that investing in DAOs can provide and may overlook many opportunities in niche areas. In addition, the traditional VC model requires investors and investee companies to invest a lot of time and money, which also increases its limitations.
Investing in DAOs represents a shift towards decentralization. Unlike traditional VC, power is not centralized and all members can participate in voting on investment decisions. Therefore, these DAO organizations use collective intelligence to discover promising opportunities in emerging industries.
The following figure compares the characteristics of VC and investment DAO:
What are the categories of investing in DAO?
Investing in DAOs can be classified based on their areas of focus.
Generalist Investment DAO (Generalist Investment DAO) can invest in various types of assets, such as tokens, startup equity, NFT, etc. The main features of the Universal Investment DAO are its flexibility and wide range of investment opportunities.
Leading general purpose investment DAOs include:
• Global Coin Research：Focus on the Web3 ecosystem and publish research reports within the community from time to time. Well-known projects invested include Manta Network, Mysten Labs (Sui), etc.
• Metacartel Ventures：Focus on early stage projects in Ethereum and the wider Web3 ecosystem. In addition to investing large sums in high-profile projects, a host of smaller projects have been funded through “grants,” including Zapper, Odyssy, and others.
• Spaceship DAO：Focus on startups in the Web3 ecosystem and emerging crypto networks. The portfolio includes EigenLayer, Argus and Arcadia, among others.
• BitDAO：Owns the largest DAO treasury (approximately US$2.1 billion), and has invested in EduDAO, Game 7, etc. It is currently merging with L2 network Mantle to establish the US$200 million Mantle Ecological Investment Fund to invest in high-potential projects in the Mantle ecosystem.
• LAO：Focus on early stage projects in the Ethereum and Web3 ecosystem. Well-known projects invested include Snapshot, POAP, ondo, NFTFi, etc.
An investment DAO focusing on xx fields is a DAO that specializes in investing in specific fields. These DAOs leverage the collective knowledge of their members to make informed investment decisions within their chosen domain.
Examples of domain-focused investment DAOs include:
• Seed Club Ventures：Focus on investing in the “intersection” of Web3 and other industries, such as early-stage projects of “Web3 + AI” and “Web3 + Social”. Well-known projects invested in include Lens Protocol, Stability AI, etc.
• Layer 2D AO：Focus on investing in Ethereum L2 network and ecological projects, investing in Velodrome, Acre Finance, Sperax, etc.
• ZeroDAO：Focus on investing in projects based on zero-knowledge proof technology, investing in Risc Zero and Lagrange.
• BeakerDAO：Focus on investing in decentralized science (DeSci) projects, investing in VitaDAO, LabDAO, etc.
• Hydra Ventures：Focus on investing in other investment DAOs. Invested in the aforementioned ZeroDAO and BeakerDAO.
• Komorebi Collective：The first investment DAO to focus on female founders and non-binary founders.
An investment DAO focused on NFT is a DAO that specializes in investing in NFT or NFT projects. These NFTs can represent a variety of tangible and intangible items, from digital art and music to virtual real estate and even rare physical artworks.
Examples of NFT-focused investment DAOs include:
• PleasrDAO：The DAO, made up of dozens of crypto investors, has been teaming up to buy popular high-priced NFTs.
• PunkDAO：Invested in early-stage projects in the NFT field, investing in Lens Protocol, Argus, Tribe, etc.
• Flamingo DAO：Invest in early projects in the NFT space.
• Fingerprint DAO：A DAO composed of artists aiming to create and collect well-known artwork NFTs.
These DAOs often make headlines for their high-profile purchases of NFTs and their innovative methods of managing NFTs.
An investment DAO that focuses on games is a DAO that specializes in investing in chain games. Investment targets include game development companies, in-game assets and game infrastructure.
Examples of gaming-focused investment DAOs include:
• Dark Horse DAO：A DAO based on the digital horse racing game Red Run, designed to acquire and manage NFTs in the game to maximize revenue generation.
