NEW New Column Introduction
Hi readers, Coinspire is about to launch our new content column—Discover Alpha/5 Minutes to Understand a Project Series.
This is the first article in the new column. In this column, we not only chase current trends but also hope to find undervalued projects that are beyond the current narrative and can tell exciting stories to share with readers.
The heated launch of Ai16z's fundraising platform daos.fun has raised the visibility of Investment DAOs in the past month.
In short, Investment DAO is a decentralized hedge fund managed by humans or AI agents that raises funds, generates returns, and distributes profits back to DAO token holders. It can also be understood as a tool that helps hedge fund managers raise funds. The launchpad is the aggregated market for such DAOs.
In fact, Investment DAO is not a new concept. It existed as a branch when the DAO concept emerged in 2022, mainly deployed on the Ethereum public chain, with investment directions leaning towards popular narratives like NFT, DApp, DeFi. In this cycle, AI Agents and Meme have become mainstream, with daos.fun positioned as a meme fund launch platform based on Solana.
Now, this wave has gradually shifted from Solana to the Base public chain, such as daos.world and Vader AI.fun in the Base Virtuals ecosystem. Next, this article will focus on the processes and technical features of these two projects to unfold thoughts on Investment DAOs.
Daos.world
The logic of daos.world and daos.fun is not much different, both focusing on the launchpad for Investment DAOs.
First, there are two roles for protocol participants:
DAO Manager;
WL (Wait List) participants, who are the DAO fundraisers.
Secondly, the operational process is as follows:
1. Publish DAO: The DAO manager publishes fundraising ETH in daos.world (currently, it is necessary to contact the project team through Telegram to obtain publishing opportunities);
2. Presale: Participants who receive a whitelist during the presale stage choose DAO funds and purchase their shares to raise initial capital for the fund. Currently, there are only four DAO funds on daos.world. Taking the highest market cap DAO as an example—$AISTR (AicroStrategy), created on December 19, currently has a market cap of $13.14 million, raised 40 ETH, with an initial fundraising plan to deposit into Aave, borrow USDC, purchase cbBTC, and repeat this process, determining the best leverage based on AI algorithms.
3. DAO token minting: After the presale is completed, all raised ETH will be handed over to the DAO treasury, which is held in a smart contract. daos.world minted 1.1 billion ERC20 tokens to represent the DAO treasury (1 billion tokens allocated to fundraisers, 100 million tokens added to the Uniswap v3 liquidity pool). The price of DAO tokens will rise or fall based on the success of DAO trading activities.
Like $AISTR's liquidity pool on Uniswap
4. Investment: Meanwhile, the fund manager of dao.world trades or invests the raised ETH on BASE in any way.
5. Returns: The fund has an expiration date. When the expiration date arrives, trading stops, and fundraisers receive returns/losses according to the proportion of DAO tokens. The manager can extend the expiration date at any time.
Currently, the ways each role profits are as follows:
Fund managers earn fees based on transaction volume and profit sharing. DAO managers earn 0.4% from the liquidity pool fees, plus a portion of the profit based on fund performance upon expiration.
Fundraisers receive returns/losses after the fund expires, and they can also trade their DAO tokens before the expiration date. If the market cap is lower than the fund value, they buy; if it is higher than the fund value, they sell.
LP: Participate in providing liquidity to the pool and earn fees.
Image source: daos.world
▎Technical Details
Design of the liquidity pool: The founder stated on X that by correctly setting the initial tick of the Uniswap pool, they will ensure that the asset value of this pool does not fall below the amount of ETH raised; additionally, this pool is designed as a one-sided pool, containing only DAO fund tokens.
Antipull: One of the key promotional terms for daos.world is Antipull. In response to dozens of rug pulls that have occurred on daos.fun, fund founders can withdraw all funds unsupervised, use DAO funds to buy back tokens, and then sell them, exhausting the DAO. daos.world emphasizes background checks on DAO fund teams, roadmap reviews, and vision assessments, implementing a rigorous KYC process prior to approval, and has implemented its multisig on the latest DAO (ALCHDAO) to ensure that fund withdrawals require platform consent.
▎Comparison with daos.fun
Like daos.fun, both have similar working principles, with only minor differences in some details. Additionally, daos.world currently has fewer functions compared to daos.fun. However, the asset management status of each DAO will be publicly displayed on the daos.fun page. Secondly, the profit-sharing mechanism is also relatively transparent. Moreover, all DAO creators are associated with their Twitter accounts.
The subtle differences are reflected in the following aspects:
Vader AI fun
In the first part, we mentioned the launchpad for Investment DAOs. In this part, we will discuss another popular paradigm of Investment DAOs, which introduces AI as its fund manager, focusing on vertical track DAOs. VaderAI fun is such a role.
VaderAI Fun is one of the functions of VaderAI, which is currently one of the AI agent projects in the Virtuals ecosystem on Base. According to the Virtuals official website, as of December 30, there are approximately 510 projects in the Virtuals ecosystem. Among them, VaderAI is one of the four projects with a market cap exceeding $100 million.
