Naturally, for our generation, it's really hard to imagine decentralised systems as we all grew up in a country with centralised government and used centralised services our entire life.
For instance, if your Amazon parcel gets lost, you just call Amazon and ask for a refund. They’re responsible for sourcing, quality, delivery - the entire supply chain. Also, Amazon has shareholders and a board that makes decisions for the entire organisation.
What's a DAO?
A DAO, or decentralized autonomous organization, is a group of people on the internet who have entered into a contract with one another to reach a coordinated goal. The aim could be as simple as pooling funds to buy an expensive piece of artwork. In other cases, DAOs can operate more like a members-only club, where you have to buy a specific NFT to gain access to the organization.
DAOs are not managed by boards, committees or executives. They replace traditional hierarchies with flat management structures. They’re governed by token holders and are built on rules that are automatically enforced on a blockchain.
To become a member of a DAO, users need to first join the DAO by buying its cryptocurrency. Holding the asset then generally gives users the power to vote on proposals and updates, proportional to the amount they hold.
For Proptee, the most interesting part of DAOs is to understand how they could work with real world assets, such as buying a piece of investment real estate, e.g. a Hotel.
4 interesting DAOs
In 2021, The Maker Foundation, an icon in the crypto industry announced that it was officially turning operations over to MakerDAO (creator of the DAI stablecoin) and would dissolve by the end of the year.
As they say on their website:
“MKR holders are entirely responsible for governing the Maker Protocol, which includes adjusting policy for the Dai stablecoin, choosing new collateral types, and improving governance itself. Anyone can be an MKR holder and all are welcome to come join us in shaping the future of DeFi.”
While there are many lingering concerns and potential issues regarding legality, security, and structure, some analysts and investors believe that this type of organization will eventually come to prominence, perhaps even replacing traditionally structured businesses.
It was a big crowdfunding effort to buy a copy of the U.S. Constitution. The DAO offered people the ability to donate funds. In exchange, they’d get the right to vote on what to do with this copy of the Constitution and what the organisation should do in the future.
ConstitutionDAO raised approximately $47 million, but eventually failed to buy a copy of the US Constitution. FYI, showing your budget to others in a bidding war is not a smart move...
FriendsWithBenefits, or simply FWB, is a members-only club with a token attached. You can only be part of the club if you own FWB tokens. These tokens are your entry passes, the more you hold, the more stuff you can do. E.g with just one FWB token, which will cost you about $50 at today’s prices, you can read the community’s newsletter.
Owning 5 tokens will get you exclusive access to different community-driven events and gain access to FWB’s Cities initiative, which is creating different FWB hubs (or sub-DAOs) in New York, London, and Los Angeles.
LinksDAO is creating the modern golf & leisure club. They have issued 2 types of NFTs as memberships and sold those memberships to collect money to buy a real golf course. They are a global community of thousands of enthusiasts with the aim to create one of the world's greatest golf clubs.
It’s still early stage, but they have raised $10.4 million in 48 hours and now they’re searching for a golf course to buy.
It’s possible to form a legal Decentralized Autonomous Organization – DAO LLC – in Wyoming. It can be formed online or even by just filing the form and mailing it.
The future of DAOs with real assets
In my opinion, we’ll see more projects popping up starting DAOs, but this is really early stage. It would be crucial to put a legal framework around it, as now anyone can just run away with the money. We recommend that you do your own due diligence before you put your money into a DAO.
These are really exciting times and big changes are happening on the internet with the arrival of web3. It’s right in front of us, so let’s not miss it.
Later Proptee might launch a DAO with the goal to purchase a hotel. Would you be interested in buying nights at a hotel in advance?
Let me know via replying to this email or tweeting us @PropteeApp.
See you next week!
-Ben and the Proptee team