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DAOs and The Next Bull Run
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Decentralized Autonomous Organizations (DAOs) are becoming more popular. DAOs provide a secure and transparent mechanism for moving money on the blockchain. Unlike traditional funds, DAOs are transparent by default, ensuring that all participants can see exactly how money is being used and managed.
Those who only glance occasionally at the world of crypto could be forgiven for regularly writing it all off, such as when calamities like FTX hit the headlines or gloating bitcoin bros are frozen out by the crypto winter. It can be reassuring. After all, any troublesome FOMO is instantly dispelled.
But, as with any walk of life, the close-up reality is quite different. For those “in the know” in crypto, the dip may not be a disaster but rather a buy signal. And then, when the bull run is once again in full flight, those spectating from afar once again begin wondering if they’re missing out.
Vladislav Shavlidze is one such member of the “crypto cognoscenti”. Founder and CEO of
It is the DAO that can lay a foundation for this resurgence and play a significant role in shaping the industry’s future.
“Trust in crypto projects and crypto funds may be declining,” says Shavlidze, “but with DAOs, we can build a new level of trust, transparency and good governance in the crypto industry. DAOs can provide the infrastructure and governance for a wide range of decentralized financial services, such as lending and borrowing, trading, and more.”
Post FTX, Are We Shifting to Decentralized Exchanges (DEXs)?
“Centralized exchanges are losing trust among market participants, not only because of the collapse of certain platforms but also due to the limitations imposed by KYC regulations,” explains Shavlidze.
“Decentralized exchanges offer a democratic and equal access to decentralized finance that cannot be restricted by any country in the world.”
He goes on, “As DEXs continue to improve, it's likely we'll see a shift towards greater adoption of these platforms. Additionally, the regulatory environment plays a crucial role in the growth of DEXs, and it will be interesting to see how governments around the world approach regulating these exchanges.”
He notes, though, that DEXs still face challenges in terms of scalability and liquidity, which is why CEXs continue to dominate the market.
Rather than one kind of exchange establishing dominance, he sees both models as coexisting and complementing each other, with CEXs providing liquidity and compliance while DEXs will offer decentralization and transparency.
“As the crypto industry matures, the need for a balance between decentralization, liquidity and compliance becomes more important. The evolution of DEXs and CEXs will be an exciting chapter in the crypto story.”
DAOs, Institutional Investors, and Revolutionizing Corporate Finance
Institutional investors are also starting to take notice of the potential of DAOs, according to Shavlidze, as they provide a secure and transparent mechanism for moving money on the blockchain without the need for intermediaries.
“As more and more institutional investors enter the crypto market, DAOs are increasingly seen as the best option for ensuring maximum security and protection against scams.”
“Furthermore, DAOs are becoming a popular form of co-investment, as they allow investors to share in the decision-making process of the organization and have the potential to earn profits through dividends or token value growth.”
Unlike traditional funds, DAOs are transparent by default, ensuring that all participants can see exactly how money is being used and managed.
According to Shavlidze, DAOs are also revolutionizing the way corporate finance is done, providing a more transparent and efficient alternative to traditional centralized decision-making structures.
“With DAOs, there's no need to rely on a narrow group of people to make important decisions, as stakeholders are empowered to participate in the decision-making process.
Raising capital and managing investments becomes more convenient with DAOs, as they provide a transparent, decentralized management structure that allows investors to vote on investment decisions.
This can lead to more diversified and risk-adjusted investment portfolios, as well as a better alignment of investor and organizational interests.”
DAOs operate on a transparent and verifiable blockchain, making it easier for stakeholders to access and verify financial information. This can increase trust in the organization and facilitate better communication between stakeholders.
“Not only that,” adds Shavlidze, “but DAOs are also more cost-effective as they don't require a centralized management structure, and smart contracts can automate many processes, reducing the need for intermediaries and leading to cost savings.”
Challenges and the Regulatory Environment
“One of the main challenges facing DAOs is the lack of a technological standard, which prevents them from being fully integrated into the blockchain ecosystem”, says Shavlidze.
This can be addressed by moving to blockchains where the creation and operation of DAOs are possible at the blockchain level itself, according to Shavlidze, or by introducing new DAO-oriented EIPs (Ethereum Improvement Proposals).
“Another challenge facing DAOs is how to maximize member involvement in the voting process while still reaching consensus. This issue becomes more pressing as DAOs grow and the number of members increases, but it can be addressed by introducing reputation-based voting.”
Perhaps the most pressing challenge facing DAOs is the lack of proper regulation.
“As a company, a DAO should not be involved in any illegal activities,” he explains, “and the activities of individual participants, as well as the DAO as a whole, should be monitored in a specific jurisdiction. The registration and regulation of DAOs is a crucial task that the market must address in the coming years. The flexibility and transparency of DAOs could make them an attractive option for regulators looking to create a fair and efficient market.”
What Is XDAO Bringing to an Ever-Changing Landscape?
“XDAO is on the cutting edge of the DAO space,” Shavlidze answers. “We stay attuned to the needs of our community, providing analytical tools, modules, and consulting services to help them succeed. We strive to be ahead of the trends.”
This is a far claim. After all, two years ago, when token distribution was the most popular way to participate in a DAO, XDAO was already thinking outside the box with its non-transferable token system. These tokens could not be bought on the market, only earned.
“XDAO is also committed to offering a legal framework to its users,” he says. “We believe in giving our clients the option to register their DAOs in a way that's both general and specific to their needs.”
“Security is another area where we don't cut corners. We spend a lot of time and resources studying trends and identifying potential vulnerabilities in smart contracts, so that we can keep our users' assets safe and secure.”
In Conclusion
DAOs seem poised to play a significant role in shaping the future of the crypto industry. They are already providing the means of renewing trust while revolutionizing the way corporate finance is done.
They can provide infrastructure and governance for a wide range of DeFi services, and institutional investors are taking notice of their potential.
And so, while the calamities and collapses of 2022 might have brought delight to naysayers and doom-mongers, in reality, these events might more accurately be seen as a necessary precursor to the laying of a truly durable new foundation.
While much might have been lost and painfully cleared away, returning to the roots we find decentralization to be solid, guiding ideal it always was.
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