Crypto: What are DAOs? What to know about these 'funky crypto organizations'

Yahoo Finance's David Hollerith explains what a decentralized autonomous organization (DAO) is and why they are gaining so much interest from crypto investors.

Video transcript

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AKIKO FUJITA: In our "Crypto Corner" today we are talking about doubling down on DAOs. Decentralized autonomous organizations have been gaining a lot of traction online and we've got our very own David Hollerith here to explain. And David, Constitution DAO made a lot of headlines when members raised over $47 million worth of crypto, but they didn't necessarily get the auction to get that rare copy of the US Constitution. What are some other groups that are organizing in this way?

DAVID HOLLERITH: Yeah, so just to take a step back, Akiko, DAOs, these funky sort of crypto-funded organizations, have actually been around for a while and, obviously, higher returns in the past bull year for crypto has sort of given some crypto investors a lot more purchasing power so they've been organizing in these groups to sort of combine their purchasing power to purchase larger things. The Constitution-- the print of the Constitution it's one example of this.

But the actual concept of a DAO is pretty broad in terms of what they could do with funding. To get more info on this, last week I spoke with Kevin Owocki who's co-founder of Gitcoin Holdings and also a member of that DAO. So for background, Gitcoin is the largest fundraising organization for open source software on the Ethereum blockchain. It uses like a type of funding mechanism that gives software projects funds based on the popularity, so sort of works like a voting system for DAO members.

You can kind of think of it as like a very Democratic 18,000 member crypto version of, like, Shark Tank for free software and that's sort of another story in itself. But here's what Kevin had to say sort of to explain the broader landscape of all the different types of DAOs out there.

KEVIN OWOCKI: There's a bunch of different types of DAOs out there. There are Defidels that are focused on building decentralized Finance. Yearn Finance is an example of that. There's NFT DAOs which are focused on art auctions and bidding on art that different creatives in the Ethereum ecosystem have created, like the most example-- the biggest example of that is Pplpleaser DAO which bid on the art from Pplpleaser, a famous NFT artists.

There's Protocol DAOs which are focused on governing protocols in the Ethereum ecosystem, the most famous of which is Uniswap DAO. There are Service DAOs that are focused on just building services for other DAOs, Social DAOs, which are kind of like token gated social clubs, and then Impact DAOs which are focused on charitable causes or the public good. I would consider Gitcoin DAO to be an Impact DAO because we're focused on creating a better internet for the world's developers.

DAVID HOLLERITH: Yeah, so, Akiko, Gitcoin, some of their notable alumni, so projects the DAO has funded, include Uniswap, Earn Finance, and the 1 Inch exchange, which are all DeFi projects, and they're obviously-- they've obviously been huge successes, so it's just sort of gives you another taste for like what these sort of Decentralized Autonomous Organizations can kind of do.

AKIKO FUJITA: OK, David Holloway walking us through the DAOs there. You can, of course, find his story on yahoofinance.com as well.