DAOs - The Future Boardroom of Internet Organizations?
My recent deep dive into the NFTs (Non-Fungible Token) space has now got me into the magical world of DAOs (Decentralized Autonomous Organization). For the uninitiated a DAO can be described as an open source blockchain protocol governed by a set of rules, created by its elected members, that automatically execute certain actions without the need for intermediaries. It can function pretty much like a regular company but in a completely decentralized and autonomous manner.
FlunkDonkeys an NFT project which I invested in a few months ago ran into rough weather recently. After the initial launch hype subsided, sales turned lukewarm and the floor price of the NFTs plummeted by over 85%. Paper hands (crypto lingo for investors who don’t have conviction in a project and sell early) started dumping their NFTs and the project fell to the bottom rung of the Solana marketplace. Diamond hands (crypto lingo for long term holders) like me decided to wait and watch the action. My primary reason for investing in this new and emerging asset class was more to learn than for financial gain. Multiple reasons caused this to happen:
1) Money moves into various crypto assets in waves. From Bitcoin to Ethereum, to Layer 1 protocols, then Layer 2, to small caps and then meme tokens and so on. FlunkDonkeys launched at the time when the unprecedented NFT craze of 2021 was slowing down. Timing is important.
2) The project launched on the Solana blockchain which isn’t well known yet for its NFT marketplace as compared to the Ethereum blockchain where most of the big NFT projects reside. So, exposure and traction were limited.
3) Most importantly the creator’s interest waned and they could not invest as much time, effort and resources into the project as required and decided to move on to other things. Marketing and community building are as essential as uniqueness of the art for the success of any NFT project.
4) Also, the future roadmap and the real use cases for this project were not clearly defined which can be a huge limiting factor for NFTs.
Image: FlunkDonkeys NFTs
However, the art of the FlunkDonkeys was top notch and comparable to wildly successful NFT projects like Bored Ape Yacht Club (BAYC). The community absolutely loved the project from the beginning and the college campus atmosphere created in the Discord servers was electric and full of fun. The Donks (NFT owners) took great pride in flunking college and always behaved at their rowdiest and rudest best.
Sensing the waning interest of the creators the Donks decided to take up the matter into their own hands, or shall we say feet and petitioned the creators to give up control so that the community can take over the reins and decide the future course of action. The community was clearly engaged to provide greater purpose and value to the existing and future Donkey holders. Fortunately, the leadership team not only agreed to give up control but will also be available for consultation on the future roadmap development. Accordingly, the DonkDAO was established and announced.
“Congrats!!! Not too long ago, we actually formed a DAO and named it the ‘DonkDAO’ through popular community vote. Sheesh, when asses get together and focus on their limited capabilities, lots of shit happens! It’s truly terrifying to see where we can go from here...”
The creators made available the source code and assets for future development work as well as for exploring added utility. Many members voluntarily stepped forward to form the backbone of the DAO, such as Developers, Concept and Design and for Operations. Members have kept in mind what is currently legal in the US and other crypto friendly countries so that the DonkDAO structure doesn't fall foul with the SEC and other crypto regulatory guidelines. Whats amazing is that both the members and founders are pseudonymous, their identities are shielded and can only been verified by software. Based on the community's input, governance and planning issues are getting voted upon this week. 5678 Donks were minted, and each will have one vote. I own 6 Donks, so have 6 votes to decide on:
1) DonkDAO Governance and Structure: This includes a DonkDAO charter or “raison d’être”, How Donk decisions are made and the core structure of the DAO to ensure continuity and execution.
2) DonkDAO Finances: Usage of current funds and allocating % of future royalties going to the DAO, ensuring a transparent mechanism for all DAO transactions.
3) DonkDAO Roadmap: Publish a new dynamic roadmap which includes short-, medium- and long-term objectives.
The above announcement has already provided a fillip to the Donks, which have risen from the bottom of the ladder to the middle rung on the Solana marketplace. Floor price has increased as well. This project is currently valued at $800,000 and as the DonkDAO builds use cases like blockchain games, organize live events, sell merchandise, build launch pads for other NFTs, publish comics etc., FlunkDonkeys could easily become one of the top projects on the Solana blockchain. If this NFT project succeeds, it'll be a fabulous advertisement for DAOs in general as they aim become the core of every future internet organization.
NFTs are increasingly becoming mainstream with many global brands now adopting them including Nike, Coca-Cola, Asics, Yumm Brands, TikTok, Visa, Bacardi, American Eagle, Warner Bros, McDonalds, WWE, Ray-Ban and NBA to name a few. Every consumer brand will use NFTs of some sort to incentivize and share value with their loyal supporters and community. Universal Music yesterday announced that it is converting four NFTs into a music band called Kingship. Kingship will consist of four digital characters — three bored apes and one mutant ape — all part of an NFT Bored Ape Yacht Club. Beat this?
Image: Kingship band digital characters from BAYC NFT
The above DonkDAO is a simple example of how DAOs will govern many billions of dollars and control the upgrade path for the future financial infrastructure of the world. The tokens which grant access to DAO voting will play an increasingly important role for investors to take best interest changes into their own hands, while also earning revenue from the success playing out through protocol fees. These assets are a superset of what equity in a traditional public company is, and thus will flourish in the DeFi world in which they were natively built. Welcome to the internet boardroom!