The Future of DAOs: How the Investment Landscape is Evolving

While private companies are tight-knit, hierarchical, invite-based and sometimes not transparent, DAOs are loose grassroots networks with transparent, open and global networks.

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key takeaways

key takeaways

  • The DAO ecosystem has increased $265.3 million in the past month and over $165.2 million in the last week to $862.8 million as of July 6, according to DeepDAO, a company that analyzes, lists and ranks top DAOs.
  • While major DAOs have millions in AUM, there are other formats to creating DAOs as well, that don’t require millions in funding.

Decentralized autonomous organizations (DAOs) are growing fast as individuals are pooling funds together to work on making decisions through blockchain technologies, but some industry players say you don’t need much capital to get involved. 

DAOs can take on many different missions or platforms and are continuing to grow globally. The DAO ecosystem has increased $265.3 million in the past month and over $165.2 million in the last week to $862.8 million as of July 6, according to DeepDAO, a company that analyzes, lists and ranks top DAOs.

While private companies are tight-knit, hierarchical, invite-based and sometimes not transparent, DAOs are loose grassroots networks with transparent, open and global networks. 

“Online communities are like an open green field. People can walk around, meet others, have conversations, share ideas, play fun games,” said Aragon, a platform for building and running DAOs. But DAOs let people turn those “open green fields” into more permanent and productive spaces, “where strangers can trust each other, make decisions as a group, reward individuals for their contributions, and share in the common benefit,” Aragon said.

DAOs are communities of people who have intention to own things together and move their money into decisions or causes they want to chip in on, said Erikan Obotetukudo, founder and managing partner of Audacity Fund, during the “CoinShares Conversations: How DAOs are Changing the Investment Landscape” virtual event.  

Communal funding can go a long way and it’s helping people “get their moment to shine” through small to large vehicles of help, Obotetukudo said. 

While the first DAO was created only five years ago, many have gained traction like the first community-owned non-fungible token (NFT) marketplace, Rarible, which is ranked the largest DAO globally with $157 million assets under management, according to DeepDAO data on July 6. While Rarible has a CEO and co-founder, Alexei Falin, the organization is based on a community governance model. 

“The ultimate goal of Rarible is to evolve into a fully DAO, where all governance and decision rights belong to the platform users,” the company wrote. “By providing creators and collectors with the opportunity to propose and vote on platform upgrades, we make sure that the platform becomes a public good, responsive directly to its community members. On Rarible, you have a voice, and your voice is heard,” it said. 

Participation and creation for less

While major DAOs have millions in AUM, there are other formats to creating DAOs as well, that don’t require millions in funding.

Companies like Syndicate Protocol, a decentralized investing platform and social network, are trying to dramatically lower the barriers to help people create DAOs by not requiring a significant amount of capital to get started, Ian Lee, managing director of IDEO CoLab Ventures and co-founder of Syndicate Protocol, said during the virtual event. 

On the platform, people can start their own DAOs for as little as a $500 to $10,000 in pooled investment, opposed to typical fundraising of millions or more, he said. 

The growth of DAOs is inevitable. It’s where the world is headed and it’s going to happen a lot faster than people realize, Lee said. He projects that in the next five to 10 years there will be millions or billions of investment-focused DAOs globally. 

“DAOs are ways for communities, populations and people who have been blocked out of opportunities to participate and generate wealth,” while empowering others to invest and participate in these spaces, Lee said. 

Companies like Syndicate can change the field of investing like the way YouTube changed film, or the way Spotify changed the music recording industry by helping organizations and individuals become great without needing a lot of investment, Lee said.

In the future, social media will reflect on “what you believe in, what you choose to invest in and what those causes are around, creating an alternative option to today’s social networks,” Lee said.  

Additionally, DAOs can help people scale their participation in ways they might not have been able to do before, said Kinjal Shah, an associate at Blockchain Capital and member of Komorebi Collective, a DAO focused on funding female and non-binary crypto founders. “It’s like clubs in high school where you can support many different things and DAOs are a great way to go and do that,” Shah said during the event. 

And if someone puts more capital in, it doesn’t mean their vote is worth more, she said. “We want to ensure that every vote is equal,” and these decentralized platforms will help enforce that, Shah said. 

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