Over the past few years, Decentralized Autonomous Organizations (DAOs) have become increasingly popular in the world of cryptocurrency. Whether you’re a fan of meme coins, NFTs, or DeFi, chances are you’ve come across a DAO at some point. DAOs are unique organizational structures where control is distributed through the distribution of tokens, rather than traditional hierarchy. These are typically online communities that are focused on achieving specific goals. They come in various forms, ranging from light-hearted groups pooling funds to purchase items to more serious decentralized investment funds and service entities.
Investment DAOs, such as Vanta Investment DAO, are DAOs where users come together to pool their funds for investments. In a traditional investment DAO, members invest their capital and receive tokens representing their share of the total investment. From there, members source investment opportunities for the DAO to consider. When a deal is presented, members vote on whether or not to invest using their shares. It’s important to note that each DAO operates differently based on its setup and goals. One example of such a DAO is Hydra Ventures, which follows a similar structure to the one described.
Another form of investment DAOs is a syndicate, where users gain access to the DAO by purchasing an NFT or a specific amount of a token. Vanta DAO, for example, uses a membership NFT to grant access. Members can choose to contribute funds to investments as they see fit. The benefit of investing in a syndicate is the quality of deal flow and the collective wisdom of the group. With multiple members sourcing deals and vetting investments, opportunities are thoroughly scrutinized compared to individual investments.
Investment DAOs like Vanta are self-sufficient entities that allow members to actively participate in the decision-making process. Members can acquire membership NFTs, which grants them access to the deal flow and investment opportunities. Those who wish to be more involved in the operations can take on various roles within the DAO. Researchers, for instance, compile research reports on potential deals and are compensated from the DAO treasury. Participants who source investment opportunities are also rewarded based on the total investment made in their successful deals.
The Moloch DAO framework, created following the infamous hack of “The DAO” in 2015, is commonly used in investment DAOs. This framework features the rage-quit function, allowing members to exit the DAO with their funds in the event of a disagreement over a proposal. The MolochDAO framework has been instrumental in shaping the future of DAOs and providing a more transparent and efficient governance model. Hundreds of investment DAOs have been launched using this framework, and thousands of DAOs have been established in various industries.
As investment DAOs continue to evolve, the syndicate model employed by Vanta DAO is gaining popularity. By decentralizing its operations and giving ownership of the syndicate to its community of NFT holders, Vanta DAO aims to scale at a faster rate and empower its members to self-administer their affairs. This approach to decentralization is expected to become more common among investment DAOs, with communities taking charge of multi-million dollar funds and actively driving the organization’s success.
