When reviewing the development of Web3 in the first quarter, the research institute Messari pointed out that at the beginning of the first quarter, new protocols in the NFT field were launched one after another, which attracted mainstream attention, especially with regard to encryption art and card transactions. Although this trend ran through most of the first quarter, recently, the market’s attention has slowly shifted to the Decentralized Autonomous Organization (DAO).
Although DAO played a supporting role for most of last year, with the encryption protocol accumulating a balance sheet worth tens of millions, the DAO has renewed interest in the first quarter of 2021.
As of the end of the first quarter of 21, the total assets managed by the DAO ecosystem (according to DeepDAO data) were $931 million. Although the encryption protocol that does not operate in the form of DAO or uses an independent DAO architecture has not been counted, this scale is also DAO A sign of ecosystem development.
The crisis of balance sheet management
Driven by the bull market, DAO’s balance sheet has grown significantly in the past quarter, because since the beginning of this year, the native tokens of most DAO projects have doubled. Newer DAOs such as NFTX, Stacker Ventures, and API3 dedicate a large part of their tokens to their respective DAOs, thus providing sufficient capital for their development.
However, poor balance sheet management is common in the entire encryption technology. Almost all AUM of most protocol DAOs are their native assets, including BarnBridge, Decentraland, pNetwork, Airlab, and Aragon Trust.
After adjusting the DAO balance sheet (only stablecoins, ETH, BTC), we have seen a small number of DAOs diversify their capital pools, which is a healthy sign of sustainable financing. However, most of the DAOs with the highest adjusted balance sheets are investment DAOs-such as Moloch, LAO, and MetaCartel Ventures, which should not be considered sustainable DAOs because they must use funds for investment or grants.
Those agreements that refuse to allocate some stablecoins or more liquid assets (such as Bitcoin and Ethereum) will appear when they encounter events that affect the price of the currency (such as a sharp decline, third-party contract vulnerabilities, or flash loan attacks, etc.) The volatility may be more. Therefore, DAO’s wise approach is to exchange some of its native tokens for stablecoins or reserve assets such as Bitcoin and Ethereum. Although doing so may cause the price of its currency to fall in the short term, in the long run, this is conducive to the sustainable development of the DAO and its agreement.
Moloch’s growth: DAOhuas
The original Moloch DAO aimed to create a minimal viable DAO based on the design concept of “ruthless minimalism”. So far, Moloch DAO has been widely used in investment style DAO, including Moloch, The LAO, MetaCartel Ventures, FlamingoDAO, etc.
We cannot bet on the Moloch DAO ecosystem unless you invest in one of the DAOs-DAOhaus. It was originally considered a hackathon project during ETHBerlin 2019, and the team developed a platform to easily create and manage Moloch DAO, which is in line with Moloch’s minimalist spirit.
The DAOhaus platform is managed by UberHaus DAO, and UberHaus DAO is controlled by various DAOs in the DAOhuase community. A unique feature of UberHaus is that there are no individual DAO members. It is a DAO managed by other DAOs, although representatives can be selected from each DAO. In order to govern UberHaus, other DAOs need to pledge HAUS tokens to join UberHaus DAO. HAUS tokens will also provide priority access to DAOhaus’s new features, as well as discounts on custom features provided by the platform.
In the future, DAOhaus intends to use HAUS for self-organizing Unions, planning DAO index funds, and funding the early-stage DAO community.
Although DAO has become an important part of the Web3 infrastructure, the actual organizational structure has yet to be determined. With the continuous development of various DAO protocols such as Aragon, Kleros, DAOhaus, and DAOstack, some protocols may open up niche markets, while others may become standards for managing billion-dollar protocols on DeFi and Web3.
Author/ Translator: Jamie Kim
Bio: Jamie Kim is a technology journalist. Raised in Hong Kong and always vocal at heart. She aims to share her expertise with the readers at blockreview.net. Kim is a Bitcoin maximalist who believes with unwavering conviction that Bitcoin is the only cryptocurrency – in fact, currency – worth caring about.