Investment DAOs
Note: Data in this section last updated July 3rd, 2022
What are Investment DAOs?
Investment DAOs are collectives of investors who pool their capital to invest in early-stage crypto projects. Proponents argue they represent the ideal form of capital allocation and, as such, will replace VCs, PE shops and hedge funds.
Typically, membership in an investment-focused DAO involves an upfront buy-in in the form of the DAO’s governance token in exchange for access to private spaces – e.g. invite-only Discord chats, Telegram groups or in-person events – where deals can be sourced and checks written.
They offer several benefits over traditional funds including:
Better Due Diligence: Unlike traditional investment funds, who are generally limited to a small team of professionals, Investment DAOs can leverage a wide variety of expertise to gain insight into potential investment decisions. Membership is generally global, and these organizations are often composed of specialists from different disciplines including macroeconomics, business strategy and operations, sales & marketing, development and finance
Superior Decision Making: Given their diverse nature, Investment DAOs can leverage the “wisdom of the crowds”, gaining unique perspectives and avoiding potential blind spots. This stands in stark contrast to traditional investment funds, who often are forced to rely on a small group of advisors
Increased Deal Flow: Members are incentivized to find and research deals, recruit talent and find partnerships and opportunities for portfolio companies. This effectively gives an Investment DAO a global sourcing network
Less Risk: Unlike traditional funds which often require long lockups, Investment DAOs are often extremely liquid, allowing any investor to leave at any time with their pro rata share of assets
How do Investment DAOs work?
To understand how investment DAOs work, let’s take a look at BitDAO, the largest investment DAO. The project was launched by ByBit, a decentralized exchange operating out of Singapore.
The project looks to further the development of decentralized technologies such as smart contract platforms, Layer 2 solutions, NFTs, DeFi, etc… They can do this by making direct investments, performing token swaps, building products and / or providing grants to research teams.
With $1 billion in AUM, BitDAO boasts the second largest treasury of any DAO.
BitDAO holds $1 Billion in its Treasury
BitDAO raised nearly $600M in a series of token sales in the summer of 2021 (one private, one public). The tokens – trading under the symbol BIT – come with both ownership and governance rights, allowing holders to vote on a variety of initiatives including:
Investments: Direct investment in projects
Partnerships: Partner with projects through token swaps and co-development efforts
Development: Build core products that allow decentralized organizations to function more effectively, such as governance and treasury management tools
Grants: Grants to research teams, R&D organizations, educational programs, blockchain technology projects and other public goods
Protocol Upgrades: Changes to the BitDAO core code
This is not an exhaustive list by any means. Like any DAO, members have the ultimate flexibility to evolve with market conditions and find new ways to support the projects vision of an open and decentralized economy.
BitDAO is backed by several notable investors including Peter Thiel, Founders Fund, Pantera Capital, Polygon and ByBit.
Notable Investment DAOs
Source: DeepDao as of 7.2.22
Note: The above list is not exhaustive. Although generally ranked by size, some smaller projects may be included for illustrative purposes. In addition, while DAOs often span multiple categories, they were only included once in the vertical that is believed to represent the best fit
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