原文标题：From Science Friction to Science Finance: A Community-Driven Revolution in Biotech
Original author: Paul Kohlhaas, founder of BIO Protocol
Original translation: zhouzhou, BlockBeats
Editor's note: This article introduces how the BIO protocol solves funding, R&D and market problems in the biotechnology field through the decentralized BioDAO network. Through tokenized intellectual property, decentralized governance and real-time liquidity, BIO enables patients, scientists and investors to participate in decision-making and support neglected areas such as rare diseases and long-term COVID-19. BIO breaks through the traditional fund structure, promotes innovation in biotechnology, accelerates the scientific research process, achieves more efficient and fairer capital flow and results transformation, and ultimately promotes scientific progress and global influence.
The following is the original content (for easier reading and understanding, the original content has been reorganized):
“We live in a society that is exquisitely dependent on science and technology, and almost no one understands it.” —Carl Sagan
TL;DR
The Broken Biopharmaceutical System: Science at a Bottleneck
Andrew Lowe's Big Fund Theory: A Milestone in Biotech Finance
Beyond Mega Funds: The Emergence of the BIO Protocol
From Fund to Ecosystem: Advancing Lowe’s Vision in the BioDAO Network
BIO Protocol Practice
Orphan drugs, rare diseases, and long-term COVID-19: The moral and economic fit
Lessons from mega-fund-inspired biotech holding companies
From scientific friction to scientific finance
Bottom-up funding evolution
A universal truth hangs over our modern era: scientific knowledge is exploding, but life-changing treatments—from long COVID to rare autoimmune diseases—remain out of reach for millions. This stark contrast reveals a twisted paradox: The problem is not scientific impossibilities but inefficiencies in market structure.
Big Pharma is pouring billions of dollars into making incremental improvements to existing drugs (e.g., boosting existing PD-1 cancer drugs or GLP-1 anti-obesity drugs) through strategies like patent lifecycle management, chasing the newest and hottest clinically validated drug targets in a highly competitive market—while research into patient needs languishes.
The result? An industry mired in scientific friction, where bloated costs, capital bottlenecks, and intellectual property silos slow potentially transformative innovations or put them on hold altogether.
1. Broken biopharmaceutical system, science encounters bottleneck
Every day, thousands of people struggle with complex, debilitating, and poorly funded diseases like long COVID. Many are finding that the research to help them isn’t scientifically “difficult”; it’s too “complex” for the return on investment (ROI) of traditional pharmaceuticals. This is just one symptom of a broader crisis, as revealed by Eroom’s Law: As biotech R&D spending has soared, productivity in discovering new drugs has plummeted. How did we get here?
1.1 The Valley of Death and “Safe Bet”
Promising discoveries made in academia often struggle to make the transition to early clinical research because no one wants to fund the perilous transition between animal testing and human trials. This notorious “valley of death” stymies potential treatments that Big Pharma sees as either unprofitable or too risky.
Many VC and pharma companies adopt a “fast follower” strategy, waiting and hoping that other companies will successfully navigate these risks. These risks may include decoding the pathophysiology of the disease, addressing regulatory challenges (such as the lack of clear clinical endpoints), the uncertain commercial desirability of pharma M&A, or the dynamics of health insurers in reimbursing treatments. It is a minefield of incentives and constraints, but it does not leverage any collective mechanisms to empower patients’ voices.
1.2 Excessive concentration of capital
The main funding channels for biotech—Big Pharma and large venture capital firms—tend to concentrate their investments in “hot-selling” categories. More than 90% of biotech capital is concentrated in highly competitive, less differentiated areas, causing once-promising breakthrough research (such as longevity, complex immune system diseases, or neurology research) to stagnate.
While these low clinical risk and commercially attractive therapeutic areas are very attractive to pharmaceutical companies and venture capitalists, many also represent the most expensive failures, as only 5% of approved and marketed drugs achieve blockbuster sales potential.
Otherwise, it is a huge waste of R&D money. In Bruce Booth's famous (Atlas 2024 review), Bruce comments that less than 15% of biotech funding rounds have received more than 66% of available VC funding, a dramatic change from where things were 10 years ago. We need more meritocratic mechanisms to deal with public health issues and the coming tsunami of aging in Western societies.
