DAO – Decentralized Autonomous Organizations
Some of the challenges that hamper fundraising are being alleviated by decentralized autonomous organizations (DAO).
In the year 2021, the cryptocurrency market grew by leaps and bounds. Nonfungible tokens (NFTs), decentralized finance (DeFi), and the Metaverse have become household terms, with the crypto market reaching a high of over $3 trillion in November 2021.
NFTs changed the way people think about art and how they buy it. DeFi changed the way we lend and borrow money. The Metaverse created a virtual parallel universe in which we might all live and work. P2E (pay-to-earn) games reward players for doing what they enjoy. DAOs, or decentralized autonomous organizations, have had their time in the spotlight.
DAO – Constitution
ConstitutionDAO is likely to be one of the most unexpected crypto news of 2021. A hastily organized community of crypto believers who support the US constitution. The group used Ether (ETH) to fund more than $47 million to buy an original copy of the United States constitution at auction. Although the group’s bid was eventually unsuccessful, the chutzpah of the effort brought DAO’s ability to crowdfund to the attention of the general public.
The brilliance of that move, as well as what it came close to doing, serves as a model for how traditional crowdfunding should be properly managed. Without a marketing team or a dedicated growth director, ConstitutionDAO was able to raise $47 million from tens of thousands of addresses.
DAOs are a set of hard-coded rules that specify how a decentralized organization will function. They are member-owned communities without a leader. A DAO is essentially a co-op that governs itself using blockchain technology to count votes. The entire group is run using smart contracts. Typically, a native token is created for a DAO and is used by its members to vote on proposals.
DAOs are next on the ladder of modern crowdfunding
Over the last ten years, digital crowdfunding services such as GoFundMe, Patreon, and Kickstarter have attracted a lot of attention. The nature of crowdfunding, which is set up with low risk, is principally responsible for this increase. This risk is distributed across all stakeholders to a given idea or startup.
Traditional banking institutions will find it difficult to fund start-ups with financial demands. These institutions bear a significant portion of the risk associated with funding company concepts that may fail. With the global economy still recovering from the epidemic, the use of DAOs as a method for crowdfunding has grown in popularity because of their accessibility and lack of bureaucracy.
Digitalized crowdfunding in the form of DAOs has removed some of the financing form’s traditional limitations. Its simplicity makes it a force to be reckoned with when it comes to traditional crowdfunding approaches.
DAOHQ was founded by Emmet Halm, who dropped out of Harvard. DAOHQ describes itself as the first DAO marketplace where customers may learn about any DAO. To build the concept, the business just received over $1 million in funding.
DAOs, according to Halm, will be a better alternative for investors if traditional crowdfunding sites like Gofundme become more centralized. “I don’t think DAOs will replace crowdfunding sites; I believe they have already done so,” he added, adding that “the kind of political pressure that sites like GoFundMe receive for certain types of fundraisers makes them less desirable for raising funds.”