A new entity called DAO, based on Ethereum, has raised more than $100 million since late April. The company is similar to a venture capital fund except that it offers DAO tokens (voting shares) in exchange for a crypto currency called Ether.
Ether is currently worth around ten dollars. All the company’s legal documents and financial agreements are hard-coded into a blockchain.
The goal of the DAO is to diligently use the ETH it controls to support projects that will provide a return on investment or benefit to the DAO and its members, and benefit the decentralized ecosystem as a whole.In some way, DAO is like any venture fund, and is clear in stating it is a for-profit venture.
Except, leadership is completely decentralized and everybody holding DAO tokens gets a vote on funding candidates proportional to their holdings. If a project receives the required amount of votes, it is funded.
The Wall Street Journal reported “everything about the relationship, from the amount of funding to the specific type of funding, whether the DAO takes a percentage of the profits or an equity stake, would be laid out beforehand in the proposal.” This campaign has made the DAO one of the highest capitalized cryptocurrency startups and could offer new opportunities to democratize business.