- “DAO models will make it easier to find aligned communities, outlets for passionate work, and ways to be rewarded.”
- “Expect to see a number of those organizations fail the same way lots of internet companies have failed over time as well.”
- In terms of the areas in which we’ll see DAOs appear, opinion is somewhat mixed on this question.
- “To predict if or when the DAOs should gain interest from the regulatory authorities, they would have to create a stir.”
2021 was the year of the non-fungible token (NFT), at least according to Collins Dictionary. However, this year another big thing in crypto may just end up being decentralized autonomous organizations (DAOs), which are expected to become the future of online communities.
Indeed, industry players speaking with Cryptonews.com concur that DAOs will have a strong 2022, with most agreeing that they’ll represent one of the year’s biggest trends. This might be evident in a variety of areas, with DAOs emerging in relation to social networks, media outlets, investment funds, and decentralized protocols, among others.
Of course, DAOs are likely to face regulatory challenges in 2022, like nearly every other part of the crypto ecosystem. But commenters agree that most DAOs will be able to meet them, even if the severity of laws may vary from one jurisdiction to another.
Why DAOs will proliferate in 2022
Last year, DAOs attracted a modest degree of attention, with social-cultural DAOs such as Friends With Benefits (FWB) and investment DAOs such as ConstitutionDAO diverting at least some people away from Bitcoin (BTC), NFTs, and the metaverse. Such projects helped cement the idea of using DAOs as a way to organize people, and it seems that 2022 will help build on such early momentum.
“We have seen the rise of service DAOs in 2021 and we expect this to continue throughout 2022,” said Namik Muduroglu, the ecosystem and partnerships coordinator at PrimeDAO, a research collective building coordination tools for DAOs.
For Muduroglu, DAOs are set to grow this year for two interconnected reasons: their openness and accessibility, and the fact that they help establish (and expand) communities on a firm democratic basis.
“[People] can not only work for a DAO and earn for their labor but also have a voice for the work that they are doing; no longer a cog in the machine, but an active participant in their community and the future of their project. In this regard, I believe DAOs are going to increase in number and fervor in 2022,” he told Cryptonews.com.
More than one industry participant has told Cryptonews.com that the fluid, open and dynamic structures of DAOs will serve to encourage more organizations and communities to turn to them in the near future.
“One can move in and out of them without much friction, and even contribute to more than one at the time pretty seamlessly,” said Kevin Rose, the head of marketing and communications at Windranger, a contributor to BitDAO. “As more and more tooling solutions experiment with things like access control, member incentives, treasury management, and general governance, we will see more and more people be able to navigate into positions within DAOs where they are actively contributing far more easily.”
Rose also explains that, especially in the wake of the COVID-19 pandemic, the lives of many of us will witness a shift in how we relate to work, and in how flexible our work becomes. For him, this means that DAOs will have an opportunity to infiltrate numerous areas of the global economy.
“DAO models will make it easier to find aligned communities, outlets for passionate work, and ways to be rewarded so long as the tools become available to lay this path. The gig economy rhetoric set the mental stage for younger generations to be as fluid as DAOs can be. It’s a perfect match for the future,” he told Cryptonews.com.
Likewise, Kyle Weiss, Chief Operating Officer of Gitcoin, a community of developers, says that a “growing number” of organizations will turn to DAO-based models, particularly when fundraising is relatively easy and regulations still aren’t even present in many jurisdictions.
“I also expect to see a number of those organizations fail the same way lots of internet companies have failed over time as well. This is the reality of the space, and we would be foolish to think the DAO model alone will solve all business problems,” he told Cryptonews.com.
Areas of popularity: Collectors, social networks, gaming, fundraising
In terms of the areas in which we’ll see DAOs appear, opinion is somewhat mixed on this question.