• Ready Player DAO：It invests in the game economy through asset acquisitions, strategic partnerships and guild development, and has invested in more than 20 chain game projects such as Petaverse, Pixion, and Avalon.
• Blackpool DAO：Own and manage a range of digital assets, from items in P2E games to Metaverse virtual lands.
There are also geo-focused investment DAOs that focus investments based on specific geographic areas. These DAOs invest by recognizing that different regions have unique markets and opportunities.
Examples of geographically focused investment DAOs include:
• Glimmer DAO：Asia-Focused NFT Collection DAO
• Upside DAO：An investment DAO focused on Australian crypto projects
• Afropolitan：An investment DAO that is currently focusing on creating a “digital nation” that will enable all Africans to live a prosperous life.
However, it is worth noting that while these DAOs are geographically focused investments, their membership is often global.
How to participate in the current investment DAO?
Investing in DAO uses the power of decentralization and blockchain technology to create a new investment structure in which everyone can participate and participate in decision-making.
There are usually two types of participation thresholds for investing in DAO:
• Membership fee only:You must pay a one-time fee, stake your assets (NFTs), or hold a certain number of DAO tokens. For example, Global Coin Research, Blackpool DAO, BitDAO
• Membership fee + contribution:One must pay a one-time fee and contribute to the DAO in some way. Usually, those who want to join these DAOs must go through review, and some also have contribution incentive mechanisms. Examples include ZeroDAO and Hydra Ventures
As a DAO member, you will participate in the research required for investment projects. You have the right to speak and vote to decide whether the DAO invests in a certain project. Some DAOs even allow you to invest personal capital in the project.
Some DAOs allow members to customize membership fees. The higher the membership fee, the greater the share. As shown by Hydra Ventures, Seed Club Ventures and Flamingo DAO.
During their participation in the DAO, members can help the projects they have invested in succeed through marketing, recruitment and other support, further increasing profitability.
Opportunities and challenges faced by investing in DAO
While investing in DAOs is revolutionary, it also comes with its own set of challenges. After in-depth research, we identified six key issues that, if addressed, could significantly enhance its functionality and impact.
• Risk Management:Just like any VC, investing in a DAO comes with risks. But in the world of DAOs, these risks are amplified by their decentralized nature and the inherent volatility of crypto markets. Therefore, a robust risk management strategy needs to be tailored for DAO.
• Dynamic voting rights:In the current system, voting power is static and based on token holdings. But what if we could implement a dynamic system where the size of voting power is also influenced by members contributions to the DAO? Successful investment advice or active participation in governance can give you more say in DAO decisions.
• Cross-DAO reputation system:Imagine a reputation system running across multiple DAOs, incentivizing good behavior and discouraging malicious behavior. Members can earn reputation points for positive contributions and lose reputation points for negative behavior. Its like your credit score in the DAO world.
• DAO Incubator:Experienced DAO members can provide guidance and support to new DAOs, helping them navigate common challenges and avoid potential pitfalls.
• DAO-to-DAO services:DAOs can develop services that are offered to other DAOs, from technical services to governance consulting. This helps create a vibrant DAO ecosystem that supports each other and grows together.
• DAO Legal Toolkit:A resource toolkit containing legal document templates, guidance on relevant laws and regulations, and how to operate an investment DAO may be beneficial to DAO developers, which may lead to a surge in investment in DAOs
The exploration of investment DAO has opened up a new field in the financial world. This journey, while still full of unknowns, has the potential to revolutionize the investing landscape. The outlook is bright, and were excited about it.
risk warning:
The above items and opinions should not constitute investment advice, DYOR. According to the Notice on Further Preventing and Dealing with the Risk of Hype in Virtual Currency Transactions issued by the central bank and other departments, the content of this article is only for information sharing, and does not promote or endorse any operation and investment behavior. Participate in any illegal financial practice.
