(2021-09-21) Baschez Will DAOs Replace Corporations?
Nathan Baschez: Will DAOs replace Corporations? Punk 4156, a notable NFT collector who identifies as the CryptoPunk that he owns.... this project, NounsDAO, has in less than two months amassed a community-controlled treasury worth $20M, growing by roughly $500K a day
On August 8th, 2021, Punk4156 and his team deployed a smart contract to the Ethereum blockchain that randomly generates a new NFT digital avatar (called a Noun) every 24 hours and auctions it off to the highest bidder. 100% of the auction proceeds get sent to a community treasury that is controlled by Noun owners. One Noun = one vote.
the price of Nouns began to rise and then stabilized at ~150 ETH ($532K USD).
I started lurking in various self-proclaimed “degenerate” corners of Twitter and Discord, where spending millions on NFT memes is cool and using a real name or photo is not. These communities have all the exuberance of revolutionary France, and fully see themselves as destroying the Ancien Régime
To these crypto degens, web3 is the true and final form of the internet.
If everything I said above is true, and we’re in a critical historical moment where the future is just beginning to be created, then maybe there’s a chance these projects will be looked back on by future generations the way we look back on Socrates’ Athens: the origins of a radical new way of life. If this is true, the value of these tokens could be immeasurable.
Belief, though, may be hard to sustain in the long run. Without a sustainable business model, people will eventually get demoralized and distracted, and move on.
This is where NounsDAO stands out. Unlike most NFT projects, Nouns comes with a unique mechanism they hope will ensure Nouns remain valuable long into the future: a decentralized autonomous organization, or DAO.
The purpose of the NounsDAO is to make Nouns more valuable
For now the ideas are simple, but you could imagine wild projects like designer merch, a private IRL clubhouse, TV shows, theme parks, giant bronze sculptures in every major metropolitan area, etc. It seems silly, but maybe the next Marvel Universe will come from a DAO like this?
MolochDAO is kind of like NounsDAO, except the purpose (shared mission) is to pool capital to fund projects that benefit the greater Ethereum ecosystem. It was a lot easier for me to wrap my head around that than NounsDAO, which solely exists to increase the value of Nouns. But yes, that really does seem to be the end game: to create a positive economic feedback loop for its own sake.
My read on NounsDAO’s current success is that it’s a function of a pyramid of belief. Take away any one layer, and the whole thing collapses.
If DAOs really are the future, if they end up supplanting joint-stock corporations as the best and most common way to organize economic activity, then I believe key early experiments like NounsDAO have a good shot at retaining their value. It would be like owning a piece of art connected to the East India Company.
DAOs are basically like if you started a business that went public on day 1, and held shareholder votes way more often. This is exactly the opposite of what most late-stage startups over the past decade have decided to do. DAOs are basically the opposite of this. They believe “ask the audience” is the winning strategy, and if you set up the right decision-making systems, collective wisdom is greater than individual vision.