How Coinbase Finds DAOs: Trademarks, Flaws, and Future Prospects

The Internet is for communication and DAOs can be used as capital.

The advent of the internet and social media has made it easy for people to communicate no matter where they are. In the context of booming digital and financial benefits, new types of relationships have emerged that allow people to benefit not only from communication but also from investing. . Like collaborations, these new networks are not limited by border areas and can attract large audiences.

Some people believe that Decentralized Autonomous Organizations (DAOs) can change the way people organize themselves and ultimately exceed the size and acreage of the largest companies or countries in the world.

In this article, we'll explore the current DAO landscape and future issues.

What is DAO?

DAO stands for Decentralized Autonomous Organization and refers to the Web3 model of a business or organization. DAOs allow people to focus their resources on a common goal and share the value that was created when the goal was achieved.

Just as the Limited Liability Company (LLC) has been the most popular organization since the reform, so has the DAO of Web3. Businesses have their roots in the traditional financial system and are created by legal contracts, while DAOs operate on public blockchain networks such as Ethereum, join as tokens, and are created by code encoded in contracts. intelligent.

Because DAOs aren't limited by location, they can quickly and easily develop skills from anywhere in the world. This view had a profound effect on DAO, which recently raised over $ 40 million from 17,000 donors in a single week.

But DAOs can do more than help people around the world predict historical data and can change the way we plan our business.

What can DAOs do?

According to data from DeepDao, there are now over 180 DAOs managing over $ 10 billion in assets and attracting nearly 2 million members. DAO resources include large DAOs that help manage crypto and small processes around investing, community, media, and philanthropy.

contract DAO

With the advent of the Ethereum smart contract in 2018, many new currencies and crypto processes have exploded. Back then, developers were developing systems for users to trade and borrow assets (like Uniswap, Compound, and Aave). However, these agreements are designed to be fair and managing their growth and development has become difficult over time.

The effect of the DAO agreement is not to pass all decisions to the development team, but to provide users with administrative rights for future development information. Typically, contracts declare tokens based on user usage and participation, and provide users with voting rights. Each user can submit suggestions for improving the process, and token holders can vote on whether the developer should comply with the request. More tokens = more energy to vote.

For example, Uniswap token holders are now voted on at Layer 2, where tokens must be submitted. Token holders can also design and vote on everything from business plans to Uniswap to manage its $ 2 billion budget.

As of December 20, the DAOs with the most important management tools are Uniswap, Lido, Radicle, Compound, Olympus and Aave.

Investment / DAO yield

The second category is the investment or acquisition of DAO. These DAOs allow members to raise funds and invest them in specialized funds. They range from investments such as DeFi contracts or NFTs to more demanding goals such as buying rare historical records or playing a sport.

Like other types of utilities in the crypto industry, DAOs provide a quick and easy way to raise capital compared to the laws associated with traditional financial services. These DAOs are more transparent than traditional investment funds because members can explore all aspects of the supply chain.

PleasrDAO, MetaCartel Ventures, Flamingo and Komerabi are all good examples of DAO companies, deciding to invest together and share the profits when these investments are identified. Likewise, Syndicate is a design tool that makes it easy for anyone to create their own CAD capital.

DAO sociale

Social DAO aims to bring together people's interests through online communities and to engage around the symbol. Examples include Friends with Support and their FWB token. To join this DAO, the user must submit an application and submit 75 FWB tokens (which can be understood as a membership fee). , and create community and special events.

By creating a unique environment, members are committed to creating a productive community where they can share understanding, hold meetings, and throw big parties. For example, as more and more people join the FWB community, the value of tokens will increase at the same time. The cost of an FWB is around $ 10 to $ 75, so the cost of participation should be around $ 750 to $ 6,000.

Some other DAO relationships use NFTs as a means of opening up community access. For example, there's the Bored Ape NFT open-access Discord, events, airdrops, and Bored Ape Yacht Club derivatives. In this regard, visible community benefit drives the value of NFT.

Currently, social DAOs are still in their infancy and it will take some time to see which models work and which do not. However, the rapid growth of these communities shows that they represent a strong new organization.

service DAO

DAO Services is like an online organization capable of engaging people around the world to develop products and services. Consumers can receive special bonuses for certain tasks, and at the end of operations, part of the funds must be paid to the DAO bank before being rewarded to partners. Most partners also receive DAO management tokens.

Most early intervention DAOs, such as DxDAO and Raid Guild, have focused on recruiting experts to create a complete ecosystem. Their customer base includes crypto plans or contracts that require software development, graphic design, and marketing.

DAO services can transform the way people work, support the overall work ethic at their own pace, and take control of DAO. Early DAO services focus on the crypto industry, but the situation is under review. If Uber were to replace UberDAO in the future, UberDAO would partner with the passengers while providing control of the DAO driver (DAO is still built into the traditional business, it will take a long time).

media stamp

Media DAOs aim to streamline the process of creating media content, users and conversations. These DAOs do not rely on financial advertising models, but rather use tokens to reward developers and consumers.

The idea of ​​decentralized media dates back to the 2013 'Let's Talk Bitcoin' podcast, but we use the popular 2021 BanklessDAO project as an example. Bankless is an advertising hub for Ethereum, mainly producing podcasts and newsletters. Recently, Bankless has bundled aerial BANK tokens for readers. Readers can also contribute to Bankless by creating books, researching, graphic designs, translations, business services, and voting for big decisions to get more money than BANK.

