The BIO Protocol will address funding, R&D efficiency, and market inequality in the biotech industry through a decentralized BioDAO network and tokenized intellectual property.
原文标题：(From Science Friction to Science Finance: A Community-Driven Revolution in Biotech)
Author: Paul Kohlhaas, Founder of BIO Protocol
Compiled by: 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.
Below is the original content (for ease of reading and understanding, the original content has been reorganized):
‘We live in a society exquisitely dependent on science and technology, in which hardly anyone knows anything about science and technology.’ — Carl Sagan
TL;DR
A fragmented biopharmaceutical system: science meets bottlenecks
Andrew Lo's giant fund theory: a milestone in biotechnology finance
Beyond giant funds: the emergence of the BIO protocol
From funds to ecosystems: advancing Lo's vision within the BioDAO network
Practices of the BIO protocol
Orphan drugs, rare diseases, and long COVID: a moral and economic fit
Lessons learned from giant fund-inspired biotechnology holding companies
From scientific friction to scientific finance
Bottom-up funding evolution
A universal truth looms over our modern era: scientific knowledge is exploding, yet 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 impossibility, but market structural inefficiency.
Big pharmaceutical companies pour billions into incremental improvements of existing drugs (such as enhancing existing PD-1 cancer drugs or GLP-1 anti-obesity drugs) through strategies like patent lifecycle management, chasing the latest and hottest clinically validated drug targets, while research into patient-demanded studies languishes.
What is the outcome? An industry entangled in scientific friction, where inflated costs, capital bottlenecks, and intellectual property islands slow potential transformative innovations or even set them aside entirely.
1. A fragmented biopharmaceutical system, science meets bottlenecks
Every day, thousands of people struggle with complex, debilitating, and underfunded diseases like long COVID. Many find that helping them with research is not scientifically 'difficult'; rather, it is too 'complex' for the return on investment (ROI) expected by traditional pharmaceuticals. This is emblematic of a broader crisis, as revealed by Eroom's Law: as biotechnology R&D spending skyrockets, the productivity of new drug discovery plummets. How did we get here?
1.1 The valley of death and 'safe bets'
Promising discoveries made in academia often struggle to transition to early clinical research because no one is willing to fund the perilous transitional phase between animal trials and human testing. This notorious 'valley of death' hinders potential therapies that, in the eyes of big pharmaceutical companies, have neither profit potential nor are they too risky.
Many venture capital and pharmaceutical companies adopt a 'fast follower' strategy, waiting and hoping that others can succeed in addressing these risks. These risks may include decoding the pathophysiology of diseases, addressing regulatory challenges (such as a lack of clear clinical endpoints), uncertain commercial viability of pharmaceutical mergers, or the dynamics of health insurers in reimbursing treatments. It is a minefield filled with incentives and constraints, yet it does not leverage any collective mechanisms to empower the patient's voice.
1.2 Over-concentration of capital
The primary funding channels for biotechnology—the large pharmaceutical companies and major venture capital firms—often concentrate investments in 'blockbuster' categories. Over 90% of biotechnology capital is concentrated in fiercely competitive, minimally differentiated areas, leading once-promising groundbreaking research (such as longevity, complex immune system diseases, or neurology research) to stagnate.
Despite the appeal of these clinically lower-risk and commercially attractive treatment areas for pharmaceutical companies and venture investors, many areas also represent the most expensive failures, as only 5% of approved and marketed drugs can achieve blockbuster sales potential.
Otherwise, it would be a waste of massive R&D funds. In Bruce Booth's renowned (Atlas 2024 Review), Bruce commented that less than 15% of biotechnology financing rounds have secured over 66% of available venture capital funds, which is a significant change compared to a decade ago. We need more meritocratic mechanisms to address public health issues and the impending tsunami of aging in Western societies.
1.3 Intellectual property lock-up and data islands
Under the current business model, knowledge is trapped behind thick patent walls and closed-door deals, slowing progress. Global laboratories often repeat the same high-cost experiments due to a lack of shared insights, adding unnecessary friction. Patient data and clinical insights are so severely fragmented that, under a unified data architecture, they could have significant inferential value but are hampered by the bureaucracy of hospital administrators, data aggregators, and biobanks.
