From Hype to Reality: Exploring the DAO Benefits in 2023
In 2021 alone, the value of DAO treasuries expanded by a factor of 40, from $380 million to $16 billion, and the number of participants increased 130 times from 13,000 to 1.6 million and in 2022 the value of DAO treasuries kept growing.
The hype surrounding the long-awaited airdrop of the Arbitrum governance token, which is a layer 2 solution with a self-executing DAO, gives us a positive outlook on the future of Decentralized Autonomous Organizations.
What issues can we address to DAO?
- Governance: DAOs can provide a transparent and decentralized way for members to participate in decision-making processes, such as voting on proposals and electing leaders. As a sample, ConstitutionDAO was the equivalent of a flash mob, a toy that showed how easily single purpose communities could rally around a given cause and fund an investment. In this case, it was the Constitution of the United States. But could this concept extend the “SPAC” model to rescue a sports club? Or buy out a small business or crypto venture? What about funding litigation versus a deep-pocketed enemy? The toy works. More innovations will follow.
- Funding: DAOs can be used to raise funds from a large number of contributors, allowing for more equitable distribution of resources and enabling collective investment in projects. Syndicates make it easier to spin up NFT and token investment clubs, which don’t require accreditation by members for many on-chain assets. These syndicates can be set up as DAOs, which can provide a transparent and democratic way for members to participate in investment decisions and distribute profits. By using DAOs, syndicates can also facilitate more efficient and secure management of funds and assets, reducing the risk of fraud and mismanagement.
- Community management: DAOs can be used to manage online communities, allowing members to self-organize and regulate behavior through decentralized mechanisms such as reputation systems and incentive structures. Gitcoin has remained one of the most innovative early DAO projects, having pioneered quadratic funding and helped seed core ecosystem infrastructure like ethers.js, Optimism, and Uniswap with over $70 million in grants since 2017. Their eight rules for creating Impact DAOs are good commandments for DAO organizers.
- Social impact: DAOs can be used to support social causes and impact investing, providing a way for individuals to pool resources and collectively address issues such as poverty, climate change, and inequality. One of the last examples is LinksDAO: they raised $10 million from 9,000+ members in January in order to DAO a golf course. Moreover, they will let you play golf with Mike Dudas (among other things).
Actually, current DAO management structures are not sustainable, meanwhile, the DAOs can suggest the following benefits and it’s a promising utilities of crypto:
1. Unprecedented control over how money is invested and directed versus most types of corporate structures. DAO contributors and workers truly are its owners.
2. The ability to leave a DAO, remove funds from its treasury at any time, and fork-off from the community without penalty is profound and inherently decentralizing.
3. An order(s) of magnitude improvement in the speed and cost of spinning up and winding down entities while real-world jurisdictions still cause headaches and expense.
In its turn our DeTech.World team is working on the ability to enhance Tech Assets ecosystem development via DAO. Moreover, we will test different DAO models to establish a sound alternative to today’s VC and Hedge funds. And we will share our experience with the community.