1.3 Intellectual Property Lock-in and Data Silos
Under existing business models, knowledge is trapped behind thick walls of patents and closed-door deals, slowing progress. Labs around the world often repeat the same high-cost experiments for lack of shared insights, adding unnecessary friction. Patient data and clinical insights are so fragmented that they could have significant inferential value under a unified data architecture, but are instead entangled in the bureaucracy of hospital administrators, data aggregators, and biobanks alike.
Intellectual property can be time-limited, and only certain forms (such as composition of matter patents) are of significant value to venture capitalists and pharmaceutical companies, contrary to the longevity community’s enthusiasm for repurposing drugs (such as rapamycin, allantoin A, and metformin). Overall, inefficiencies in resource allocation and commercial constraints inhibit real-world health transformation, and real-time transparency can help alleviate some of these problems.
1.4 Opaque R&D and Limited Accountability
The process of developing a pipeline is slow and convoluted. Funding flows are hidden; outsiders cannot see if (or why) a trial fails until it is too late. Accountability is limited, leaving patients and the public in the dark.
Management and R&D teams change constantly, and as the teams change, so does the pipeline. Companies like Roivant have built large and successful businesses by licensing and developing strategically shelved drugs.
1.5 Capital lock-up periods of more than 10 years inhibit innovation
Traditional biotech investments often take a decade or more to pay off — a near-eternity in a fast-paced market. This illiquidity leads to a lack of funding for early-stage research, especially when outcomes are uncertain.
Biotech competes with other asset classes for capital allocation when clinical and scientific explanations of drug therapeutic potential are lacking (e.g., more easily understood revenue/EBITDA growth, etc.) In this context, open communities can help bridge the gap in education and socialization about the relative value of these therapies.
Biotech is at a disadvantage in attracting investors and gaining market share, while other health-related themes such as longevity have become cultural phenomena. Certain biomedical breakthroughs such as statins, PD-1 inhibitors or anti-obesity drugs demonstrate amazing commercial potential (e.g., 93% return on investment for Obesity 5 (NONO, LLY, AMGN, ZEAL and VKTX) in 2024), but investment structures need significant revisions to ensure that the value of these transformative innovations is not diluted and to ensure better investor accessibility - this is where tokenization will bring change.
Eroom’s Law runs counter to the tremendous scientific progress we are experiencing – such as Deepmind’s AlphaFold 2, the 2024 Nobel Prize in Chemistry, mRNA therapeutics, GLP-1, cell and gene therapies, etc. The business and stakeholder models of the pharmaceutical and biotech industries are rarely questioned, and they will warmly welcome operating structures that can help improve efficiency.
Andrew Lowe's Big Fund Theory: A Milestone in Biotech Finance
In 2012, MIT professor Andrew Lo and his collaborators proposed the concept of a “megafund” — a large, diverse pool of early-stage drug candidates. Having 50 to 200 relatively uncorrelated assets spreads risk: a single biotech startup might go out of business if its only treatment fails, but a portfolio can withstand multiple failures as long as the few successful projects deliver a return.
This theory groundbreakingly points to the structural inefficiencies in how we fund life science R&D. Yet Lowe’s approach remains top-down: big checks from institutional investors, funding allocated at the top, with little opportunity for ordinary scientists or patients to participate in meaningful decision-making.
3. Beyond Mega Funds: Enter the BIO Protocol
Now, a new wave of decentralized science has emerged to further Lowe’s vision. The BIO Protocol borrows the core idea of mega-funds — managing risk through broad diversification — but reimagines how that diversification, governance, and capital formation work. Rather than acting like a single, massive fund managed by a central authority, the BIO Protocol:
As a decentralized token holder governance protocol, curating and incubating BioDAOs. These are dedicated bottom-up communities that own and guide R&D through an on-chain research portfolio.
Tokenizing intellectual property and data through IPTs (Intellectual Property Tokens) makes them tradable, liquid assets, giving BioDAO’s researchers and community access to liquidity earlier than is common in the biotech industry.
Deploy capital in real time and enter the "Valley of Death" directly.
Putting patients, scientists, and everyday people at the core is like a Reddit community with a shared bank account.