Intellectual property may have time limits, and only certain specific forms (like substance composition patents) hold significant value for venture capital and pharmaceutical companies, contrasting with the longevity community's enthusiasm for drug repurposing (like rapamycin, urolithin A, and metformin). Overall, inefficiencies in resource allocation and commercial constraints stifle real-world health transformation; real-time transparency could help alleviate some of these issues.
1.4 Opaque R&D and limited accountability
The process of unfolding R&D pipelines is slow and intricate. Capital flow is hidden; outsiders cannot see whether (or why) trials fail until it's too late. Accountability is limited, leaving patients and the public in the dark.
Management teams and R&D teams are constantly changing; as teams change, R&D pipelines also shift. Companies like Roivant have built successful large enterprises by licensing and developing strategically shelved drugs.
1.5 Over 10 years of capital lock-up stifles innovation
Traditional biotechnology investments often require a decade or more to see returns—in a fast-paced market, this is nearly eternity. This lack of liquidity leads to a shortfall in funding for early research, especially when outcomes are uncertain.
Compared to clinical and scientific interpretations of drug treatment potential, biotechnology competes for capital allocation against other asset classes (such as more easily understood revenue/EBITDA growth). In this context, open communities help bridge the gap in the relative value of these therapies in terms of education and socialization.
Biotechnology is at a disadvantage when attracting investors and gaining market share, while other health-related topics (such as longevity) have become cultural phenomena. Certain biomedical breakthroughs (like statins, PD-1 inhibitors, or anti-obesity drugs) demonstrate astonishing commercial potential (e.g., 93% returns for Obesity 5 (NONO, LLY, AMGN, ZEAL, and VKTX) in 2024), but the investment structure needs significant revision 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 contradicts the significant scientific advances we are experiencing—such as Deepmind's AlphaFold2, the 2024 Nobel Prize in Chemistry, mRNA therapies, GLP-1, cell and gene therapies, etc. The business and stakeholder models of the pharmaceutical and biotechnology industries remain largely unquestioned; they would warmly welcome operational structures that could help improve efficiency.
2. Andrew Lo's giant fund theory: a milestone in biotechnology finance
In 2012, MIT professor Andrew Lo and his collaborators introduced the concept of the 'giant fund'—a large, diversified early drug candidate library. Holding 50 to 200 relatively unrelated assets can spread risk: a single biotech startup may fail if its only treatment fails, but a portfolio can withstand multiple failures as long as a few successful projects can bring returns.
This theory groundbreakingly points out the structural inefficiencies in funding life sciences R&D. However, Lo's approach remains top-down: large checks from institutional investors, top-level funding allocations, and ordinary scientists or patients have little opportunity to participate in meaningful decision-making.
3. Beyond giant funds: entering the BIO protocol
Now, a new wave of decentralized science emerges, further propelling Lo's vision. The BIO protocol draws from the core idea of giant funds—managing risk through widespread diversification—but reimagines the way this diversification, governance, and capital formation occurs. The BIO protocol is not a single massive fund managed by a central authority, but rather:
As a decentralized token holder governance protocol, orchestrating and incubating BioDAOs. These are specialized bottom-up communities that own and guide R&D through on-chain research portfolios.
Tokenizing intellectual property and data through IPTs (intellectual property tokens) turns them into tradable liquid assets, allowing BioDAO researchers and communities to access liquidity earlier than is typically found in the biotechnology industry.
Real-time capital deployment directly into the 'valley of death.'
Placing patients, scientists, and ordinary people at the core, just like the Reddit community having a shared bank account.
3.1 Unlicensed stakeholders
In BioDAOs, anyone directly related to a disease—whether a patient, clinician, or scientist—can join through on-chain governance. Rather than passively hoping for 'someone' to fund their cause, they collectively raise capital through crypto fundraising, forming DAOs, and collaboratively seeking research ideas from within and among global scientists, deciding how to allocate and prioritize resources.
