DAO – digital communities with a common mission
2020 was the year of DeFi, 2021 is the year of NFT, and 2022 will be the year of DAO.
The most popular example of such a community is a crowdfunding organization called The DAO. In 2016, the company raised over $150 million in investments, becoming the largest crowdfunding project in history. True, it closed in the same year due to the theft of funds by hackers. However, developers continue to learn from their mistakes and improve the technology.
Experts highlight the key features of DAO:
- The members of the group are independent parties;
- Availability of SmartContract — an open source code on the blockchain;
- Open membership;
- A token is used to manage the community, which distributes funds in accordance with priorities, stimulates participation, and punishes violations of the rules;
- The group has internal capital to automate the market, prevent collusion, and stimulate the creation of ascending communities.
According to entrepreneur Ryan Selkis, most of us will someday work for the DAO. So, it makes sense to keep an eye on this model.
Nowadays, there are 15 blockchains, each with $10 billion in assets, and Bitcoin and Ethereum combined are valued at $2 trillion. As of today, the world of blockchains resembles the physical world with different countries that have their own economy and laws. And it seems that growth will not slow down in the near future, and there will be even more blockchains.
All upcoming blockchains must now interact with one another. The absence of bridges is thus Web3’s most serious issue. Analysts predict that whoever develops the most practical method of connecting blockchains will ultimately rule the virtual world.
Modern solutions are still in an immature state, which leads to disputes between users and developers. A bridge that achieves sustainable decentralization and is well integrated will facilitate even more asset and data transfer.
The crypto industry is divided into sectors
If earlier the cryptocurrency industry was strongly associated with bitcoin, now users and investors understand that there are different areas in it. Currencies, DeFi applications, crypto casino, distributed computing platforms, and NFTs — each of these sectors has its own specialists.
Ari Paul, chief executive of investment firm BlockTower Capital, writes, “Cryptocurrency options that are not directly related to bitcoin are finally on the rise. DeFi and NFT were virtually non-existent 4 years ago as were most other ‘sectors’. Now DeFi farming or NFT speculation is becoming a full-time job, and sooner or later it will take a small team to keep up in one of these segments.”
Here, private equity funds will have a permanent advantage over their generalist competitors. The entry threshold for crypto investment remains high. The main obstacles are the complexity of technical training, risk management, and compliance with legal requirements.
By the end of 2021, Crypto funds had reached their peak. This dynamic is likely to continue into 2022.
Venture capital: new records
In 2021, a staggering amount of capital was poured into the crypto industry, making the value of crypto funds’ assets rise to a record high.
Nowadays, funds such as Multicoin are becoming some of the most efficient investment firms of all time. For instance, firms like Polychain, Paradigm, a16z, Multicoin, 3AC have billions of dollars under management. The average check per deal here is $25 million.
According to Dove Metrics, in the third quarter of 2021, private investments totaled $8 billion across 423 deals. This is more than in the previous six years combined. Nearly 90% of the largest transactions in the history of cryptocurrencies took place in 2021. Institutional investors (legal entities that specialize in investing in financial assets) are currently more interested in crypto than ever.