DAO Ecosystem Development in China
DeepDAO feature:
Author：LD Capital Research
Edit: Noise z
DAO mechanism
DAO: Decentralized Autonomous Organization, is defined by Binance Research as a particular type of organization that coordinates member actions and resources through a set of multilaterally agreed-upon rules that are undeniable, formal and transparent.
In simple terms, the mechanism of DAO is similar to the democratic vote in ancient Greece but much fairer, coordinating member actions and resources through blockchain and smart contracts.
For instance, YAM Finance votes through Snapshot DAO to decide how to initiate YAM V3 and adjust V3 parameters.
Following is a screen capture of YAM Snapshot governance voting.
DAO Ecosystem status in China
It’s interesting to note that the emergence of DAO in China is rooted in a variety of catalysts. Dodo, one of the DeFi DAOs, chooses forum and community for interaction and governance. dForce and forTube choose to interact through forum and community, but use Snapshot for proposal vote.
Starting from The DAO to DeFi Summer, the ecosystem and supporting applications of DAO have been improved step by step, and Chinese teams have also launched several DAO related supporting applications. Following is a brief introduction of two Chinese domestic DAO related applications.
DAOSquare
DAOSquare, the incubator for Web3 and born in the Ethereum community MetaCartel, aims to bring incubators into a brand-new era based on Web3 ideas.
DAOSquare is a commercial startup project and an incubator for everyone, as only commercial success can make the community sustainable. The purpose of DAOSquare is to connect DAOist with people who have ideas and are innovative, thus hatching ideas and supporting them having higher chances of success.
Currently, it has two online functions, DAOSquare Community DAO(DCD), a DAO for its community, and WhaleDAO that commits to help high-quality projects around the world build their ecosystem in China and Chinese-speaking regions. In the meantime, the incubator has started its first phase of projects hatch; for instance, projects meTokens and Ethermore are in the incubation process.
The next step for DAOSqure is to launch the Farm Factory function and the beta version of VentureDAO in Q4 and start the second phase of fundraising and the second batch of project incubation (more than 15 projects). Then it aims to catalyze more projects and incubation campuses.
Dora Factory
Dora Factory — Its vision is to build a DAO-as-a-service infrastructure platform. It enables every community member who wants to launch DAO to freely add pallets on-demand through Dora.
For example, I could carry out capital operations in the primary and secondary markets by creating a Venture DAO, joining the DAO organization, transferring assets into Venture DAO, and then adding functions for DAO governance. Also, non-profit organizations can achieve fair, open, and transparent organization management through DAO. Everything can be done on Dora Factory’s on-demand DAO platform, providing you a one-stop DAO service.
The project was hatched by DoraHacks, and most of its members came from DoraHacks. DoraHacks, established in Tsinghua University in 2014, is now one of the largest hack communities in China and the world. It holds Hackathon competitions on public chains such as BSC, SOLANA, Filecoin, and HECO.
Up to now, the first product launched by Dora Factory is Hackerlink Blockchain Developer Platform. It can perform on-chain governance, quadratic voting, funding grant, bounty, Hackathon, BUIDL project display, etc. The “DAO on-demand” platform is still under construction and will launch its modular applications later.
Are DAOs Perfect？
Nowadays, as the DAO trend grew significantly, the DAO space is still facing challenges.
Recently, an organization called DeFi Education Fund linked to Uniswap DAO had sold their 500,000 UNI token at once out of their 1 million UNI token that gained through the snapshot voting.
Sushi.com is planning to sell 51 million token to investors. These token have a locked up period of 6 months and linear release period of 18 months. This caused a great controversy within community. Most of the holders rejected the proposal and suggested a new one. These all are also through the forum and snapshot.
These two incidents exposed the cons of the DAO voting mechanism:
The voting power is ironically too centralized, and many small investor aren’t engaged in voting, which results in unfair voting dynamics.
Other examples are where whales (large token holders) cooperate with each other to vote on proposals which will hurt the benefits of small investor. Since whales have very large voting power they can more easily get the proposal passed. One example for an attempt to address this issues is the voting mechanism of Curve is, the longer period you lock in, the more voting power you have. With this method, maybe will lost some short terms profit, but, it is better for long term development.
Sushi.com, after the “sell token” proposal been submitted, the community members fully participated in the discussion and changed the original plan, which also shows a very good point of DAO, which is, the participation of community members change the decision and lead to a better direction where most of the members want it to be.
Future Outlook
Although the DAO space received renewed public attention in 2020 and 2021, DAOs are not so popular among DeFi projects or only adopted by a small number of communities for autonomy. And the same is true in China. However, through the efforts of DAO around the world, such as DAOSquare, Dora Factory, Moloch DAO, DAOHAUS, PieDAO, etc., it is believed that more Web3 and DAO-related projects will emerge, and DAO supporting applications will gradually be improved.
In the future, DAO will be an Indispensable part of the blockchain. Under DAO system, lot of small but excellent organization will be created, through the power of DAOs, all the power and knowledge of decentralized supporters that scattered around the globe will be brought together, to one point.
If you want to go fast，go alone.
If you want to go far，go together.
LD Capital is a leading crypto fund in investment and trading in primary and secondary markets, whose sub-funds include dedicated eco fund, FoF and hedge fund.
Owing to industrial resources and professional investment and research team, LD Capital has successively discovered and invested more than 300 companies in DeFi/infra/protocol/NFT/Dapp/Metaverse/DAO/Layer2/GameFi fields since 2016.
We have 30+ industrial experts around the world based in China, Singapore, Australia, EU and US, who worked for financial and high-tech companies like Visa, Cisco and now actively invest in blockchain companies.
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