Remember that Matt Damon movie ‘We Bought a Zoo’? It was roasted because 1) it wasn’t very good 2) it had a very dumb title.
But I always think about the film’s final scene. Matt Damon’s character goes back to the coffee shop where he met his (now dead) wife. He reenacts with his kids how he introduced himself and the movie goes back to its best quote.
“You know, sometimes all you need is twenty seconds of insane courage.”
Unfortunately, this is how most NFT traders operate. They “ape in” and ask questions and do research late. It’s all just vibes and intuition, baby. And if it’s good enough for Matt Damon, it’s probably good enough for you.
So is it crazy to say that there are other lessons to be learned from We Bought a Zoo about the NFT space? (Yes.) Does it warrant a rewatch for this reason? (No, but I’ll do it for you.)
Could we theoretically buy a zoo just like our pal Matt Damon but instead of using our life savings we use the power of Web3? (Go on…) With DAOs that does seem to be a possibility so I’ve spent the last week arduously researching more about them (Fine, I aped into this article too.)
I’ll start with what I know has been a successful DAO thus far - LinksDAO.
Quick rundown for those unaware, DAO stands for ‘decentralized autonomous organization’. Everything you need to know is right there in the name. But if you are still confused because like me you don’t have a big vocabulary, think of it as a new kind of business model, where instead of going public and selling shares of your company, there is instead a token that represents ownership.
That token can be bought and sold, just like any other cryptocurrency. Anyone can “invest” in your company and the value of the “corporation” is baked into the token. It’s really genius and for that reason, it’s caught on with Web3 degens.
For the most part, DAOs still have a governing body (aka the “board of directors”). They make decisions on behalf of the DAO and keep the chains moving. The “governance” token still makes it decentralized and gives you a chance to vote on certain decisions, but the execution usually comes from a core team.
That can vary. For example, ENS is a successful DAO where you can delegate your vote to someone within the community (think a representative as we have here in the US for our district). I always found that more fun because the idea of having responsibility scares me.
(Speaking of ENS, people wondered if there would be a vote to remove Brantly after his controversial tweets surfaced. The power of the DAO.)
Back to LinksDAO, which is a golf-centric project. But unlike golf, LinksDAO appeals beyond boomers and frat boys. Their thesis is simple yet ambitious: they will be using their DAO to purchase a golf course.
There is a lot of fluff in their mission statement, like how they will revolutionize golf memberships and country clubs, but don’t be fooled, they need funds from your purchase to buy a golf course and then turn that into a for-profit business. The revolutionizing of the country club will come much later.
At the ground level so far, these are what DAOs look to accomplish. They want to pool money together to buy a distressed asset that a team can then flip or turn into something that has a “return” for you everyone down the road.
The applications go beyond golf courses (real estate). Andy8052 talked about forming a DAO to buy the NY Knicks from James Dolan. The now-famous ConstitutionDAO wanted to buy a rare copy of the Constitution. I want to form one to buy a brewery (get in my DMs if you’re down).
At this fledgling stage, DAOs could be big in 2022, but I imagine they’ll be massive later on. It provides economic opportunity to those who’ve always wanted to invest in a business but didn’t have the resources. And if you’re a business, instead of relying on VCs, you could get financial backing or exit from a DAO.
But why aren’t there more DAOs? I’m not a lawyer, but my guess is that there are many legal hoops that need to be jumped through to run one legitimately.
We’re already operating in weird territory as it is in crypto. Bringing your lawyer into this sounds both confusing and expensive. They’ll have to learn all about the everchanging laws on cryptocurrencies and also abandon their typical incorporations notions and biases. It’s an uphill battle.
Not only that, but DAOs can be scary to most even within the crypto community. The aforementioned ConstitutionDAO raised $47 million but ultimately lost their bid for the Constitution. What happened to all that money? Luckily, though the DAO is now discontinued (discontinDAOed?), the funds were returned to everyone.
However, who is to say they couldn’t have just taken that money and ran? “Rugs” are still quite common in the crypto space, and to be done at a DAO level seems even easier than pulling off an NFT heist. At least with an NFT rug, you need some art that people will buy. With DAOs you just need a good elevator pitch on what you’re buying. Then, poof. You’re gone with all the ETH you raised for your “project”.
We’ve only just scratched the surfaces on DAO possibilities…but we’ve also just scratched the surface for DAO problems too. For that reason, I think people are rightly being very cautious when investing in them currently. With time, I’d imagine it’ll smooth out and become more streamlined. But until then, you’re running some risk by trusting in a DAO completely.
Back to my initial scenario from the intro:
Matt Damon forms a DAO to buy a zoo, but this guy has never ran a business before? He also knows nothing about animals? He just wanted to do it for his kids because they miss his dead wife? What’s he doing with all our funds anyway? Did we vote on the elephant he just bought? I’m beginning to think buying a zoo was a bad idea!
A Mega Mutant Serum (for BAYC Mutants) was consumed on Tuesday (see below), leaving only 2 in existence. Who is to say that someone couldn’t form a DAO to buy one? See? The possibilities are endless.
Sorry for the short and late newsletter this week. I’ll be back and better than ever next week<3