NEWNew column introduction
Hi readers, Coinspire is about to launch our new content column - Discover Alpha/Understand a project series in 5 minutes.
This is the first article in a new column, in which we not only chase what’s hot right now, but also look for underrated projects that are beyond the scope of current narratives and can tell wonderful stories to share with readers.
Ai16z and its fundraising platform daos.fun have become very popular, raising the profile of Investment DAO in the past month.
In short, Investment DAO is a decentralized hedge fund managed by real people or AI agents, which raises funds, generates returns, and returns profits to DAO token holders. It can also be understood as a tool to help hedge fund managers raise funds. Launchpad is an aggregation market for such DAOs, and the platform acts as a third-party endorsement.
In fact, Investment DAO is not a new concept. It existed as a branch when the DAO concept emerged in 2022. It was mainly deployed on the Ethereum public chain. The investment direction tends to be NFT, DApp, DeFi and other currently popular narratives. In this cycle, AI Agent and Meme have become the mainstream of investment. For example, daos.fun is positioned as a Meme fund launch platform based on Solana.
Today, this trend has gradually shifted from Solana to the Base public chain, such as daos.world and Vader AI.fun in the Base Virtuals ecosystem. Next, this article will focus on the processes and technical features of these two projects to start thinking about Investment DAO.
Daos.woeld
The logic of daos.world and daos.fun is similar, and both are launchpads for Investment DAO.
First, there are two roles for protocol participants:
DAO Manager;
WL (Wait List) participants, that is, DAO fundraisers.
Secondly, the operation process is as follows:
1. Release DAO : DAO manager releases fund in daos.world to raise ETH (currently need to contact the project owner through Telegram to obtain release opportunity);
2. Pre-sale : Participants who obtain the whitelist select DAO funds and purchase their shares in the pre-sale stage to raise initial capital for the fund. Currently, there are only four DAO funds on daos.world. Take the DAO with the highest market value as an example - $AISTR (AicroStrategy), which was created on December 19 and currently has a market value of 13.14 million US dollars and raised 40 ETH. The initial plan for raising funds is to deposit Aave, borrow USDC, buy cbBTC and repeat this process, and determine the best leverage ratio for it based on the AI algorithm.
3. DAO token minting: After the pre-sale is completed, all ETH raised will be handed over to the DAO treasury, which is hosted in a smart contract. daos.world minted 1.1 billion ERC20 tokens to represent the DAO treasury (1 billion tokens allocated to fundraisers and 100 million tokens added to the Uniswap v3 liquidity pool). The price of the DAO token will rise or fall based on the success of the DAO trading activities.
Such as $AISTR liquidity pool on uniswap
4. Investment: At the same time, dao.world’s fund managers trade or invest the raised ETH in any way on BASE.
5. Profit: The fund has an expiration date. When the expiration date arrives, trading stops and fundraisers receive gains/losses in proportion to the DAO token. The manager can extend the expiration date at any time.
The current ways for each role to make money are:
Fund Manager: Earn fees based on trading volume and profit sharing. DAO managers earn 0.4% from the liquidity pool fees, plus part of the profit based on the fund performance when the fund expires.
Fundraisers: Gains/losses after the fund expires. You can also trade the DAO tokens before the expiration date. If the market value is lower than the fund value, buy; if it is higher than the fund value, sell.
LP: Participate in providing liquidity to the pool and earn fees.
Image source: daos.world
Technical Details
Design of the liquidity pool: The founder stated on X that the initial price of the Uniswap pool will be set correctly to ensure that the value of the assets in the pool will not be lower than the amount of ETH raised; in addition, this pool is unilaterally designed and only contains DAO fund tokens.
Antipull: One of the keywords promoted by daos.world is Antipull. In response to the dozens of rug pulls that have occurred on daos.fun, where the founder of the fund can withdraw all funds without supervision, use DAO funds to repurchase tokens, and then sell them off, exhausting the DAO, daos.world emphasizes background checks, roadmap reviews, and vision assessments on the DAO fund team, and conducts a strict KYC process before approval. It also implements its multi-signature on the latest Dao (ALCHDAO) to ensure that fund withdrawals require platform consent.
▎Comparison with daos.fun
Like daos.fun, the two work in a similar way, with only some differences in details. In addition, the daos.world interface currently has fewer functions than daos.fun, but similarly, the asset management status of each DAO will be publicly displayed on the daos.fun page; secondly, the profit sharing mechanism is also relatively transparent. In addition, all DAO creators are associated with their Twitter accounts.
The subtle differences are as follows:
Vader AI fun
In the first part, we mentioned the launchpad of Investment DAO. In this part, we will talk about another popular paradigm of Investment DAO. That is, DAOs that introduce AI as their fund managers and focus on vertical tracks in investment targets. VaderAI fun is such a role.
VaderAI Fun is one of the functions of VaderAI, which is currently one of the AI agent projects on Base, Virtuals ecological projects. According to the Virtuals official website, as of December 30, there are about 510 Virtuals ecological projects. Among them, VaderAI is one of the four projects with a market value of more than 100 million.
