Investment DAOs are blockchain-based platforms that raise funds, coordinate activities, and arrange investments through the blockchain. These entities are changing our conception of how investments can be made and what they should look like. In this article, we explain what investment DAOs are and how they work.
- Investment DAOs raise funds on the blockchain and invest these funds on behalf of their members
- They are managed by the community and often rely on their governance token when it comes to decision making
- Investment DAOs can raise funds through native token sales, NFT sales, and project investment.
What are Investment DAOs?
Investment DAOs are decentralized investment platforms that are built on the blockchain. Investment DAOs use the principle of DAOs to coordinate investments. Therefore, all members have equal rights in both decision-making and investment opportunities.
Investment DAO is a type of DAO that is primarily created to facilitate investment for members. An investment DAO encourages members to contribute funds. The funds are then used to make collective investments on behalf of the community.
There are no restrictions on the kind of projects that an investment DAO can invest in. They can invest in Web3-specific niches such as DeFi, NFT, GameFi, metaverse, AI, and more. They can also invest in traditional assets such as real estate and commercial properties, or even stocks and bonds.
Governed by the Community
Investment DAOs are governed based on the existing principles of decentralized organizations. In other words, all participants are equal and they have an equal say in the affairs of the DAO.
The decision-making process in an investment DAO is similar to that of other DAOs. Members can raise proposals and the entire community can put such proposals to vote. Proposals can be raised for reasons such as the kind of investment that the DAO should make, or alterations to the community rules and regulations.
However, voting is done using the native token of the DAO, and the total weight of a member’s vote is always proportionate to the total number of native tokens they hold. Other DAOs could also consider factors such as how active a member is or the value of previous contributions.
How do investment DAOs raise funds?
Investment DAOs have a few ways in which they raise funds. First, they can raise funds by selling their native tokens. Token sales are one of the most common ways that Web3 projects raise funds. Investment DAOs are no different in this regard. The money raised through token sales is often deposited in the DAO treasury. Such funds can be used for project investments.
Second, DAOs can raise funds through NFT sales. DAOs can create NFT collections and sell these collections as part of their investment options. They could also sell NFTs as membership access or as passes to gated content or experiences.
Third, investment DAOs can raise funds through revenues generated from investments. This is expected, as it relates to the very existence of investment DAOs. They can keep a set percentage of all revenues as long as they share profits with their investor community.
Investment DAOs are changing the way people invest. They help remove the barriers to investing by offering a simple, decentralized investment model. They could be the future of global investment.