Hello world, and welcome to Dove Dispatch #18!
Today, we are digging into the NFTs DAO venture funding ecosystem.
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Union Square Ventures recently invested 500 ETH (around $1.6M at the time) in the Bright Moments DAO, an NFT gallery that started as a popup gallery in Venice Beach California where NFT artists drop and show new work.
This was actually their third DAO investment, which they define as “token transactions denominated in ETH and ERC-20 assets with no other paperwork”.
Fingerprints, an artworks curating and collecting DAO which owns pieces from famous collections such as Autoglyphs, Avid Lines, Digital Zones, Mutant Garden, Bitchcoin, and DEAFBEEF, recently raised a seed funding round.
This is undoubtedly a milestone for NFTs DAOs onboarding venture investors.
Earlier this year, JennyDAO onboarded top funds such as IOSG Ventures, Moonrock Capital, The Spartan Group, 3Commas, and Multicoin Capital. Each fund actually chipped into JennyDAO’s $7 million launch pool. They plan to keep adding NFTs to their collection over time through the Unicly protocol and focus on fractionalization to enable retail collectors to get exposure to a fraction of high-value collections.
Even if raising funds from centralized investors may sound paradoxical at first glance, NFT DAOs - and DAOs in general - can gain many advantages from doing so:
As pointed out in Fingerprints’ announcement tweet, big VC funds like Andreessen Horowitz and Union Square Ventures can help with outreaching, brand building, and implementing processes to increase DAO’s scalability.
Getting ETH to implement marketing initiatives is currently the most efficient and least risky alternative for DAOs. SquiggleDAO has been discussing marketing bounty programs to produce content, collaborate with media channels, close partnerships with galleries, or further engage their community on social media.
Attracting big amounts of fresh capital from funds in exchange for tokens enables DAOs to make their native tokens liquid by establishing a liquidity pool and then lower barriers to entry for retail investors.
A large part of the amount raised can also be used to sweep a collection floor - which is equivalent to stock buybacks and can be done with help from MiningDAO to do the floor sweep in one block.
On the other side, many more funds will deploy capital into NFTs DAOs, because:
As collecting DAOs will own a meaningful share of the most valuable and hottest art pieces, directly investing in DAOs appears as an efficient option to get some exposure to the most important assets.
Major NFTs DAOs take care of purchasing pieces that have very little chance to pull back in value, so the risk to the downside is minimal.
As a DAO member, one’s learning curve literally explodes. Funds can get insights from rightly incentivized experts about the tooling, the most promising projects, and the market itself.
Valuation models can make deals in NFTs DAOs different for investors. To date, two alternatives seem to be progressively becoming market standards:
No premium: the native token value is equal to the treasury value divided by the number of tokens distributed.
Premium: a premium determined by the DAO is applied to the native token value.
Besides going through a formal governance proposal where community members are asked to approve investments from funds, alternative options exist. For example, a dedicated Fingerprints’ Discord channel has been created for OTC deals venture funds could easily participate in via trustless solutions such as Airswap.
Another option consists in using Juicebox Protocol, which describes itself as a business-model-as-a-service and programmable treasury for community-owned Ethereum projects. NFTs DAOs such a SharkDAO are currently raising there and many more should follow. Interestingly enough, Jesse Walden from Variant recently showed up in the Juicebox Protocol’s Discord wondering about projects “potentially intersecting with VC financing where there’s a large amount of “permanent” runway parked in one go that can’t be recalled”.
In the future, some projects might raise from a liquid community and from long-term investors simultaneously.
Last week 17 projects announced fundraising rounds:
X-Margin ($8M) | A complete platform for managing the lending and borrowing lifecycle — with participation from Coinbase Ventures, Hashkey Capital, Spartan Group, Bixin Ventures, Gemini, Primitive Ventures, Kenetic, CMS Holdings, Mgnr, Dunamis Trading, Pirata Capital, Kronos Research, Wintermute, Digital Currency Group, CoinShares, Polychain Capital, GSR, Alameda Research, CMT Digital, and Bybit.
Nakji Network ($8.8M) | An indexing protocol for organizing blockchain data — with participation from Animoca Brands, CMS Holdings, Primitive Ventures, One Block Capital, PANONY, LD Capital, Genesis Block HK, and RocketFuel.
DeFi Land ($4.1M) | A farming simulation game bringing key elements of DeFi together - built on Solana — with participation from Animoca Brands, Alameda Research, Jump Capital, NGC Ventures, Solana Foundation, and Gate.io.
szns ($4M) | User-curated NFT albums for collectors, curators, and creators — with participation from Framework Ventures, Dragonfly Capital, Pear VC, Baller Ventures, DeFi Alliance, LongHash Ventures, and Cypher Capital LLC.
