Top investment DAOs: The organisations that could prove profitable

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Investment DAOs offer a more accessible route to fund and profit from crypto projects

An illustration of miniature people gathering around investment tools                                 
Investors band together in investment DAOs and jointly fund crypto projects – Photo: Shutterstock
                                

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Venture capitalists have long dominated start-up funding. But with the young and innovative crypto industry, a new approach is being taken. Investment DAOs (decentralised automomous organisations) allow anyone to get in on the action and potentially reap profits.

But investors will need to be careful. Alongside the decentralised and accessible benefits of these organisations, there are still risks, such as the potential for depreciating governance tokens, and failed crypto start-ups

So before navigating the best investment DAOs, it is first important to recognise how they function.

What is a DAO?

What if venture capitalists were a decentralised body? Investment DAOs are making it more accessible for investors to band together and jointly invest in a crypto project. These are making the headlines, whether it is PleasrDAO, which bought the original Doge meme as an NFT, or BitDAO, which raised $230m within 20 minutes of its token going live.  

The foundation of these DAOs is the concept of raising capital from its members and investing it on behalf of this community into different projects. These projects can range from crypto start-ups to cryptocurrencies to non-fungible tokens (NFTs).

With accessibility and decentralisation being a central component, at the core of most DAOs is a governance token. Investors can usually vote on what should receive funding and how much should be allocated.

BitDAO

BitDAO logo

One of the biggest and most notable investment organisations is BitDAO. A total of $1.1bn is held in its treasury, which it is using to fund an ecosystem of projects, or, as  BitDAO calls it, “autonomous entities” (AE).

Currently, more than $600m has been invested in “AE”. These include the gaming collective Game7, which has a stated mission to “help make the gaming industry sustainable by ensuring it is equitable and fair”, and the blockchain education organisation EduDAO.

The most convincing factor of BitDAO is its backing and partnership with the cryptocurrency exchange Bybit. The Singapore-based  exchange is contributing 2.5 basis points (BPS) or two and a half hundredths of a percentage point, of its futures trading volume, to BitDAO’s treasury. Its whitepaper wrote: “Bybit will also dedicate resources for BitDAO protocol development and BitDAO partnerships.”

BitDAO has other significant backers. Peter Thiel, the billionaire and co-founder of PayPal, contributed to the organisation’s $230m token raise. Dragonfly Capital and Spartan Advisory, a boutique financial advisory firm, are also among its total of eight backers.

In addition, BiDAO has its own token that uses the ticker BIT. CoinMarketCap said: “The treasury tokens can be used for rewards, grants and swaps, and their usage is determined by the proposal and voting of the contributors.”

DAOVentures

DaoVentures logo

The investment organisation DAOVentures describes itself as a “DeFi ETF Index Fund for fund managers and crypto investors”. This DAO is more focused on exposing investors to a range of different established assets.

DAOVentures has three different products for its investors. The Citadel’s strategy is primarily to invest in major cryptocurrencies and altcoins. Those who choose this option will gain returns from yield farming.

DAO Stonks gives investors the ability to invest in FAANG stocks, which stands for Facebook, Apple, Amazon, Netflix and Google. It then uses “mirror protocol”, financial derivatives that virtually “mirror” actual listed stocks, to reap additional yield farming rewards.

Finally, there is a metaverse index that offers a similar approach to the Citadel stratey. However, in this case it gives exposure to digital world assets, such as Axie Infinity (AXS) and Illuvium (ILV).

DVD is the platform’s governance token, which allows holders to shape the future of DAOVentures. Investors need 1,000 DVD tokens to vote or suggest plans. These proposals could be a change to a strategy or the integration of a new asset.

DAO.vc

Marketplaces have become a common site in crypto projects, whether it is for music NFTs or crypto gaming assets. DAO.vc is curating a marketplace of crypto start-ups for investors to fund.

Its website says: “Earn safely on verified IT, DeFi, and blockchain projects without worrying about their failure, since you invest in a pool. Vote and manage a portfolio pool and the work of a platform based on the DAO principles.”

The investment platform has shown promise with its statistics. More than 2,000 investors have funded at least one project, and 270 start-ups are registered on DAO.vc. These companies range from new trading platforms to a DeFi poker game.

The revenue from these start-ups is split among contributors, in proportion to the amount funded.

Like most investment DAOs, the start-up marketplace has its own governance token for investors to decide its future direction.

Syndicate

Syndicate logo

Flipping the concept on its head, Syndicate gives users the chance to turn any wallet into an investment DAO. Its website says: “Syndicate is revolutionising investing by changing how communities and capital work together through accessible, effortless, and social Web 3.0 technologies.”

Syndicate has provided a number of tools to make this possible. By combining an Ethereum wallet like Metamask with Syndicate’s smart contracts, users can create a DAO. They can manage this with automated management infrastructure, such as deposit and distributions trackers.

Creators of these “investment clubs” can send links to other investors to join and add funds. Meanwhile, start-ups and other projects can pitch clubs in hopes of winning funding. The Komorebi collective is an example of this, it is an investment club that funds female and non-binary crypto founders.

The future of investment DAOs

While there are a many top investment DAOs to choose from, it is still a new concept. The profitability of these organisations, especially during the current bear market, is yet to be fully researched.

This has not stopped notable firms from jumping on the trend. Pitango, an Israeli venture capital fund, has recently announced its own investment DAO, which will be accompanied by a token.

But before investing in DAOs, investors should carry out their own due diligence. This is necessary, as some governance tokens, such as DAO.vc, have been depreciating. It is also important to note that not every start-up is successful in this cut-throat world of technology, making research a valuable investment tool.

FAQs

There are a number of ways to invest in DAOs. Investors can purchase the governance tokens, such as BIT or DAO.vc. You can also invest in a platform’s products, such as Syndicate’s investment clubs or the strategies from DAOVentures.

Remember, tokens and start-ups are not always profitable, so you should never invest more than you can afford to lose.

It depends. There is a wide range of investment DAOs to fit different needs. DAOVentures is providing exposure to different assets whereas DAO.vc has curated a marketplace of crypto projects.

You should always do your own research before choosing a DAO to invest in.

BitDAO is one of the largest investment DAOs. It has more than $1bn in its treasury and $600m in invested companies. The platform is also supported by Bybit through a constant stream of the exchange’s futures revenue

It could be. Investment DAOs are making investing in crypto projects and other digital assets more accessible. But some of the governance tokens have been depreciating, so investors should always carry out thorough due diligence before purchasing.

Further reading

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