This Week in DAOs - October 21, 2021
PleasrDAO's Wu-Tang Album, NounsDAO's Treasury, Indexed Finance's Hack, and the DAO Revolution Index
Lots of things went DAO’n this week. Keep scrolling to get caught up!
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📊 This Week’s Stats
Ecosystem Overview - October 21, 2021:
💰 $13.1 billion in DAO treasuries 💰
🗳️ 256,402 ballots ever 🗳️
👥 63,190 unique voters ever 👥
✍️ 5,892 proposals ever ✍️
Governance Activity - Last 7 Days
🗳️ 4,172 ballots cast on 74 different proposals 🗳️
👥 2,234 unique voters 👥
🌐 23 DAOs with active voters 🌐
✍️ 38 new proposals created this week ✍️
📰 This Week’s News
PleasrDAO’s Big Announcement
The collectors of the original Doge photo, Uniswap’s V.3 NFT, and the NFT that Edward Snowden produced to benefit the Freedom of the Press Foundation, PleasrDAO was already one of the preeminent NFT collector in the world today. However, the news this week that PleasrDAO has acquired Wu-Tang Clan’s single-copy, unreleased album - Once Upon a Time in Shaolin - cements their reputation as such.
There are a couple reasons why this is cool from the perspective of this newsletter, meant to covers DAOs and decentralized governance.
First, the album was previously owned by the United States government after the Department of Justice seized it from infamous “pharma bro” Martin Shkreli. Though the New York Times article on PleasrDAO’s acquisition (yes, there was a NYT article about a DAO) noted that PleasrDAO had to pay an intermediary to convert their cryptoasset holdings into US dollars, a DAO bought something from the United States government. What a time to be alive.
Second, a DAO now controls one of the most legendary pieces of hip hop history - and appropriately so. From PleasrDAO’s blog post on the acquisition:
Philosophically, Wu-Tang Clan is the OG DAO: a collective formed to reach beyond the limits of any single individual; collaborative in nature to fulfill a higher purpose, yet allowing each individual member sovereign freedom to act on their own accord… Creating an album that record labels and distributors could not monetize was an ingenious approach, highlighting the failed state of the music industry.
The Wu-Tang clan’s protest against middleman overlords was prescient of the problems to come with the Web 2.0 streaming era, an industry that profits by standing between artist and fan, siphoning off profits and leaving creatives hanging out to dry, heart and souls stolen from the page. Decentralization and Web 3.0, at its core, addresses this head on. The primary objective of blockchain technology and cryptocurrencies is to enable one-to-one transfer of ownership and the creation of value without middlemen and centralized rent-seeking institutions.
If the music and entertainment industry wasn’t already paying attention to NFTs they will be now. As we often say in this newsletter, DAOs underpin everything in crypto: with encoded rules on a blockchain, there will almost always be a role for token holders to participate in the governance of those rules. How might DAOs take hold in the music industry?
NounsDAO
Last month, we highlighted NounsDAO as an interesting example of DAO formation. Each day, a new Noun NFT is sold and proceeds are directed towards the Noun treasury, which is governed by Noun holders.
At time of writing, the Nouns treasury holds 11,569 Ether, worth nearly $47 million. So, NounsDAO needs to figure out what to do with that capital. Thus far, Nouns DAO has spent community funds on an iOS app, a community-bidding tool, and donations to charity.
Now, Nouns leader/creator @punk4156 has proposed using the DAO’s capital to “fund real-world public goods.”
Our superpower is a mechanism for funding and building public goods (among other things) that accrue value back to the original work of art in the form of ‘brand equity’. The status and brand power of operating a Noun can exist proportional to our ability to help make things better for everyone, and the increase in brand power will yield more ETH in the treasury for creating even more impact.
The Nouns DAO project is pioneering the idea of a “permissionless pool of capital,” which has no predetermined goals but has the infrastructure and legitimacy to do almost anything it wants.
Often, DAOs are described as “group chats with a bank account.” Whether it be buying artwork like PleasrDAO or operating a financial protocol like DeFi DAOs, the description works. NounsDAO is an example of the spontaneity with which such organizations can arise and, now, the “real world” impact they can have. It is certainly something that is exciting to observe play out in real time, online. Shout out NounsDAO.
Indexed Finance Hack
Crypto hacks are the ultimate test for a community’s strength. And, as we discussed at the end of last month regarding the exploited bug in Compound’s Comptroller contract, hacks of decentralized, community-governed protocols put the idea that “code is law” in the spotlight.
If a flaw in an open source, publicly accessible financial protocol is taken advantage of by an individual, is it stealing or is it finder’s keepers? This question arises every time something like this happens and, in a nascent space like DeFi which hasn’t been fully integrated into the real world legal system, the answer is subject to debate.
The Indexed Finance exploit last week was no exception.
The ensuing investigation into the exploit (which you can read about here and here) resulted in the Indexed Finance team finding out who did it and initiating legal actions towards that person.
Whether these actions result in some type of legal precedent will be something to watch for other DAOs in the space.
As for compensating those who lost money in the exploit, that will be up to the community.
Which is another, albeit different, type of precedent for community-owned financial protocols like Indexed dealing with these types of situations. All in all, these events are a reminder of just how early we are in the development of decentralized finance and organizations.
The DAO Revolution Index
If you subscribe to this newsletter, chances are that you’re bullish on the future of DAOs.
Well, soon you may be able to invest in a product - built by a DAO - to track the “paradigm shift of decentralized autonomous organizations.”
An Index Coop community member proposed the creation of the DAO Revolution Index to do just that: “The DAO Revolution Index will contain a collection of ERC20 tokens to capture exposure to the DAO sector, with a focus on infrastructure and ecosystem plays.”
If you have thoughts on how best to construct this product, join the conversation here and keep an eye on Index Coop’s Boardroom page for a chance to vote on its creation.