Cere Network ($31M) | Delivering fast-tracked consumer enterprise adoption through decentralized data clouds, data interoperability, and SaaS-DeFi — with participation from Polygon, Republic, and others.
EnterDAO ($1.75M) | A decentralized organization on the Ethereum blockchain founded with the mission to build products enabling new markets within the metaverse economy — with participation from D64 Ventures, Fourth Revolution Capital, Delphi InfiNFT, Aaron McDonald, BCW Group, Mark Yusko, Troy Murray, UNKNOWN VC, Tim Kang, 6th Man Ventures, MANTRA DAO, Wave Financial, John Patrick Mullin, Santiago R. Santos, Jordan Momtazi, Matt Hunter, Ivo Georgiev, Rahilla Zafar, Stable Node, Kain Warwick, Ivan Manchev, Kieran Warwick, Adam D'Augelli, Jon Callaghan, Tyler Reynolds, Marc Smith, Ivailo Jordanov, Mark Ward, Ryan Shtirmer, Algernon Homes, Nick Ward, and Harrison Hines.
Kawaii Islands ($2.4M) | The most enchanting play-to-earn game — with participation from "Signum Capital, Mapleblock Capital, HyperChain Capital, DFG, Jsquare, AU21 Capital, X21 Digital, SkyVision Capital, Kyros Ventures, Oraichain, Imba Games Studio, and others.
SolRazr ($1.5M) | The first decentralized developer ecosystem for Solana — with participation from Ascensive Assets, Moonrock Capital, Divergence Ventures, CMS Holdings, Morningstar Ventures, Genblock Capital, GBV Capital, ZBS Capital, Skynet Trading, and PANONY.
SubQuery ($9M) | — with participation from Arrington XRP Capital, Digital Currency Group, Stratos Technologies, Hypersphere Ventures, NGC Ventures, Wintermute, Skynet Trading, PAID Network, Megala Ventures, Node Capital, Interchain Ventures, ExNetwork Capital, Ellipti, Fairum Ventures, CSP DAO, Angel DAO, Impossible Finance, Safelaunch, OIG Investment Group, Follow[the]Seed, Maven Capital, Insignius Capital, The LAO, gumi Cryptos, Moonwhale Ventures, Bitscale Capital, Web3 Capital, TRG Capital, Halvings Capital, GD10 Ventures, Double Top, Illusionist Group, and others.
Eden ($17.4M) | A priority transaction network for Ethereum that provides protection against miner extractable value (MEV) and arbitrary transaction reordering — with participation from Multicoin Capital, Jump Capital, Alameda Research, Wintermute, GSR, DeFiance Capital, Andre Cronje, and Joshua Lim.
Fluency ($1.3M) | Permissioned, enterprise smart contract platform developed for the purpose of building and interconnecting national multi CBDC networks
deBridge ($5.5M) | A decentralized standard for cross-chain interoperability and liquidity transfers — with participation from ParaFi Capital, Animoca Brands, Lemniscap, Crypto.com Capital, Huobi Capital, IOSG Ventures, Mgnr, Gabby Dizon, Mounir Benchemled, Axia8 Ventures, SkyVision Capital, The LAO, Chorus One, Neptune DAO, Bitscale Capital, Fundamental Labs, Krypital Group, HashQuark, Nima Capital, Double Peak, GSR, DFG (Dynamic Fintech Group), Bware Labs, Angel DAO, Tenzor Capital, Parsiq, D64 Ventures, and others.
Zenlink | A cross-chain DEX network based on Polkadot — with participation from Alameda Research, IOSG Ventures, Hashkey Capital, OKEX, Hypersphere Ventures, SNZ Holding, SevenX Ventures, DFG (Dynamic Fintech Group), TRG Capital, and PAKA.
AKRU ($2M) | — with participation from Draper Goren Holm, Milwaukee Venture Partners, and others.
TAIKAI ($1.7M) | — with participation from Bright Pixel, Portugal Ventures, and FinLab.
Sypool Protocol | — with participation from ExNetwork Capital, NGC Ventures, Bella Protocol, Evernew Capital, SkyVision Capital, Solar Eco Fund, Nabais Capital, Woo Network, Kronos Research, OIG Investment Group, Aussie Capital, and Blockwall.
Bit2Me ($4.2M)
We have also added the following investors: Aussie Capital, ICONPLUS Capital, Infinity Capital, UNKNOWN VC, and many angels.
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See you on Thursday for Thursday Thoughts #13,
The Dove Team