Investment DAO: A new way to High Profit Returns

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19 Jan 2024

Can you envision a way to collaborate and invest with other people all over the world without knowing who they are, steering a project together towards a common goal and make huge profit on the way, without a central authority to arbitrage decisions? Decentralized Autonomous Organizations (DAO) are making this a reality.
A DAO is a entity that has no central authority governing its organization. The organization’s members, no matter how many they are, are the ones maintaining control over it. The rules and governance processes controlling DAOs, by which members must abide, are fully transparent and encoded in the governance contract. Since rules and governance processes are set in stone (or set in code), no managers are required, which reduces bureaucracy or hierarchical barriers.
For a DAO to be fully functional, there are three pre-requisites:

A set of coded rules/processes by which it will operate
A token, to determine voting rights and reward DAO activities performed by members
A utility (the project needs to have a “raison d’être”, a problem that it is solving or a purpose)

DAO activities typically included:

Making proposals, for example development proposals regarding the project/organization
Making decisions on the proposals, Yes or No

The finality is for members to steer the project into the future and make necessary developments to support the project’s purpose/growth. Usually, members receive voting rights in proportion to the number of tokens they own, but the rules in the DAO may choose otherwise. This functions a little bit like a democracy, except certain members may have more voting rights than others. A well-designed DAO governance process is important to ensure members participate, make proposals, and decide on the correct future course of actions for the project/organization.
There are several utility that can be tackled by DAOs. DAOs have been developed for a variety of applications thus far, including but not limited to investment & asset management, charity, fundraising, and/or decentralizing any layer-one blockchain projects or layer-two dApps, all without the involvement of a central authority. To take the example of a charity DAO; the organization receives donations from all-around the world, and its members determine through the DAO how the donations are administered. Let’s look more in details into investment DAOs.

Investment DAO Utility

An investment DAO in its most simple form, pools the assets of its members into one account and sets up a DAO for its members to decide together how these assets are invested and how proceeds of these investments are distributed.
In 2022, we are seeing a significant number of investment DAOs popping out everywhere. Perhaps this year, will be the year of the DAO craze, the same way we had the Defi craze and the NFT craze.
Investment DAOs, however composed, usually follow a similar investment process:
1. Pooling assets of members into one bucket
2. Projects are proposed for investment
3. Members vote, Go or No-Go, to invest in a project
4. If Go, then the DAO makes the investment in the validated project on behalf of the organization (this usually happens automatically)
5. Members vote when to divest (sell) a project
6. Members vote how the profits from an investment are distributed (eg. dividends to members, re-investment in new projects, donations to charity, etc.)
Investment DAOs usually have an address where all assets are stored, which typically needs multiple signatures to allow transactions and therefore fluid capital allocation. The investment strategy of a DAO is very important, typically some could have a focus on early-stage crypto projects, some could be investing only in NFTs or perhaps even real assets (like real estate). We are observing lately many DAOs whose investment focus is Web3.0 startups or play-to-earn projects.
Investment DAO are in a stark contrast to traditional financial organizations, which can be hierarchical, elitist, localized, and opaque. Investment decisions are done by a small numbers of people, so called investment board. Decentralized autonomous organizations (DAOs), on the other hand, are made up of grassroots networks with anywhere from a few people to thousands of members. Investment decisions are made by all members in the DAO.
As a result, DAOs may draw investors from all around the world while also providing greater flexibility in terms of investment size and type. Furthermore, in contrast to traditional organizations, they offer a social bond that unites all their members and display radical transparency through smart contract executions. With that introduction in mind, below two examples of good Investment DAOs offering interesting investment opportunities.

The Rebellion Protocol

The Rebellion Protocol is a cryptocurrency-focused venture capital (VC) fund that is run by a decentralized autonomous organization (DAO). Its moto is: “You don’t need a suit to run wallstreet”.
The project aspires to bring together experienced people to run an investment fund that is more lucrative and more fun than any other VC firm.
The Rebellion Protocol’s DAO (REBL DAO) is designed so that the community can make decisions regarding the entire ecosystem of the project, including investment decisions and changes related to the contract of the project itself. Furthermore, its processes are built to ensure investors make the best financial returns possible in crypto. Finally, the project’s simple architecture makes it highly accessible to anyone in the world. As such, anyone can buy the project’s token ($REBL) and become a venture capitalist.
Traditional investment funds exclusively attract institutional investors and high-net-worth individuals, making such asset class only available to the one percenter in the world. On the contrary, Rebellion Protocol aims to democratize crypto VC investments, which typically bring in returns in the range of 10–100x (1’000%-10’000%) per annum, and make it available to anyone, wherever you are from.
The $REBL token
The Rebellion protocol token ($REBL) is a BEP-20 token which can be purchase on PancakeSwap (a decentralized exchange). A total transaction fee of 9% is taken and split in three, to:

