Investment DAOs Landscape

Investment DAOs Landscape


Throughout history, the democratization of financial power has been a struggle. The story of finance is littered with examples of the few wielding power over the many. From the merchant guilds of the Middle Ages, which controlled trade and excluded outsiders, to the Wall Street titans of the 20th century, who often acted as gatekeepers to wealth creation, the financial world has been marked by a persistent imbalance of power.

New chapter has arrived. Enter Investment DAOs. The aim is to democratize investments, to break down the barriers of traditional finance, and to give power to the many, not the few. With blockchain in the backend, these organizations offer a new, more inclusive way for individuals to pool their resources and invest collectively.

In this report we will thoroughly explore all aspects on Investment DAO and the potential it has. The goal is to reveal the future of decentralized, inclusive, and democratic investments. Let’s dive in.

Why Investment DAO

To truly appreciate the revolution brought on by Investment DAOs, we must first understand their distinctive characteristics and benefits.

Venture Capital, and Investment DAOs,  – each has a unique flavor and serves a different function in the financial ecosystem.

Venture Capital represents the conventional landscape of investment, characterized by centralized decision-making. The advantages of this model lie in rapid decision-making and partner expertise. However, VC’s limitations are evident as it’s often confined to accredited investors, excluding a significant segment of potential contributors.

Moreover, the VC’s decision-making lacks the diverse insights that Investment DAOs offer, leading to potentially overlooked opportunities in niche fields. Additionally, the traditional VC model demands substantial time and capital commitments from both investors and invested companies, adding to its limitations.

Investment DAOs represent a shift towards decentralization. Unlike traditional methods, power isn’t centralized but distributed, enabling all members to participate in voting on investment decisions. As a result, these organizations harness collective intelligence to spot promising opportunities in emerging sectors.

Here’s a table comparing both VC and Investment DAOs

Venture Capital

Investment DAOs
PurposeGenerating investment returnsAccomplishing collective goals of the DAO while also generating returns
Decision-MakingCentralized decision-making by a small team of investorsCollective decision-making through voting by all members
AccessibilityLimited to accredited investorsOpen to a wide range of participants
ExpertiseExpertise of VC partnersVaried expertise of DAO members
Time/Capital CommitmentsSubstantial time and capital commitmentsVaries depending on the DAO
FocusAchieving investment returnsAchieving investment returns
Potential Overlooked OpportunitiesPotential in niche fields may be overlookedCollective intelligence helps spot opportunities in emerging sectors

Categories of Investment DAO

Investment DAOs can be categorized based on their focus areas. Let’s walk through this one by one:

Generalist Investment DAO can include various types of assets such as tokens, equity in startups, NFTs, and more. The key characteristic of a Generalist Investment DAO is its flexibility and broad scope in terms of investment opportunities.

Examples of Generalist Investment DAOs include:

  • Global Coin Research: Community-first Research and Investment DAO focused on Web3.
  • Metacartel Ventures: Investment DAO that funds and supports early-stage projects in the Ethereum and wider Web3 ecosystem. Checkout the portfolio here
  • Spaceship DAO: A group of crypto natives, founders, builders, and investors investing in blockchain start-ups and emerging crypto networks.
  • BitDAO: The largest DAO-directed treasury to support the growth of open finance and help decentralized token-based economies. Checkout the portfolio here
  • The LAO:  a for profit Investment DAO backing projects across the Ethereum and blockchain ecosystem. Checkout the portfolio here

Domain-Focused Investment DAOs are DAOs that specialize in investing in a specific sector or area of interest. These DAOs leverage the collective knowledge and expertise of their members to make informed investment decisions within their chosen domain.

Examples of domain-focused DAOs include:

  • Seed Club Ventures: Backing early-stage founders building at the intersection of Web3 and community.
  • Layer2DAO: Investing in Layer 2 scaling solutions for the Ethereum network.
  • ZeroDAO: Supporting the growth of Zero Knowledge Technology.
  • Hydra Ventures: First investment DAO fund of funds, investing in other investment DAOs.
  • BeakerDAO: Supporting the growth of decentralized science.
  • Komorebi Collective: First investment DAO focused on funding female and nonbinary crypto founders

NFT-Focused Investment DAOs are DAO that primarily focus on investing in NFTs. These NFTs can represent a wide range of tangible and intangible items, from digital art and music to virtual real estate and even rare physical item

Examples of NFT-Focused Investment DAOs include:

  • PleasrDAO: An aligned group of a few dozen crypto investors that have been teaming up to buy high-priced NFTs. Checkout the portfolio here
  • PunkDAO: A DAO that invests in Punks, Punk-related projects and the wider ecosystem. 
  • Flamingo DAO: NFT-focused DAO that aims to explore emerging investment opportunities for ownable, blockchain-based assets. Checkout the portfolio here
  • Fingerprint DAO: Collective with a collection of highly prized NFTs assembled by its curation committee. Checkout the portfolio here

These DAOs have made headlines for their high-profile NFT purchases and their innovative approaches to managing and investing in NFTs which makes them very prolific.