VaderAI Fun's vision is that most AI agents can only be started faster, not faster. More than 10,000 agents have been launched on virtuals. As the number of agents grows, their professional fields will also be different. It is impractical for users to study and analyze all individual agents around the clock - they either lack time or expertise. Investing in DAO enables users to invest in a narrative/theme/strategy without having to do it themselves. At the same time, according to the latest data from Cookie.fun, as of December 30, the overall market value of AI Agent has reached 11.68 billion US dollars, and the increase in the past 7 days has reached nearly 39.1%. This data has fully reflected the investment value of the AI agent concept.
In response, VaderAI Fun launched three DAO funds and launched
Micro Cap (targeting agents with market capitalization between $100,000 and $2 million);
Small Cap (targeting Agents with a market capitalization between $2 million and $10 million);
MID Cap (targeting Agents with a market value between US$10 million and US$100 million).
VaderAI fun's investment strategy is an AI agent that combines thousands of machine learning-based trading strategies, clearly defining the scope of investment targets (which can be market capitalization or project themes, such as DeSci, DeFi), rebalancing frequency, index weighting method, minimum liquidity requirements, minimum holding time of targets, upper limit of holding of a single target position, etc., and trading within the corresponding market capitalization range;
Take one of the DAOs as an example.
DAO size is 50,000$VIRTUAL
Will actively trade Virtuals agents with market caps between $700,000 and $5 million.
Another advantage of the VaderAI Small Cap DAO is access to discounted OTC trades from top agent teams, which are submitted to VaderAI for final decision.
3 month initial lock-up period.
Only $VADER stakers can participate.
DAOs are divided into two types based on managers:
The passive DAO is managed by VaderAI, which charges a 0.5% management fee and rewards $VADER stakers.
Active DAOs are run by real people and charge a performance fee of 0-20%. A 20% performance fee pool rewards $VADER stakers.
Image source: @Vader
The process to participate in Vaderfun AI is:
1. Stake $VADER to join the DAO;
2. The currency invested in DAO will be funded by VIRTUAL's ecological token $VIRTUAL (after the liquidity and price of $VADER gradually stabilize, $VADER will be used instead);
$VIRTUAL is a transaction/incentive currency, similar to L1 ecosystem tokens, such as ETH and SOL;
$VADER is a proxy token, similar to the dApps token on L1;
3. The DAO Fund must retain 10%-20% of $VADER as a cash reserve liquidity buffer to cope with withdrawal needs and the need to rebalance assets in case of sudden market changes;
4. Withdrawals of positive returns generated by the fund will be distributed to participants in the form of $VADER tokens. (A 1% handling fee will be charged for withdrawals, which will be converted into $VADER and destroyed to create a deflationary token economy.)
Among them, approved managers are required to pledge 100,000$VADER to establish a fund.
In addition, the profit sources of staking $VADER include two parts:
The management fees earned by VaderAI (whether active or passive) will be used to repurchase $VADER and rewarded to $VADER holders;
The 20% performance fee collected by other agents or human-managed active funds will be used to repurchase $VADER and rewarded to $VADER holders.
Characteristics and risk factors of this type of DAO
In fact, Investment DAO has taken shape in recent years. Its goal is to democratize investment, break down the barriers of traditional finance, and empower the majority rather than the minority. The current AI narrative has given it new vitality, but there are still some risk factors that cannot be ignored:
1. The key factor for investment success depends on the DAO fund manager. For example, there have been dozens of rug pulls on daos.fun, where the fund founder can withdraw all funds without supervision, use DAO funds to buy back tokens, and then sell them, exhausting the DAO. Or if all is invested in Meme, and the value of Meme will soon fall, then the potential value of the fund will also fall. Therefore, investors need to choose investment funds wisely if they want to invest for the long term. If investors participate in the pre-sale, they can sell the tokens immediately after the issuance.
2. The market value and net fund value ratio is high, and the speculation atmosphere is strong. For example, the market value and fund asset value ratio of $AISTR of daos.world is as high as 96 times. The high market value of these funds undoubtedly reveals the strong speculation atmosphere in the current market and the extremely high expectations of investors for the future performance of these funds. But this also reminds us that while pursuing high returns, we must also be vigilant against potential market fluctuations and risks.
3. It is not very friendly to retail investors. Although the goal of Investment DAO is to provide retail investors with equal opportunities to participate in potential projects, obtaining the whitelist is a relatively difficult thing, and the opening process is not publicly quantifiable and is mostly open to KOLs.
However, daos.world has recently launched a method of staking to obtain WL, which is relatively quantifiable and transparent. That is, you can earn Daos World Whitelist Tokens (DWL) by staking any of the four DAO tokens: After applying for DWL, there are two options: one is to destroy one DWL to obtain the WL whitelist; the other is to destroy less than one DWL to join the WL lottery pool. Among them, DWL has no asset value.
Conclusion
The reason for presenting these two projects is not to recommend them, but they are just two representative projects of Investment DAO on the Base public chain. We have seen that due to the outbreak of ai16z, Investment DAO has been put back on the agenda. Now ai16z is no longer just an Investment DAO - it is an open source innovation movement. It has become a one-stop shop for launching and expanding Agents and has a strong decentralized network.
At the same time, it also opens up the space for Investment DAO:
1. The Launchpad project, which targets daos.fun and aims to solve its pain points, will be launched on various public chains one after another;
2. Investment DAOs that focus on vertical investment tracks have become a trend. Currently, AI Agent and Meme have become mainstream, and more vertical investment DAOs may appear in the future.
Coinspire will continue to pay attention to how Investment DAO will develop in the future.
