The Y Combinator of Web3 Attracts Record Number of DAO Startups

Blockworks Exclusive: DAOs and related startups made up an “overwhelming number of applicants” for a Web3 accelerator’s cohort this year

article-image

Source: Alliance

share

key takeaways

  • “It looks like [the vast majority of] FAANG engineers and Web3 founders [want] to build in DAO tooling,” Alliance’s Qiao Wang told Blockworks
  • Ink Finance, specifically, facilitates mergers and acquisitions for DAOs

As the number of DAOs has exploded this year to 4,832 — just the first 216 in assets under management (AUM) are responsible for $9.1 billion in Web3 assets — so has their pursuit of funding and exposure.

The uptick has been good news for one Web3 accelerator: Alliance. A record number of DAOs (decentralized autonomous organizations) and related startups will pitch to investors during Alliance’s Demo Day on Wednesday, Qiao Wang, a contributor, told Blockworks.

Last April, total DAO AUM was just $932 million, according to data dashboard DeepDAO.io. Specifically, 10.3% of those presenting at the Demo Day will be related to the nascent space.

“On the DAO side of things, we’re seeing an overwhelming number of [them],” Wang said. “It looks like [the vast majority of] FAANG engineers or Web3 founders [want] to build in DAO tooling.”

The startup accelerator accepted less than 5% of applicants this year. The “main goal” for roughly half the startups is to raise money, according to Wang.

Prospective applicants are considered based on the “caliber of the founders,” and “if they’re building something truly unique,” Wang said, adding that the criteria are not “absolute requirements” for acceptance.

“I don’t just look at credentials [of founders],” Wang said. ”It’s also based on an interview with myself and other partners of Alliance. [The] second thing is whether or not they’re building something novel.”


Alliance Presenters

  • Azuro is a blockchain-betting protocol governed by a DAO. The startup bills itself as a way to replace traditional bookmakers with independent data providers, front-end operators and liquidity providers.
  • Rain is advertised as the “credit card for DAOs,” aiming to make cryptocurrency spendable without a centralized exchange. 
  • Ink Finance facilitates mergers and acquisitions for DAOs in need of financing — comparable to a Web3 investment bank. 

Yury Lifshits, chief executive of DAO infrastructure company Superdao, told Blockworks the startup will be presenting Wednesday to “encourage people to use [their] services.” Superdao raised $10.5 million in January, raising its valuation to $160 million. 

The number of DAOs in Alliance’s cohort, Lifshits said, will continue to grow, because the number of DAOs in Web3 will do the same. 

“We estimate that up to one million DAOs will be created by the end of this calendar year,” he said.

Investing in new structures like DAOs with less lengthy track records always has some risk, general partner at VC firm Initialized Capital Brett Gibson told Blockworks. 

“DAOs are new…but there are a lot of different types of DAOs, DAO governance structures and relationships to the legal system,” Gibson said. “So if you believe in the ability of token economics to align incentives and believe the DAO is well structured and governed, a lot of risk is mitigated.”

One DAO in particular was plastered over mainstream headlines last year when a group of crypto investors raised $49 million in a bid to buy a copy of the US Constitution at Sotheby’s auction house. 

The group — dubbed ConstitutionDAO — later lost the bid to hedge fund billionaire Kenneth Griffin and dissolved.

DAOs, however, have had their own pitfalls as well — despite the surge in popularity.

“There have been DAOs that I’ve been a part of that have accidentally sent millions of dollars’ worth of tokens to the wrong address and then they were just lost forever,” Will Papper, co-founder of Web3 investing DAO Syndicate, told TechCrunch. “We have a lot of protections in place to help users, but there’s always a tradeoff between the protection we give them and the flexibility.


Start your day with top crypto insights from David Canellis and Katherine Ross. Subscribe to the Empire newsletter.

Explore the growing intersection between crypto, macroeconomics, policy and finance with Ben Strack, Casey Wagner and Felix Jauvin. Subscribe to the Forward Guidance newsletter.

Get alpha directly in your inbox with the 0xResearch newsletter — market highlights, charts, degen trade ideas, governance updates, and more.

The Lightspeed newsletter is all things Solana, in your inbox, every day. Subscribe to daily Solana news from Jack Kubinec and Jeff Albus.

Tags

Upcoming Events

Salt Lake City, UT

MON - TUES, OCT. 7 - 8, 2024

Blockworks and Bankless in collaboration with buidlbox are excited to announce the second installment of the Permissionless Hackathon – taking place October 7-8 in Salt Lake City, Utah. We’ve partnered with buidlbox to bring together the brightest minds in crypto for […]

Salt Lake City, UT

WED - FRI, OCTOBER 9 - 11, 2024

Permissionless is a conference for founders, application developers, and users. Come meet the next generation of people building and using crypto.

Javits Center North | 445 11th Ave

Tues - Thurs, March 18 - 20, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

recent research

4.png

Research

This months PPGC covered four main areas. Firstly, debriefing the progress and status of the mainnet implementation of the Ahmedabad hard fork. Secondly, a retrospective on the testnet phase of the Ahemdabad Hard Fork. Thirdly, an update on PIP-36 which involves replaying failed state syncs. Lastly, PIP-47 which pushes upgrades to the Polygon Protocol Council.

article-image

Institutions to test out the settlement of “digital assets and currencies” on a network that annually carries more than 5 billion financial messages

article-image

After Bitwise’s XRP ETF filing this week, one industry watcher notes: “Politics will determine whether this happens soon or in a few years”

article-image

Plus, a look back at some of the SEC’s biggest enforcement moves under Gurbir Grewal

article-image

The forward-looking financial system is being championed by several contributors to India’s UPI digital money system

article-image

Multiple teams are pursuing integration cross-chain and off-chain

article-image

An SEC spokesperson told Blockworks the Ripple judgment clashes with Supreme Court precedent and securities laws