The vision of VaderAI Fun is that most AI agents currently launched only get faster, with over 10,000 Agents launched on virtuals. As the number of Agents increases, their areas of expertise will differ, making it unrealistic for users to research and analyze all individual agents around the clock—they either lack time or lack expertise. Investment DAOs enable users to invest in a narrative/theme/strategy without having to do it themselves. Meanwhile, according to the latest data from Cookie.fun, as of December 30, the overall market cap of AI Agents has reached $11.68 billion, with a nearly 39.1% increase in the past 7 days. This data clearly reflects the investment value of the AI agent concept.
In this regard, VaderAI Fun has launched three DAO funds and introduced them based on asset size.
Micro Cap (targeting Agents with a market cap between $100,000 and $2 million);
Small Cap (targeting Agents with a market cap between $2 million and $10 million);
MID Cap (targeting Agents with a market cap between $10 million and $100 million).
The investment strategy of VaderAI fun is to aggregate thousands of machine learning-based trading strategies as AI agents, clearly define the investment target range (which can be market cap or project themes like DeSci, DeFi), rebalancing frequency, index weighting methods, minimum liquidity requirements, minimum holding time for targets, and maximum position limits for single targets, trading within the corresponding market cap range;
Taking one of the DAOs as an example,
DAO scale is 50,000 $VIRTUAL
Actively trading Virtuals agents with a market cap between $700,000 and $5 million.
Another advantage of VaderAI Small Cap DAO is the ability to access discount OTC trades from top agent teams, submitting them to VaderAI for final decision-making.
3-month initial lock-up period.
Only $VADER stakers can participate.
DAOs are classified into two types based on their managers:
Passive DAOs are managed by VaderAI, which charges a 0.5% management fee and rewards $VADER stakers.
Active DAOs are operated by human managers, charging a performance fee of 0-20%, with 20% of the performance fee pool rewarding $VADER stakers.
Image source: @Vader
The process to participate in Vaderfun AI is:
1. Stake $VADER to join the DAO;
2. The currency invested in the DAO will use the ecological token $VIRTUAL as funds (after the liquidity and price of $VADER gradually stabilize, it will change to using $VADER);
$VIRTUAL refers to trading/incentive currency, similar to L1 ecosystem tokens like ETH, SOL;
$VADER is a proxy token, similar to dApp tokens on L1;
3. DAO funds must retain 10%-20% of $VADER as cash reserve liquidity buffer to meet withdrawal demands and rebalancing assets due to sudden market changes;
4. The positive returns generated by the fund will be distributed to participants in the form of $VADER tokens. (Withdrawals will incur a 1% service fee, which will be converted to $VADER and burned, creating a deflationary token economy.)
Among them, approved managers must stake 100,000 $VADER to establish a fund.
In addition, the profit sources for staking $VADER include two parts:
The management fees earned by VaderAI (whether active or passive) will be used to buy back $VADER and reward $VADER holders;
The 20% performance fee charged by other agents or human-managed active funds will be used to buy back $VADER and reward $VADER holders.
Characteristics and risk factors of such DAOs
In fact, Investment DAOs have already taken shape in recent years. Their goal is to achieve investment democratization, break the barriers of traditional finance, and empower the majority rather than the minority. The current AI narrative has granted them new vitality, but there are still some risks that cannot be ignored:
1. The key factor for investment success depends on the DAO fund manager. For example, dozens of rug pulls have already occurred on daos.fun, where fund founders can withdraw all funds unsupervised, use DAO funds to buy back tokens, and then sell them, exhausting the DAO. Or if all investments are in Meme, and the value of Meme drops quickly, then the potential value of the fund will also drop. Therefore, for investors to engage in long-term investments, it is necessary to wisely choose investment funds. If investors participate in the presale, they can sell tokens immediately after issuance.
2. The market cap to net fund value ratio is high, and the hype atmosphere is strong. Taking $AISTR of daos.world as an example, the market cap to fund asset value ratio is as high as 96 times. The high market cap of these funds undoubtedly reveals the current market's speculative atmosphere and investors' extremely high expectations for these funds' future performance. But this also reminds us to be wary of potential market fluctuations and risks while pursuing high returns.
3. Not very friendly to retail investors. Although the goal of Investment DAO is to provide equal opportunities for retail investors to participate in potential projects, obtaining a whitelist is quite challenging, and the open process is not publicly quantifiable, mostly open to KOLs.
However, daos.world has recently launched a method to obtain WL through staking, which is relatively more quantifiable and transparent. That is, by staking any of the four DAO tokens, one can earn the Daos World Whitelist token (DWL): After claiming DWL, there are two options: one is to destroy one DWL to obtain a WL whitelist; the other is to destroy less than one DWL to enter the WL lottery pool. Among them, DWL has no asset value.
Conclusion
The presentation of these two projects is not an endorsement; they are merely two representative projects of Investment DAO on the Base public chain. We see that due to the explosion of ai16z, Investment DAOs have been brought back to the agenda. Today, ai16z is no longer just an Investment DAO—it is an open-source innovation movement. It has become a one-stop shop for launching and scaling Agents, backed by a strong decentralized network.
At the same time, it also opens up space for Investment DAOs:
1. A Launchpad project that benchmarks against daos.fun and uses solving its pain points as a gimmick will successively land on various public chains;
2. Focusing on investing in vertical tracks has become a trend for Investment DAOs. Currently, AI Agents and Meme have become mainstream, and more vertical track Investment DAOs may emerge in the future.
Coinspire will continue to pay attention to how Investment DAOs will evolve in the future.
