DAOs and the Future: As businesses move away from centralized and take-for-all models of the above, DAOs will replace them. As the DAO grows, so will their coffers, says Simon Furlong, co-founder of Geode Finance.
The birth of Web 1.0 gave rise to digital content and peer-to-peer communication. Web 1.0 was largely uncommercialized in its early years. Then came Web 2.0, which facilitated mass communication and collaboration. Businesses such as Amazon, Facebook and Google stepped in to provide the necessary infrastructure and platforms to support the growing user base.
We are now in the early days of Web 3.0, where crypto assets and the Decentralized Finance (DeFi) protocol are providing the building blocks for a new Internet – one based on value rather than information.
Like the early days of Web 1.0, the early days of crypto were dominated by individual investors and hobbyists. Centralized exchanges such as Mt Gox, Coinbase and Bitstamp stepped in to provide the much-needed infrastructure for the growing ecosystem. At the time, the use cases for cryptocurrencies were mainly limited to speculation and trading.
Ethereum’s Success
But then there was a breakthrough. In 2013, Vitalik Buterin proposed Ethereum, which paved the way for an entirely new class of decentralized applications (DApps). These dApps enabled a wide range of valuable use cases such as lending, borrowing and much more.
And similar to the Web 2.0 revolution, retail and institutional investors have poured massive amounts of money into the DeFi protocol as the Web 3.0 ecosystem evolves and matures. This growth and maturity in the crypto and DeFi markets has created B2B opportunities that may not have existed in previous years.
There are now countless companies, decentralized autonomous organizations (DAOs), and revenue-generating protocols that create and provide valuable services to their users. Unlike in previous years, many of these “users” are now other companies or DAOs rather than simply individual retail participants.
The demand for B2B service providers in Web3 is increasing as companies and DAOs look for tools and resources to support their businesses. for example, Aragon provides applications and templates to help get The DAO up and running. Gnosis Safe DAO provides a multi-sign solution for asset management. And Geode Finance enables DAO to increase revenue by providing a white label liquid staking product.
DAOs and their Treasuries
DAOs are essentially Web3-native companies, and like traditional companies, they have treasuries to maintain and grow. They need solutions that enable them to generate revenue and earn a yield on inactive Treasury assets. This is where DeFi comes in handy.
For most DAOs that reside on Proof-of-Stake (PoS) chains, liquid staking presents an interesting option for generating revenue on passive Treasury assets. A growing share of DeFi, Liquid Staking allows users to validate PoS networks to earn passive staking returns without sacrificing other opportunities in DeFi for equal liquidity. Retail users prefer liquid bets for this reason, but so do DAOs that are sitting with treasuries full of base assets and earning no returns.
But who is attracted to DeFi, like the flames from a moth, and the demand for these services is increasing?
DeFi is attracting enterprise
Enterprises are risk-averse by definition. They are built to last, which means they are much less likely to take risks on unproven technologies. But as the DeFi space matures, we are seeing more and more businesses dipping their toes in the world of decentralized finance.
This trend is being driven by the growing number of robust, battle-tested protocols and tools available in the DeFi ecosystem. These protocols and tools are enabling enterprises to do things that were not possible before.
As PwW reports, almost half of traditional hedge fund managers are looking to invest in crypto. HSBC, JP Morgan, Citigroup, Mitsubishi UFJ Financial Group, Barclays, UBS, Goldman Sachs, Comerzbank, BNY Mellon, Signature Bank, and SBI Holdings are working on blockchain-related projects – the big guns are starting to notice DeFi Huh .
Also, institutional investors are using platforms like Aave Pro and Alkemi, which are specially designed for them. These platforms offer features such as compliance and KYC’d pools, making it easy for enterprises to join DeFi without worrying about regulatory hurdles.
DAOs Promote B2B Adoption of DeFi
As the DAO progresses and becomes more established, their stakeholders are increasingly focused on achieving their goals, financial or otherwise. This has accelerated the development of B2B solutions specifically designed to meet the needs of DAOs, a testament to the growth and maturity of DeFi. B2B tooling gives DAOs access to additional products and services that they cannot build on their own because they either do not have the capacity, or they lack the time and resources.
One of the most important benefits of these B2B solutions is that they allow DAOs to provide more sophisticated products and services to their users. This in turn expands their potential reach and longevity, as users are more likely to stick around if they feel they are getting value from the DAO.
DeFi solutions, in particular, have been a boon to The DAO. We are already seeing a strong sense of collaboration in the DeFi space, which is providing enormous value. For example, oracles and indexers such as Chainlink and The Graph are helping DAOs access accurate data, while white label liquid staking protocols such as Geode Finance are providing DAOs with new revenue-generating products for their users. With Geode, DAOs can earn interest on the digital assets in their treasuries and expand their revenue streams with no fees.
In addition, liquidity provision and market-making services are helping The DAO to list its tokens on more exchanges and attract more users. And finally, investment firms are providing DAOs with the capital they need to grow and expand.
All these B2B solutions are helping to boost DeFi adoption among DAOs. As more DAOs adopt DeFi, we can expect to see even more innovation and development in this area.
DAO and future
The traditional corporation is based on a hierarchical model optimized for efficiency and growth. But this model is no longer workable in today’s world. We now live in a world where information flows at the speed of light and technology is changing at an unprecedented rate.
As businesses move away from the centralized and take-for-all model above, DAOs are set to continue to grow. With its decentralized governance structures, The DAO aligns the interests of all stakeholders – from employees and customers to investors and ecosystem partners.
As the DAO grows, so will the need to build their treasury and additional income sources. This is part of what makes tooling such an important area of growth as DAOs look to B2B services. There will be an increased demand for solutions that allow DAOs and their members to earn returns on dormant assets. Thus, with the help of The DAO, Liquid Staking Protocol, and other critical infrastructure, we are in a unique position to capitalize on the Web3 revolution.
It is only a matter of time before The DAO fully maintains the status quo. From sales and marketing to virtual land and legal services, DAOs are slowly but surely taking over the traditional business model. DAO-focused tooling and infrastructure providers are—and will continue to be—a major contributor to this change, and this is going to become more apparent in the years to come.
About the Author
Simon Furlong is co-founder of geode finance, a white label liquid staking protocol for the DAO and DeFi protocols. Simon has over a decade of combined experience in the financial, digital product and media jurisdictions, previously working as a Risk Analyst, Product Leadership and Director of Media Rights. Their professional experiences and passion have driven their mission to build products that support the growth of an efficient, decentralized and vibrant Web3 ecosystem.
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