3.2 Tokenized intellectual property and data
BioDAO issues IP tokens (IPT) via @molecule_dao, representing decentralized governance rights over research. These tokens can be licensed, traded, or pooled, effectively providing a new way for DAOs to gradually reduce the risks of early science based on milestone funding deployments. Sharing data and replicating that data is no longer an afterthought but a core, fluid asset capable of driving scientific discovery. Bonuses can also be issued to various researchers, creating incentive mechanisms for decentralized science and drug discovery.
3.3 Bottom-up capital formation
Unlike giant funds that rely on large institutional investors, the BIO protocol coordinates community-driven fundraising. Through its startup platform, BioDAO founders can pitch their research, set up private or public token sales, and reward early supporters with governance rights—without the need for vetting by venture capital or big pharmaceutical companies.
4. From funds to ecosystems: advancing Lo's vision within the BioDAO network
4.1 The 'meta-portfolio' of decentralized centers
The BIO protocol is not a single entity holding 200 assets but facilitates a governance treasury of thousands of BioDAOs, each focused on a specific scientific niche. This greatly expands the possibility space while enabling community self-governance. There is no single manager making decisions; rather, the protocol guides the asset development, risk management, and synergies of all these DAOs through its token holder community.
4.2 Unlicensed startup platforms and acceleration
The real-time decentralized startup platform mechanism of BIO—such as bonding curves or auctions—enables new BioDAOs to launch quickly. Early stakers or token holders can indicate which areas are worthy of investment. This approach democratizes biotechnology funding while accelerating capital flow to neglected areas, such as long COVID or rare autoimmune diseases.
4.3 On-chain risk management
Giant funds reduce risk through portfolio theory, and so does BioDAO, but on-chain analysis allows them to share standardized reports on clinical milestones, intellectual property valuations, and treasury data. This facilitates real-time insights, enabling the protocol to further disperse risk or rebalance by allocating funds across multiple DAOs or by establishing research-based obligations.
4.4 Continuous liquidity and evergreen capital
Traditional funds lock up capital for a decade, while BioDAO's tokens and intellectual property tokens maintain liquidity, allowing participants to exit or reallocate capital. If a BioDAO's therapy starts showing promise, it will naturally attract more liquidity. The game theory here is that therapeutic methods will naturally become a 'Schelling point' for capital. Meanwhile, revenues from successful therapies will flow back into the protocol treasury (BIObank), cycling capital into new or existing DAOs.
5. Protocol practice: a holistic, bottom-up ecosystem
Imagine a team of scientists proposing a new 'NeuroDAO' aimed at developing innovative treatments for traumatic brain injuries. They upload clinical predata and a funding roadmap to BIO's user-friendly startup platform. The global BIO community approves or rejects the proposal by staking tokens—without a small committee operating behind closed doors. Upon approval:
NeuroDAO mints its intellectual property tokens (IPTs).
Selling these tokens via bonding curves or auctions to raise initial capital.
As milestones (like preclinical endpoints) are achieved, more capital will automatically unlock.
A broader community can track progress, further invest, and accelerate the flywheel effect.
If NeuroDAO reaches a major breakthrough moment—such as discovering a new molecule that accelerates brain recovery—intellectual property licensing agreements could bring revenue into the treasury to fund further research. This mechanism creates a sustainable flywheel effect, driving a perennial, self-reinforcing cycle.
Since its inception, the BIO ecosystem has grown rapidly. In less than two years:
Funded 8 BioDAOs
Raised $30 million for research
The total value of tokenized intellectual property exceeds $50 million
Over $60 million in funds within the BIO treasury (AUM)
To date, $8 million has been allocated to scientific projects funded by BioDAOs
60 active R&D projects
34,000 ecosystem token holders (of which 3,716 hold BIO governance tokens)
Multiple BioDAOs have rapidly advanced from seed-stage research to advanced preclinical research, validating the premise that decentralized capital and open collaboration can accelerate biotechnology innovation.
