You're reading State of the DAOs, the high-signal low-noise newsletter for understanding DAOs.
gm and welcome to State of the DAOs!
We are still in the early days of understanding DAOs as a business model and need to keep experimenting to determine the best way to organize and govern ourselves.
One of the biggest challenges has been finding a business model that works. DAOs have had to grow up from their early days as a chat group with a shared bank account. This model might have worked during the bull market, but we have witnessed how poor treasury management and a lack of a coherent business model can bring a DAO to its knees during the bear.
This week, Azeem explores one possible model that might allow DAOs to thrive: a fusion of a startup and a hedge fund. Like startups, DAOs are well equipped to act on a specific mission or product and they need capital to get started. Hedge funds understand how to raise capital and generate returns for holders for the long term. By effectively managing the DAO treasury, they would allow the DAO to do what it does best: collectively act towards a shared goal.
A hybrid model that combines smart capital with the build-fast culture of startups might just be the solution we need.
Contributors: BanklessDAO Writers Guild (Azeem Khan, Warrior, kenichi, Teafeh, BOBOtoTHEmoon, HiroKennelly, siddhearta)
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Author: Azeem Khan
Credit: Tonytad
After spending the last year working in DAOs, I’ve come to a conclusion I’ve yet to see anyone publicly discuss, despite many agreeing in private: most successful DAOs combine the smart capital deployment and management associated with hedge funds with the build-fast culture of startups.
It’s not that people are afraid to say it; it’s that they are just starting to see that it’s true. Traditionally, hedge funds and startups have been two very separate entities — hedge funds may even capitalize startups. But in the world of DAOs, where capital and creation are largely intertwined, it’s as if they’re two important divisions of the same organization. The problem is that few, if any, DAOs have been successfully run that way. Looking to the future, I believe the most successful DAOs will be run using this model. Bull markets don’t last and diversifying assets under management in a way such that it creates more runway for projects will be an integral step to allowing DAOs to mature in a crypto native way.