Conceptually, DAOs are simple, but their implications are profound. The team at Syndicate is building the protocols and tools that will enable DAOs to reach their full potential. That’s why today we’re announcing that we’re leading Syndicate’s Series A.
From the moment that we got to know Will and Ian, we’ve been inspired by their crystal-clear vision of a future in which the majority of all economic coordination between humans happens through DAOs, rather than through the archaic legal machinery that we use today. It’s a vision that is very aligned with our view of crypto’s potential and with the kind of positive impact that we believe it will have on the world.
First, for the uninitiated, what is a DAO? A DAO (Decentralized Autonomous Organization) is a mechanism that enables online communities to form and coordinate economically. It is a new kind of digital and economic entity that runs as code and is owned and controlled by its members. It makes it possible for an online group with members from anywhere in the world to pool capital and hard-code rules — entirely in software — for how that capital will be managed and deployed. Those rules are then enforced by the underlying blockchain.
It’s easy to forget that there was a time when the very idea of a corporation was controversial. Before their invention, all we had were informal partnerships that were loosely held together by ad-hoc agreements. The widespread adoption of legal protocols that formalized corporations like LLCs (and other kinds of structures that followed) dramatically increased the scale at which humans were able to cooperate — as well as the amount of capital that they can collectively raise, manage, and deploy.
But the legal machinery behind corporations today is slow, inflexible, and expensive. For example, creating an LLC in the U.S. today can easily take weeks and cost thousands of dollars. In the age of software and the internet, that kind of inefficiency is embarrassing. DAOs are a better, digitally native mechanism for human coordination. They have similar properties as corporations, but they’re 10,000 times faster/cheaper to set up and operate because so much of how they work is expressed in code (rather than legalese) and is fully automated.
Because they are so much more efficient, they have the potential to unlock yet another dramatic increase to the scale at which we humans and capital can come together and cooperate with one another. But, it would be a mistake to think that all DAOs will do is make corporations 10,000x more efficient. An improvement of this magnitude to any technology tends to bring along with it fundamentally new use cases and capabilities.
For example, there is a sense in which the core protocols of the internet were nothing more than a 10,000-fold improvement over the postal mail service. After all, both of them really just do one essential thing — they transport messages from point A to point B. But could you imagine Google Search or Amazon ever being built on top of the postal service? The kinds of things that can be built on top of a 10,000x better messaging system like the internet are fundamentally different.
So, in the same way that the internet unlocked all sorts of new fundamental value by improving messaging, DAOs have the potential to do the same by improving our social mechanisms of coordinating humans and capital on the internet. We’re at the very start of the evolution of DAOs as a technology. For them to reach their potential, we have to build the right standards/protocols, developer tools, user interfaces, and legal frameworks. Syndicate is leading the way.
We’re excited to be partnering with the Syndicate team and the community that they’ve brought together to help build the infrastructure that will drive DAOs to widespread adoption.
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