daos.fun: The next liquidity black hole?

Written by: Karen, Foresight News

Last weekend, besides the BAN platform represented by Sotheby's Vice President Michael Bouhanna, ai16z also attracted a lot of attention with its outstanding performance, with its market value once approaching the $100 million mark, currently falling back to around $46 million.

Three days ago, someone spent only 20 SOL (about $3,500) to purchase 47.54 million ai16z tokens, which are now worth $2.3 million, yielding a return of up to 650 times.

So what exactly is ai16z? How does its launch platform daos.fun operate? What are its features and risks?

What is daos.fun? How does it operate?

daos.fun is a platform founded by @baoskee and supported by Alliance DAO. The main function of this platform is to help fund managers and creators raise funds so they can establish their own DAOs and invest in memes on behalf of token holders.

Currently, daos.fun is still in an invitation-only phase, and only creators who receive an official or @baoskee invitation code can participate.

Once you become a creator on daos.fun, you need to set a fundraising target amount, fund expiration time, and management fees. Then, you will have a week to raise the required amount of SOL. The tokens for each DAO will be issued fairly to ensure everyone can acquire tokens at the same price at the start. If fundraising fails, buyers have the right to redeem their SOL, but early redemption incurs a 10% loss.

When the fundraising reaches the preset hard cap, the creator will invest the raised SOL into their preferred Solana protocols or memes, and the tokens will also be publicly traded through a virtual AMM market. Thus, the market value and price of the DAO tokens will fluctuate with the trading activities and performance of the fund, and of course, market attention plays a significant role.

In principle, the price upside potential of DAO tokens is unlimited, but the downside is limited to the fundraising market value. As long as the token's market value exceeds the original fundraising amount, holders can sell DAO tokens at any time.

All DAOs have expiration times ranging from 3 months to 1 year. After the fund expires, the DAO wallet will be frozen, and SOL profits will be distributed proportionally to creators and investors. Token holders can choose to burn DAO tokens to redeem the underlying assets or sell them directly on the market (provided the market value is higher than the fundraising amount).

Ai16z: The First AI DAO with a Disruptive Market Value on daos.fun

As mentioned above, the most successful DAO fund on the daos.fun platform is undoubtedly the ai16z fund founded by @pmairca (Marc Andreessen). ai16z started with an initial fundraising amount of 420.69 SOL, and with the help of Marc Andreessen's two mentions on official Twitter, it achieved a disruptive market value, once approaching $100 million, and although it has since fallen back, it remains stable at around $45 million.

Top 10 DAOs by Market Value on daos.fun

Marc Andreessen has pointed out, "We are in the midst of a revolutionary wave of change, where the deep integration of AI and blockchain technology will reshape the landscape of finance and innovation. In this transformation process, the pioneering AI DAO ai16z is playing a leading role, envisioning a future where AI agents are the core driving force of value creation and growth. In the early stages, ai16z will operate in a highly autonomous manner under the collective wisdom of stakeholders. Its long-term goal is to achieve full on-chain operation, placing AI entities under the strict protection of Trusted Execution Environments (TEE) to ensure unprecedented transparency, security, and integrity."

ai16z not only actively listens to community insights and suggestions but also strives to learn and grow from them. DAO holders have the opportunity to provide input on investment decisions in Discord, and the AI system will closely track the implementation effects of these suggestions. Individuals who consistently contribute reliable insights will earn the trust and confidence of the AI, while those whose suggestions perform poorly will see their influence gradually diminish. To maintain a balanced distribution of power, each member's input weight will be proportional to their shareholding in the DAO, effectively preventing potential threats from malicious actors. In the future envisioned by ai16z, everyone who empowers the network and adds value will receive fair rewards.

The official page of ai16z also shows that ai16z will invest in seed-stage AI companies, covering areas such as robotics, bio + healthcare automation, consumer manipulation, crypto anarchy, enterprise obsolescence, fintech disruption, game theory development, and infrastructure hijacking. The technical battles of ai16z have been open-sourced on GitHub.

It is worth mentioning that kotopia is the DAO that has raised the most on daos.fun, collecting nearly 4,207 SOL (worth $740,000), with a current market value of $810,000.

What are the Features and Risks of daos.fun?

So, what are the features and potential risks of daos.fun?

daos.fun lowers the threshold for operating meme funds. If daos.fun later opens up creator registration, theoretically anyone can initiate a Meme DAO or Meme VC, and some KOLs and institutions may also be able to issue tokens through daos.fun. Given the current high popularity of AI memes, but the difficulty for most retail investors to grasp their rhythm, daos.fun undoubtedly opens up new possibilities for retail investors.

Transparency is also a major feature of daos.fun. First, the asset management status of each DAO is publicly displayed on the daos.fun page, and second, the profit-sharing mechanism is relatively transparent. Additionally, all DAO creators are linked to their Twitter accounts, which usually means they value their reputation. But who knows?

The profit points of daos.fun mainly lie in the performance of DAO tokens and fund investments. However, this profit model also comes with significant risks, especially concerning potential misconduct by fund managers, such as insider trading. More critically, the severe divergence between the fund's market value and its net asset value becomes another major potential risk.

Taking the largest token by market value on daos.fun, ai16z, as an example, its market value to net asset value ratio is as high as 58. The second-largest token, SEQUOAI (market value $455,000), has a ratio of 40, while the third-largest token, NORM, has a ratio of 29. These high ratios of funds undoubtedly reveal the current market's strong atmosphere of speculation and hype, as well as investors' extremely high expectations for the future performance of these funds. However, this also reminds us that while pursuing high returns, we must be vigilant about potential market volatility and risks.

As early as 2022, the concept and implementation of Ventures DAO had already emerged in the Web3 space, but it did not achieve significant progress at that time. With the rise of the meme craze, whether Meme DAO funds and AI DAO funds can create a wave remains to be seen, and Foresight News will continue to monitor this.