3.1 Permissionless Stakeholders
In BioDAO, anyone directly involved in a disease — whether it’s a patient, clinician, or scientist — can join through on-chain governance. Rather than passively hoping that “someone” will fund their cause, they raise capital through collective crypto funds, form a DAO, and collectively source research ideas from within and among scientists around the world, deciding how to allocate and prioritize resources.
3.2 Tokenized Intellectual Property and Data
BioDAO issues IP tokens (IPTs) through @molecule_dao, which represent decentralized governance rights for research. These tokens can be licensed, traded, or pooled, effectively providing a new way for DAOs to incrementally de-risk early-stage science based on milestone funding deployments. Sharing data and replication of data is no longer an afterthought, but a core, liquid asset that drives scientific discovery. Bounties can also be issued to various researchers, creating incentives for decentralized science and drug discovery.
3.3 Bottom-up capital formation
Unlike mega-funds that rely on large institutional investors, the BIO Protocol coordinates community-driven fundraising. Through its launchpad, BioDAO founders can pitch their research, set up private or public token sales, and reward early backers with governance rights — without the scrutiny of VCs or Big Pharma.
4. From Fund to Ecosystem: Advancing Luo’s Vision in the BioDAO Network
4.1 Meta-portfolio of decentralized centers
Rather than a single entity holding 200 assets, the BIO Protocol facilitates a governance treasury with thousands of BioDAOs, each focused on a niche area of science. This greatly expands the possibility space while also letting the community govern itself. There is no single manager making decisions; instead, the protocol guides asset development, risk management, and synergies across all of these DAOs through its community of token holders.
4.2 Permissionless Launchpad and Acceleration
BIO's real-time decentralized launch platform mechanisms - such as bonding curves or auctions - enable new BioDAOs to be launched quickly. Early stakers or token holders can indicate which areas are worth investing in. This approach both democratizes biotech funding and accelerates the flow of funds to neglected areas such as long-term new crowns or rare autoimmune diseases.
4.3 On-chain risk management
Megafunds mitigate risk through portfolio theory, as does BioDAO, but on-chain analytics allow them to share standardized reporting on clinical milestones, IP valuations, and treasury data. This facilitates real-time insights, allowing protocols to further diversify risk or rebalance by allocating funds across multiple DAOs or by establishing research-based obligations.
4.4 Continuous Liquidity and Evergreen Capital
While traditional funds lock up capital for a decade, BioDAO tokens and IP tokens remain liquid, allowing participants to exit or redeploy capital. If a BioDAO’s therapy begins to show promise, it will naturally attract more liquidity. The game theory here is that treatments naturally become “Schelling points” for capital. At the same time, revenue from successful treatments flows back to the protocol treasury (BIObank), recycling capital into new or existing DAOs.
5. Protocol Practice: A Holistic, Bottom-Up Ecosystem
Imagine a team of scientists proposes a new “NeuroDAO” aimed at developing innovative treatments for traumatic brain injury. They upload their preclinical data and funding roadmap to BIO’s user-friendly launchpad. The global BIO community approves or rejects the proposal by staking tokens — no small committee operating behind closed doors. Once approved:
NeuroDAO mints its Intellectual Property Tokens (IPTs).
These tokens are sold through a bonding curve or auction to raise initial capital.
As milestones, such as preclinical endpoints, are achieved, additional capital will automatically unlock.
The wider community can track progress, invest further and accelerate the flywheel effect.
If NeuroDAO reaches a major breakthrough moment—like discovering a new molecule that speeds brain recovery—the IP licensing agreement can funnel revenue into the coffers to fund further research. This mechanism creates a sustainable flywheel effect that drives an evergreen, self-reinforcing cycle.
Since its inception, the BIO ecosystem has grown rapidly. In less than two years:
8 BioDAOs funded
Raised $30 million for research
Tokenized intellectual property value exceeds $50 million
BIO's AUM exceeds $60 million
$8 million has been allocated to BioDAO-funded scientific projects to date
60 active R&D projects
34,000 ecosystem token holders (3,716 of whom hold BIO governance tokens)
Multiple BioDAOs have rapidly advanced from seed-stage research to advanced preclinical research, validating the premise that decentralized capital plus open collaboration can accelerate biotech innovation.
Orphan drugs, rare diseases and long-term COVID-19: The moral and economic fit
Long Covid is just one example of an “unpopular” but urgent condition. Similarly, orphan diseases — those that affect smaller patient populations — are often overlooked by big pharma because they see limited profit potential.
