Oct 29, 2021
Friendship of A16Z in the name of DAO
“I don’t have a type. It’s more about what’s inside.”
— Dylan, Friends With Benefits (the Movie)
Although this is not related to the Friends with Benefits movie, let’s stay committed and enjoy this article for 3 minutes to find out what this DAO called $FWB is all about. Why is a big American venture capital firm like Andreessen Horowitz invested in it?
Andreessen Horowitz has been famous for investing in seed, start-ups, early, mid-stage, growth, and late-stage companies in the social media business and technology sector. A16z — as the firm is also known, for the 16 letters between the A in founding partner Marc Andreessen’s name and the Z in Ben Horowitz’s — has made another interesting investment in crypto space after a successful investment with Axie Infinity and more.
This time, it’s a decentralized autonomous organization (DAO) called Friends With Benefits.
To give you more understanding about DAO, it is actually created by a group of crypto wallets controlled by individuals and other organizations that executes all its movements through code, making it possible to manage assets and votes safely without the need for underlying legal or traditional banking setups.
So, why is a16z surprising the community with a DAO investment? Let’s take a look at FWB and what’s in it for the DAO ecosystem when a big name like a16z enters the picture.
Friends With Benefits (FWB)
Friends With Benefits started last year as an informal crypto social club on Discord. It’s also a Soho House crypto — Soho House is a group of private members’ clubs originally aimed at those in the arts and media. Since then its popularity has skyrocketed and at one point it cost over $ 14,000 to register.
In the past, DAOs were primarily used to secure DeFi protocols, and their members were primarily highly technical contributors. However, FWB introduces a new kind of DAO. In just a few short years, FWB has become the de facto home of web3’s growing creative class.
Now, companies like a16z, Spark Capital, and Pace Capital have valued the platform at $100 million.
A16z: Why DAO?
Unlike other venture capitalist institutions, a16z usually works with a particular business type when they see potential from it. It’s hard to explain exactly what venture capital companies invest in but depending on who you ask, a16z might be into FWB because it’s an active Discord, a Soho House crypto, and they believe in the future development of DAO. Why NOT throw millions into it, right?
There is, of course, the financial incentive. Venture capital companies, like a16z, purchase FWB tokens which they can potentially sell at a profit in the future.
More so, interest in DAOs that was limited to most active members of the blockchain community is changing with the rise of NFTs and DeFi. As investors’ interests in digital assets grow, they can now understand the value of DAO’s that adhere to the rules set by the blockchain community.
As it matures, the underlying blockchain infrastructure applied to DAO’s will provide interoperative ecosystems providing performant, inexpensive transactions/settlement, the immutability of contracts, and execution of smart contracts to handle ownership, authenticity, certification, governance, royalty payments, and a host of other ecosystem functionality.
Seems like the decentralized ecosystem transparency will support and provide price and market efficiency. By that time, decentralization will grow via the network effect, as the rise of innovation, performance, and resulting participation will grow a vibrant global ecosystem of applications.
Conclusion
While DeFi is certainly here, alongside the booming NFTs, what comes next is difficult to predict.
For a16z — they believe DAOs are likely to have an enormous impact on the adoption of web3 products. No wonder this big firm is seeing waves of brilliant, creative people building new products and services on top of blockchains that are disrupting industries and reaching mainstream adoption.
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