Decentralized Autonomous Organizations (DAO) projects are now back in business and raising significant sums of money. Synthetix, a DAO offering asset-based protocols has raised over $12 million in funding from a consortium.
The Return of DAO Platforms
The idea of decentralized governance and distributed applications and entire organizations is not a new one. The sector developed in parallel with Ethereum and other programmable blockchain networks. They also raised a lot of money during the last bull cycle back in 2017/2018. However, Ethereum’s chronic limitations in place meant that the sector took a huge hit in the aftermath during the 2018-2020 bear market and the DAO went down with it.
Now, it seems like DAO based applications are getting back in business, especially at a time when Ethereum is scaling and looking to move to a Proof-of-Stake (PoS) based approach along with sharding for scaling purposes.
The $12 Million Synthetix Funding
Paradigm, Coinbase Ventures, and IOSG are three Venture Capital (VC) firms raised $12 million through the Synthetix ecosystem. According to the announcement from Synthetix:
[The funding] will contribute where possible by providing liquidity in the form of SNX collateral, and also participate in its rapidly evolving community governance system….”
The funds now own equivalent amount of SNX tokens and can take part in the community’s decentralized working approach and vote on different moves going forward. This is kind of a controversial topic, especially when it comes to DAO projects. This is because VCs like these companies can swoop in any time on small projects and purchase enough tokens to have a controlling stake on the working of the project. However, restricting their involvement is also problematic as it would mean that the organization is not open for all investors. It is a slippery slope overall and the new funding has certainly created a scenario for the future in which they will have considerable control over the working of the Synthetic platform.
IOSC, for example is a Chinese VC and is now looking to asserts its influence into the project. They plan to make a foray into the Chinese market and hire a Chinese regional head for the company. While the expansion around the world is beneficial for the company, a few top brass making all of the decisions is may be opposed by some members of the Synthetix platform arguing for a more democratized role. However, it is not an easy issue to handle and blockchain technology is more about transparency and equitable power rather than universal equality.
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