AI Memes are very popular, but unable to keep up with the pace; DAO funds + Meme coming?


Written by: Karen, Foresight News


Last weekend, in addition to the BAN represented by Sotheby's vice president Michael Bouhanna, ai16z also attracted a lot of attention with its outstanding performance, with its market cap once approaching $100 million, currently dropping back to around $46 million.


Someone spent only 20 SOL (about $3,500) three days ago to purchase 47.54 million ai16z, which is now worth $2.3 million, with a return rate of up to 650 times.


So what exactly is ai16z? How does its launch platform daos.fun operate? What are its characteristics 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 that they can establish their own DAOs and invest in Memes on behalf of token holders.


Currently, daos.fun is still in an invitation-only stage, and only creators who obtain 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. Each DAO's tokens will be issued in a fair manner, ensuring that everyone can obtain tokens at the same price at the beginning. If fundraising fails, buyers have the right to redeem SOL, and early redemption will incur a 10% loss.


When fundraising reaches the preset hard cap, creators will invest the SOL they have raised into the Solana protocol or Meme they like, while the token will also be publicly traded through a virtual AMM market. In this way, the market cap and price of the DAO token will fluctuate with the trading activities and performance of the fund, of course, market attention also plays a very large role.


In principle, the price upward potential for DAO tokens is unlimited, but their downward space is limited by the fundraising market cap. As long as the token's market cap exceeds the original fundraising amount, holders can sell DAO tokens at any time.


The expiration times for all DAOs range from 3 months to 1 year. After the fund expires, the DAO wallet will be frozen, and the 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 cap is higher than the fundraising amount).


Ai16z: The first in market capitalization among AI DAOs on daos.fun.


As mentioned above, the most successful DAO fund on the daos.fun platform is undoubtedly the ai16z fund established by @pmairca (i.e., Marc Andreessen). ai16z started with an initial fundraising amount of 420.69 SOL and, with the assistance of A16z founder Marc Andreessen being mentioned twice on official Twitter, it achieved the first in market capitalization, once approaching $100 million, although it has since fallen back, it remains stable at around $45 million.


Top 10 DAOs by market capitalization on daos.fun


Marc Andreessen pointed out, 'We are in the midst of a wave of revolutionary change, and the deep integration of AI and blockchain technology will reshape the landscape of finance and innovation. In this transformation process, the pioneer AI DAO, AI16z, is playing a leading role, envisioning a future where AI agents are the core driving force for value creation and growth. In the initial stage, ai16z will operate in a highly autonomous manner under the guidance of the collective wisdom of stakeholders. Its long-term goal is to achieve complete on-chain operation, placing AI entities under the strict protection of a Trusted Execution Environment (TEE) to ensure unprecedented transparency, security, and integrity.'


ai16z not only actively listens to the insights and suggestions of the community but also strives to learn and grow from them. DAO holders have the opportunity to provide feedback 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 gain the trust and confidence of the AI, while those whose suggestions perform poorly will gradually lose influence. To maintain a balance in power distribution, each member's input weight will be proportional to their shareholding ratio in the DAO, effectively preventing malicious actors from posing a threat to the system. 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, involving fields such as robotics, bio + healthcare automation, consumer manipulation, crypto anarchy, enterprise obsolescence, fintech disruption, game theory development, and infrastructure hijacking. The technology of ai16z has been open-sourced on GitHub.


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


What are the characteristics and risks of daos.fun?


So, what are the characteristics 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 or institutions may also be able to issue tokens through daos.fun. In the current situation where AI Memes are highly popular, but most retail investors find it difficult to grasp the pace, daos.fun undoubtedly opens up new possibilities for retail investors.


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


The main profit point of daos.fun lies in the performance of DAO tokens and fund investments. However, this profit model also comes with significant risks, especially improper behaviors such as front-running by fund managers. More critically, the severe divergence between the market cap of the fund and its net asset value has become another major potential risk point.


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


As early as 2022, the concept and implementation of Ventures DAO already appeared in the Web3 space, but it did not make significant progress at that time. With the rise of the Meme craze, whether Meme DAO, AI DAO, etc., can spark a wave, Foresight News will continue to pay attention.