Gaming Investment DAOs are DAOs that focus their investment strategies on the gaming sector. This can include investing in game development companies, in-game assets and gaming infrastructure.

Examples of Gaming Investment DAOs include:

  • Dark Horse DAO: A collective focused on acquiring, managing, and maximizing yield-generating NFTs across the growing ecosystem of utility gaming and performance-based AI platforms.
  • Ready Player DAO: Making investments into gaming economies via asset acquisition, strategic partnerships, and development of guilds.
  • Blackpool DAO: Own and manage a range of digital assets from play-and-earn game items to metaverse plots. Checkout the portfolio here

Geographically Focused Investment DAOs are decentralized autonomous organizations that concentrate their investments based on specific geographical regions. These DAOs recognize that different regions have unique markets, opportunities, and challenges, and they leverage this understanding to make strategic investments.

Examples of Geographically Focused Investment DAOs include:

  • Glimmer DAO: NFT Collector DAOs focusing in Asia
  • Upside DAO: Investment DAO focusing in Australia
  • Afropolitan: Investment DAO focusing on creating a Digital Nation to enable all Africans to build abundant lives.

However, it’s important to note that while these DAOs have a geographical focus, their membership is typically global, leveraging the power of the internet and blockchain tech to bring together investors from around the world to invest in a specific geographical region.

Current Investment DAO Structure

Investment DAOs have introduced a new structure for investment that leverages the power of decentralization and blockchain technology. There are typically two types of admission to Investment DAOs

  1. Membership fees only: Have to either pay a one-time fee, chip in your valuable assets(NFTs) or hold X amount of such Investment DAO token. For example Global Coin Research, Blackpool DAO, BitDAO
  2. Membership fees + sweat equity: Have to pay one time fee and expected to contribute in some ways for the DAO. Typically the DAO is member-vetted and some have incentives mechanisms. For example ZeroDAO and Hydra Ventures

Once you’re in the club, the game begins. As a member of a DAO, you will take part in due diligence and calls with the soon-to-be portfolio company. You have a voice, a vote, and the power to decide whether to the DAO will invest in a project or not e.g. BitDAO. Other DAOs allows you to commit your personal capital to a project, as seen with Global Coin Research

Some DAOs will use the membership buy-in fees to invest different amounts in each project. As seen with Hydra Ventures, Seed Club Ventures and Flamingo DAO. Both schemes provide members more control over their investment portfolio and risk level.

Lastly, the member will wait until the Token Generation Event (TGE) so the holdings are liquid. Between those times members can help the portfolio company to succeed via marketing, recruitment and other support to further elevate their holdings.

Investment DAO Design Space

Investment DAOs, while revolutionary, are not without their own set of challenges. As we delve deeper into the intricacies of these entities, we identify six key areas that, if addressed, could significantly enhance their functionality and impact.

Let’s start off with risk management. Just like any investment entity, Investment DAOs face risks. But in the world of DAOs, these risks are amplified by their decentralized nature and the inherent volatility of the crypto market. Imagine if we could develop robust risk management strategies specifically tailored for DAOs to protect the upside of investing in portfolio companies. The impact could be transformative.

Next, consider the concept of dynamic voting power. In the current system, voting power is static, based on token holdings. But what if we could implement a dynamic system where voting power is also influenced by a member’s contributions to the DAO? Successful investment suggestions or active participation in governance could earn you more say in the DAO’s decisions.

Then, there’s the idea of a cross-DAO reputation system. Imagine a reputation system that works across multiple DAOs, incentivizing good behavior and discouraging malicious actions. Members could earn reputation points for positive contributions and lose points for negative actions. It’s like a credit score for your behavior in the DAO world.

We also see potential in DAO incubator programs. Experienced DAO members could provide guidance and support to new DAOs, helping them navigate common challenges and avoid potential pitfalls. It’s like a mentorship program for DAOs, fostering a supportive environment for growth and learning.

The concept of DAO-to-DAO services is another area ripe for exploration. DAOs could develop services that they provide to other DAOs, from technical services to governance consulting. This could create a vibrant ecosystem of DAOs supporting each other, fostering a sense of community and mutual growth.

Finally, there’s the need for a DAO operating and legal toolkit. Navigating the complex landscape can be a daunting task for DAOs. A toolkit that includes template legal documents, guides to relevant laws and regulations, and resources on how to operate an Investment DAO could be beneficial for operators which could lead to proliferation of Investment DAOs

The exploration of Investment DAOs opens up a new frontier in the financial world. This journey, though partly uncharted, holds the potential to revolutionize the investment landscape. The land is promising and we are excited about it.

[This article has been written and prepared by zkCyborg and GCR Research Team, a group of dedicated professionals with extensive knowledge and expertise in their field. Committed to staying current with industry developments and providing accurate and valuable information, is a trusted source for insightful news, research, and analysis.]

Disclaimer: Investing carries with it inherent risks, including but not limited to technical, operational, and human errors, as well as platform failures. The content provided is purely for educational purposes and should not be considered as financial advice. The authors of this content are not professional or licensed financial advisors and the views expressed are their own and do not represent the opinions of any organization they may be affiliated with.

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