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# Collector DAOs
## **What are Collector DAOs?**
Collector DAOs are the close cousin to investor DAOs in that they pool money together to purchase and co-own digital assets such as NFTs.
These DAOs became popular in response to the NFT boom of 2021, which saw [average prices increase from $128 to $6,900](https://www.bloomberg.com/news/articles/2022-03-03/nft-mania-show-signs-of-cooling-as-average-price-sales-decline#:~:text=Nonfungible%20tokens%20%2D%2D%20most%20often,best%20month%20ever%20in%20January.) (including several high-profile sales such as *Beeple’s Everydays* for $69.3 million). As asset prices became out of reach for the average person, collector DAOs offered a logical way to preserve access to the most desirable NFTs.
**The NFT Market has grown over 300x since 2021**
Collector DAOs provide members several unique benefits including:
* **Shared costs**: Sharing the cost of expensive NFTs dramatically lowers the barrier to entry for the average user (as well as the risks)
* **Collective Intelligence**: Like investment DAOs, collector DAOs can leverage a diverse set of viewpoints and experiences to help them make decisions into what projects to invest in
* **Flexibility**: In addition to pooling funds to purchase art, collector DAOs can choose to make angel investments with the goal of growing the entire digital art community
## **How do Collector DAOs work?**
To understand how collector DAOs work, let’s take a look at PleasrDAO, an organization that focuses on the collective purchase of expensive NFTs. The project was founded in 2021 and is backed by Andreessen Horowitz.
The DAO pools capital from potential investors, uses this money to purchase an NFT and then returns each investor a token representing their pro-rata share of the NFT.
For example, if Alice contributed $1,000 to the purchase of a $100,000 NFT, she would get 1% of the tokens issued by Pleasr. These tokens can generally be traded on the open market, giving investors liquidity and allowing them to speculate on asset prices.
Shares are created through a process known as “fractionalization” – a method of *economically* splitting up the ownership of an NFT into smaller pieces which can be bought, sold, traded and held by multiple users.
The term “economically” is key here as NFTs can’t actually be divided (much like you couldn’t cut a physical piece of art into little pieces without destroying its value). Instead, the process of fractionalization involves the issuance of tokens that represent a *claim* on the original asset.
**Fractionalization of a CryptoPunk**
PleasrDAO often uses a platform known as Fractional to distribute tokens to the community. To issue a token via Fractional, PleasrDAO would need to:
* Create a Vault: PleasrDAO would deposit their asset as collateral in a “vault” on Fractional and specify the number of tokens they want to create
* Mint Tokens: Once the collateral is deposited, Fractional issues the PleasrDAO 100% of the fractional ownership tokens
* Distribute Tokens: PleasrDAO would distribute each investor their pro-rate share of tokens.
Fractionalization yields several benefits in that it: 1) allows the average user access to extremely expensive works (such as CryptoPunks or Bored Ape Yacht Club), 2) facilitates price discovery and 2) provides liquidity allowing members to sell a portion of their assets (which can’t be done with traditional NFTs)
To date, PleasrDAO has purchased several notable works such as the “DOGE” meme NFT for $4million, an NFT from Edward Snowden for $5.5 million and the only copy of an album from the Wu-Tang Clan for $4 million.
## **Key Players**
In addition to PleasrDAO, other notable collector DAOs include Merit Circle, FingerprintsDAO, Bright Moments DAO, Flamingo DAO, Squiggle DAO, Constitution DAO and Yield Guild Games.
Source: [DeepDao](https://deepdao.io/) 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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