6. Orphan drugs, rare diseases, and long COVID: a moral and economic fit
Long COVID is just one example of an 'underrated' but urgent condition. Similarly, orphan diseases—those affecting smaller patient populations—are often overlooked by large pharmaceutical companies because they perceive limited profit potential.
But in networks like BIO, patient-led or family-led BioDAOs can be formed around any disease, utilizing new structures to fund research that large companies are reluctant to sponsor. Smaller patient populations can accelerate clinical trials, shorten timelines, and unlock substantial returns without the 'hit-or-miss' mentality. The moral consistency is evident: it is not about market size, but about impact.
7. Momentum in the real world: lessons learned from giant fund-inspired companies
Before decentralized science, multi-asset risk-sharing models were attempted in various forms:
BridgeBio (NASDAQ: BBIO): Focused on rare diseases, adopting a center-radiating pipeline.
Roivant Sciences: Launching independent 'Vants' for each therapeutic area, integrating management fees and capital.
Royalty Pharma: A portfolio with diversified royalty income streams worth billions, demonstrating that securitization can reliably fund drug intellectual property.
These companies embody Lo's diversification principle. The BIO protocol extends this principle further by democratizing access, distributing governance rights, and achieving continuous liquidity through tokenization.
8. From scientific friction to scientific finance (SciFi)
Close your eyes and imagine it is now 2026. Under the BIO framework, there are already hundreds of BioDAOs tackling various diseases 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 shared research data across networks, accelerating the advancement of each clinical turning point.
Coordinating clinical trial participants and best practices (if multiple BioDAOs are addressing related areas, BIO can facilitate shared trial participant pools, data registries, and best practice governance, reducing management overhead).
Using AI to assess risks, potential synergies, and capital allocation.
No longer is a decade-long capital lock-up or stringent institutional gatekeeping hindering breakthroughs. Instead, the whole network acts like a living, breathing organism—flowing, adapting, 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 exposes the industry's biggest friction points. Suddenly, drug development feels more like science fiction than a lengthy marathon.
8.2 Inclusive communities, global impact
This revolution is not just happening in labs. Ordinary investors—those whose relatives may suffer from rare diseases—can stake tokens to support new research and see transparent progress in the process. Collaboration is no longer a buzzword but a reality on-chain, driving the formation of multinational research teams.
8.3 Reversing Eroom's Law
With the friction eliminated, communities from any region can access global funding, and we may finally see the cost/time curve of drug development bend downward instead of upward—achieving the promised exponential scientific progress.
9. The bottom-up evolution of biotechnology financing
Andrew Lo's giant fund theory points us to an important path: large, diversified portfolios can tame the high risks of biotechnology and attract larger capital. However, top-down structures and institutional inertia still suppress the realization of certain innovations. In contrast, the BIO protocol disrupts this script:
Community-driven: Any stakeholder—patients, scientists, or curious funders—can participate in governance, propose new BioDAOs, and co-shape research directions.
Tokenized intellectual property: Data and intellectual property become liquid, paving the way for new funding and collaboration models.
Real-time liquidity: Breaking free from a decade of capital lock-up, capital can flow rapidly to breakthrough innovations.
AI-driven risk management: On-chain analysis continuously tracks performance, synergies, and correlations, allowing capital to flow efficiently across multiple BioDAOs.
By stacking decentralized scientific solutions (through BioDAOs) under the top-level coordination of BIO, the most daunting challenges in science and the pharmaceutical industry can be addressed in a community-driven, transparent, and continuously flowing environment.
Placing families, patients, and scientists at the core of decision-making, BIO aims to 'boil the ocean' and address the dilemmas in early innovation. No longer will half the world's great ideas rot in the 'valley of death.' Instead, we witness the dawn of a scientific era no longer shackled, free from outdated gatekeepers and friction-filled pipelines.
So, the next time your family faces a rare disease, the determining factor will no longer be the board's analysis of market size. Instead, it will be a global network—scientists, patients, and ordinary believers—coordinating, funding, and accelerating those truly important therapies together. In short, we return to a sci-fi world where humanity ultimately unites to turn the impossible into the inevitable.