Finance the VC fund
Redistribute a constant reward to token holders
Improve liquidity

This means that, unlike traditional VCs who have to raise funds and are illiquid, Rebellion Protocol has its VC fund grow with the number of investors (no fundraise) and investors can buy/sell anytime as liquidity is guaranteed 24/7.
The REBL DAO NFT (DAO token)
The NFT collection of the Rebellion Protocol is designed with the community in mind. As a result, the REBL DAO NFTs give voting rights to its holders, which are utilized in the REBL DAO to make investment decisions and decide on the project’s future developments. REBL DAO NFTs are distributed to members staking their $REBL. In the future a marketplace will be available to buy/sell REBL DAO NFTs.
Governance
As previously stated, the REBL DAO NFT holders are entitled to voting rights. These rights can be used to elect investment consultants who are responsible for proposing investments to be approved by the community (REBL DAO NFT holders). There are two types of governance processes on the platform.
General governance processes involve any decisions that are not related to investment. They include voting on changes pertaining to transaction fees, anti-whale protection mechanisms, electing or voting out investment consultants, and voting on how the community reserve should be managed.
Investment governance processes, on the other hand, include voting on decisions related to investments. Typically, voting on investment proposals, voting on how investment profits should be redistributed, voting on token burns, and changes related to the payment of dividends to investors.

Rebellion Protocol website: https://rebellionprotocol.com/
Rebellion Protocol whitepaper: https://wp.rebellionprotocol.com/

MetaCartel Ventures

MetaCartel Ventures is a legal entity and a permissioned for-profit investment DAO. Its goal is to provide financial benefits to its members while funding innovative projects that create new decentralized applications on top of Ethereum. The fund will initially only be offered to accredited investors who must be approved through voting processes by existing members. Tokens, future token agreements, and traditional equity in startups can all be used to make investments.
MetaCartel Ventures’ founding members have deep links within the Ethereum community as investors and founders. Members, known as Mages, contribute towards providing initial capital and serve as fund managers to source, diligence, propose, and vote on investments. Moreover, mages have to consistently take part in managerial responsibilities in order to avoid being expelled to the lower tier for inactivity. Members of the lower tier are known as “Goblins.” Unlike mages, they do not take part in managerial activities and can provide capital. It should be noted that both can switch between the groups. There is also a third group that is known as the Summoners. Strictly speaking, they are not necessarily classified as members of the DAO, but they perform tasks pertaining to legal, coordination, and finance. Also, these tasks are overseen by mages and are paid for through fees that can be negotiated.
The Grimoire
This grimoire is used as a means to legally enforce the rules and regulations outlined in it and is essentially an LLC agreement among the members. Every user that plans on becoming a member is bound to these rules and must act in accordance with them. Additionally, it is intertwined with smart contracts to the point where any user who follows on-chain processes to lawfully buy DAO shares is eligible for membership, and is then subjected to the Grimoire’s rights and the duties highlighted by it, as well as current laws.
Membership
Prospective members must be endorsed by an existing member, go through a comprehensive review of attributes like skill and cultural fit, and then earn a majority vote to join the DAO. They will next be made to sign the Grimoire in order to get their DAO economic rights.
Since members can propose to expel any member amongst them, each member must have the absolute consent of the majority to retain their membership status. If expelled, members have to let go of whatever governance rights they have along with their shares. They will, however, have the right to obtain their proportional claim to existing investments as liquid assets, along with claims pertaining to illiquid asset revenue. In addition, members are free to leave whenever they choose and would then be eligible to make the same aforementioned claims.
MetaCartel Website: https://metacartel.xyz/

Final Thoughts

DAOs can be an excellent means for gathering people across the globe and forming vibrant communities. They have seen many applications in various industries. Investment DAOs is a major DAO application, and they are growing fast. Unlike traditional investment funds that lack inclusivity, Investment DAOs can be accessible to anyone. This is due to their flexibility when it comes to the types and sizes of investments that can be partaken in. In addition, investors can be directly involved in decision-making processes that can determine best investments and shape the future of the organization. Finally, investment DAOs are usually transparent and can provide huge financial returns for its investors.

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