While many believe ad format revenues have exploded, Media DAO has another way to meet the preferences of readers, developers, and broadcasters.

Funding/Charity DAO

Fundraising / Charitable DAOs, like Investment DAOs, allow members to raise funds and use them for a variety of purposes. The only difference is that the money / DAOs invest without the need for a payback.

Gitcoin is a pioneer in this model, providing funding for some of the biggest open source sites that will struggle to be financially successful. Likewise, major systems such as Uniswap, Compound, and Aave have unique DAO features that allow community members to vote on how funds are allocated to pay for production costs to support long-term growth.

In an effort to re-examine how freebies are available, DAO services are slowly emerging. For example, Dream DAO would advertise NFTs to raise funds and then allow NFT insurers to allocate that money to goals (like the Citizen Leaders Fund).

Challenges meet DAOs

DAOs, which are multidisciplinary, have become the standard design of Web3, which can streamline the way we manage, invest, operate, build, and deliver. At the same time, significant changes should be considered in terms of the grade, quantity and quality of DAO in the future.

However, DAO still has a long way to go. The problems are evident when you determine that DAO's primary role is to change the course of business management for centuries. Today we see 4 negatives in DAO.

There are no clear laws / regulations

No good cooperation

no infrastructure

Risks of smart contracts, fragmentation and sustainability

There are no clear laws / regulations

Companies still have specialized offices, and work rules are authorized by the government and the city. Therefore, the government will also establish rules that companies under its authority will have to follow. Because DAOs do not have a physical facility and do not operate like a business, they cannot fit into existing business processes.

DAOs must consider various laws and regulations while protecting their members from risk. What to do with DAO tokens and financial activities from a tax point of view? How do I report income to a member?

In the United States, DAOs are currently faced with adjustment situations due to the responsibility of the company or its general involvement in certain decisions. The previous membership destroys the DAO's ability to govern under the terms of the smart contract, while the latest membership may allow its members to take responsibility by mutual consent.

The downside is that the ambiguous management makes it difficult for DAOs to interact with real businesses. The U.S. state of Wyoming has been pushing for legislation that allows DAOs and LLCs to still operate legally and be governed by their own smart contracts, but the U.S. Securities and Exchange Commission has protested. Secretary).

A16z and OpenLaw have provided legal standards for DAOs, but in the future DAOs will need to work more in the gray area.

All of these uncertainties suggest that in the near future, DAO growth may be focused on the crypto industry. The rule of thumb only increases as DAOs try to break into the traditional industry like UberDAO.

No good cooperation

There are reasons why companies don't engage with every employee in every decision. Because it's a bad way to work and not everyone deserves to be involved in a decision. The existence of hierarchical companies eliminates the need for more qualified personnel to make difficult decisions together.

Many DAOs are now available under strict control with 1 token = 1 vote. In large DAOs with thousands of symbol holders, this can lead to inconsistencies in decision making, and even members with "demons" can be overwhelmed by cuts done correctly. For DAO to be truly successful, it would require extensive research into governance models, including the transition to a support structure in which token holders can vote for valid and important decisions.

Therefore, in the short term, the DAO administration seems to be in a state of chaos until after trying different models, it finally finds standard management which has real rewards.

No infrastructure design

Just as businesses benefit from strong legal standards and decision-making processes, improving efficiency also has its benefits. However, DAOs need to establish a similar process from scratch.

CAD tools for administration, advertising, financial management and communications are still in their infancy. Fortunately, the field of CAD tools is deeply ingrained in the human mind and hundreds of teams are now working on these loopholes.

There are a lot of great teams that are not mentioned here, but in terms of management tools, we are proud of the collection of Messari tools, which allows us to monitor and participate in respecting the management of different DAO by interaction.

Risks of smart contracts, fragmentation and sustainability

It is difficult to talk about DAO without mentioning "DAO". DAO was Ethereum's first DAO, but 40% of its revenue was stolen, resulting in a loss of nearly $ 60 million. DAO finances also pose a risk to smart contracts, as evidenced by the recent US $ 130 million in BadgerDAO.

Some large blockchains also have a history of disruption due to community fragmentation. The Bitcoin and Bitcoin Money fork was born out of a size debate. The Ethereum and Ethereum Classic fork is caused by disagreements over how to resolve the mentioned "DAO" hack problem. Thus, we will see similar “splits” in larger DAOs in the future.

On the flip side, when winter cryptocurrency arrives, how secure is DAO? Will people be more excited about DAOs as token prices continue to drop, base funds drop, membership shrinks, and membership drops?

Reconnect the world with DAOs

Although DAO has many problems, DAO represents a change in the organization. If Web3 becomes a shared user on the Internet, then DAO will become a regulatory entity.

In 2021, we see an increase in CAD experiences and new models. At the same time, the combined tools to develop DAO capabilities and all DAO perspectives are still the most important in the crypto industry.

DAO invested by Coinbase

If this trend continues, we will one day see large corporations, corporations, media, and organizations as open, non-regulatory blockchains. Likewise, as users encrypt knowledge improvements, DAOs can seem to shift corporate responsibility as the organization becomes more interested in the digital world.