But in a network like BIO, patient-led or family-led BioDAOs can form around any disease, leveraging new structures to fund research that large corporations are reluctant to fund. Smaller patient groups can accelerate clinical trials, shorten timelines, and unlock significant returns without a “go-or-bust” mentality. The moral alignment is clear: this is not about market size, but about impact.
7. Real-world momentum: Lessons from companies inspired by megafunds
Prior to decentralized science, multi-asset risk-sharing models have been tried in different forms:
BridgeBio (NASDAQ: BBIO): Focused on rare diseases with a hub-and-spoke pipeline.
Roivant Sciences: Launching independent “Vants” for each therapeutic area to integrate management expenses and capital.
Royalty Pharma: A portfolio of multi-billion dollar diversified royalty income streams that demonstrates that securitization can provide consistent funding for pharmaceutical intellectual property.
These companies all embody Lowe’s principle of diversity. The BIO Protocol takes this principle a step further by democratizing access, distributing governance, and enabling continuous liquidity through tokenization.
8. From Science Friction to Science Finance (SciFi)
Close your eyes and imagine it’s 2026. Under the BIO umbrella, there are already hundreds of BioDAOs, covering everything from pancreatic cancer to autoimmune hair loss. Each DAO is a “community collective mind” made up of patients, researchers, and charitable supporters. They:
Access real-time research data shared across your network to accelerate every clinical turning point.
Coordinate clinical trial participants and best practices (if multiple BioDAOs are addressing related areas, the BIO can facilitate shared trial participant pools, data registries, and best practice governance, reducing administrative overhead).
Use AI to assess risks, potential synergies, and capital allocation.
No longer are breakthroughs limited by decade-long funding lock-ins or heavily guarded institutions. Instead, the entire network is like a living, breathing organism—fluid, adaptable, and open.
8.1 The Golden Age of Biotechnology
By “tokenizing everything,” from preclinical data to final-stage intellectual property, coupled with decentralized governance, BIO is bringing the industry’s biggest friction points to light. Suddenly, drug development feels more like science fiction than a long marathon.
8.2 Inclusive Community, Global Impact
This revolution isn’t just happening in the lab. Regular investors — those who may have a loved one with a rare disease — can stake tokens to support new research and see transparent progress as it happens. Collaboration is no longer a buzzword, but an on-chain reality, driving the formation of multinational research teams.
8.3 Reversing Eroom's Law
As friction is removed and communities from any region can access global funding, we may finally see the cost/time curve for drug development bend downward, rather than upward—delivering the exponential scientific progress that was originally promised.
9. The bottom-up evolution of biotech financing
Andrew Lowe’s giant fund theory points us to an important path: large, diversified portfolios can tame the high risks of biotechnology and attract larger-scale capital. However, top-down structures and institutional inertia still inhibit the realization of certain innovations. In contrast, the BIO Agreement subverts this script:
Community-driven: Anyone with a stake in the project—a patient, scientist, or curious funder—can participate in governance, propose new BioDAOs, and collectively shape the direction of research.
Tokenized IP: Data and IP become liquid, paving the way for new funding and collaboration models.
Real-time liquidity: Freed from a decade of funding lock-in, capital can flow quickly to breakthrough innovations.
AI-driven risk management: On-chain analytics continuously tracks performance, synergies, and correlations, allowing capital to flow efficiently across multiple BioDAOs.
By stacking decentralized science solutions (via BioDAO) with BIO’s top-level coordination (launch platform, funding, liquidity, meta-governance), the most difficult challenges in science and pharma can be solved in a community-driven, transparent and continuously fluid environment.
Putting families, patients, and scientists at the heart of decision-making, BIO aims to “boil the ocean” and solve the dilemma of early-stage innovation. No longer will half of the world’s great ideas rot in the “valley of death.” Instead, we witness the dawn of an era of unfettered science, freed from old gatekeepers and friction-filled pipelines.
So the next time a family member faces a rare disease, the deciding factor will no longer be a boardroom analysis of market size. Rather, it will be a global network of scientists, patients, and everyday believers working together to coordinate, fund, and accelerate the treatments that really matter. In short, we are back in the world of science fiction, where humanity has finally come together to make the impossible possible.
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