“Yes, we expect a good number of startup organizations to resort to the DAO model in operations. However, this move will impact certain sectors more than the others due to their structure being more pertinent to some sectors than others,” said a spokesperson for HashCash, a provider of blockchain, AI, and Big data products, platforms, and services.
For HashCash, they expect to see DAOs crop up in the following sub-sectors:
- Operating Systems
- Protocol DAOs
- Investment DAOs
- Grant DAOs
- Collectors DAOs
- Service DAOs
- Social DAOs
- Media DAOs
For example, Collectors DAOs, designed for NFTs and artists to support fragmented or complete ownership of art and content, have already gained traction, with HashCash’s spokesperson arguing that “DAOs of this variety are sure to top the charts in terms of popularity.” We see this in the case of PleasrDAO, for instance, as well as Flamingo.
Social DAOs are another sub-category that gets mentioned often, with Kyle Weiss picking it as his big area to watch this year.
“FWB, [Bored Ape Yacht Club], and others have shown that people are interested in finding ways to connect outside of Facebook groups or subreddits alone. While DAOs offer interesting advantages to coordinating, they also offer a true sense of belonging to those in and working on a project,” he said.
Weiss suggests that ConstitutionDAO grew in part because people wanted to be involved and to be able to say ‘I was a part of that.’ This is a very powerful motivator, so while many DAOs will be formed around protocols (i.e. voting on governance proposals and the like), Weiss estimates we’ll see social DAO’s picking up steam this year.
However, given that DAOs can be adapted to nearly any kind of organization or social structure, some commenters say they could appear in a multitude of areas.
“Finance, art, entertainment, media, technology, you name it. DAOs help distribute ownership and decision-making, which are universal concepts,” said Kevin Rose.
Despite being open to the possibility of DAOs spreading nearly everywhere, Rose also suggests that we may see a “fantastical confluence” of ideas surrounding DAOs in gaming.
“Ownership is power, and the idea of gamers owning what they earn is perhaps more deeply complex than people anticipate right now. It not only has implications for how we see gaming as an activity in our lives, but also for how this USD 180bn industry is structured from the top down,” he added.
Rose expects organizations such as Game7 to help drive this conversion in the coming years, with the recently launched DAO focused on distributing funding to gaming developers who seek to integrate blockchain-based elements into their creations.
This also links to another likely trend for 2021: fundraising and investment. Indeed, YAP DAO core contributor MiaKoda Grodsky suggests that DAO’s will help give rise to a flash fundraising model, which is already evident with not only ConstitutionDAO, but also LinksDAO, BlockbusterDAO, MoonDAO, and others.
“I expect to see this trend continue in art, fashion, music, and every other cultural subset where individuals are able to leverage the collective power of the community to accomplish things that are impossible to do alone,” she told Cryptonews.com
‘Regulatory landscape needs to evolve’
Of course, no trends article would be complete without a look at how regulations might affect the evolution of DAOs. Commenters estimate that DAOs could fare better than other areas of the crypto ecosystem, such as DeFi.
“I think DAOs will be much more welcome than DeFi because the financial system is a critical piece of society and an integral source of legitimacy and control. I am really curious to see what happens in emerging markets because you are taking away power used to control populations and redistributing it to the people,” said Namik Muduroglu.
For some industry players, it’s still too early in the life of DAOs for regulators to sit up and take notice, unlike with Bitcoin and DeFi, for example.
“To predict if or when the DAOs should gain interest from the regulatory authorities, they would have to create a stir. This will happen when instances of resounding successes are aired,” said HashCash’s spokesperson, who also points out that the state of Wyoming passed a law in 2021 recognizing DAOs as limited liability companies.
The example of Wyoming points to the possibility that DAOs will benefit from fairly balanced regulation, which may not disturb their overall development and evolution.
“As long as DAOs put processes in place to pay taxes for US entities or [organizations], they will be fine in the short term. Medium term, the regulatory landscape needs to evolve to be more inclusive of how decentralized groups want to work,” said Kyle Weiss.