Rise of DAOs: Is It Just a Hype or a Profitable Industry in the Making?
The concept of a decentralized autonomous organization (DAO) recently gathered steam amid the news surrounding ConstitutionDAO – an organization that sought to purchase an original copy of the U.S. Constitution.
For this purpose, the collection of over 17,000 donors raised over $47 million worth in Ether (ETH), but they lost to a bid of $43.2 million in the Sotheby’s auction. Although the bidding didn’t go as expected, the discussion on DAOs remained on the table.
Different Sectors Are Becoming DAOs
A decentralized autonomous organization is a group of people who use various tools to exercise governance decisions on the internet. People see DAOs as a faster way to arrange networks for different purposes – all related to cryptocurrencies in some way. Moreover, the DAO concept expanded further to the media organizations.
Dirt, a DAO started by journalists Daisy Alioto and Kyle Chayka, as well as Uniswap DAO for users as well as other DAOs including FWB and PleasrDAO are among the most famous DAOs that recently born.
People that run DAO projects are looking for this new concept to attract more adopters to cryptocurrencies. That’s something that Li Jin, an investor in the FWB DAO, told The New York Times, arguing that DAOs are a “front door” for people to come into crypto.
Legal Consequences of Dealing With DAOs
But as new fronts are born into the crypto sphere, these same new concepts could attract the attention of regulators because these DAOs deal with cryptos that later are converted into fiat in so-heavily regulated countries. Even so, some organizations launch their own tokens.
Still, watchdogs like the U.S. Securities and Exchange (SEC) are, in fact, battling with companies like Ripple, accusing XRP tokens of being “securities” and not assets themselves.
For example, Shannon Li, who created her own DAOs dubbed WECrypto DAO, believes that some DAO tokens should be regulated as securities, although legality and lawyer fees remain among the major concerns in the brand-new industry of decentralized autonomous organizations.