As DeFi projects grow in number, competition to make an industry-changing impact is sizzling up. In this outlook, Decentralized Autonomous Organizations (DAOs) are also in a race to innovate, but they face several hurdles such as the inability to scale and develop solid multi-chain interoperability, machine learning, and new digital asset classes.
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Part of those challenges relate to coordinating DAO members’ skills, building a community, and securing the best developer talent.
We spoke with Eden Dhaliwal, former head of crypto at Outlier Ventures and current co-founder of New Order, a venture DAO, which aims at enhancing DeFi innovation through a maximum of 30 projects every year –supporting and launching them across all L1 ecosystems.
Eden shares how New Order is planning to achieve this, and delves into the challenges startups and investors are facing as the market expands towards multi-chain support and new digital assets.
Despite the current frothy market of venture capital, founders are in desperate need of expertise, community, and networking opportunities specifically tailored to the unique challenges of the crypto industry, in order to have a successful launch.
New Order’s goal is to build a self-governing venture DAO positioned to assist DeFi innovation, by promoting new asset classes, chain independence, and machine learning while leveraging its expansive community of builders and investors.
To achieve this goal and source resources for DeFi startups, New Order is planning to launch 20-30 projects per year by identifying gaps in the DeFi ecosystem and providing a platform for the community to build and grow them. To kick off the pipeline, New Order will be launching 3 projects built in-house into this DAO.
Is it difficult for DAOs to scale? If so, why?
First, let’s give a quick definition of a DAO. DAO stands for Decentralized Autonomous Organization. In its simplest form, it is basically a community with a shared bank account.
This organization allows members to facilitate and coordinate members’ skills, resources, and funds as they work towards a common goal. Decisions are made from the bottom up and governed by the community with rules enforced through voting on the blockchain.
It can be difficult to scale a DAO because many people come from traditional organizations with their existing work habits and are not used to working in this environment, where much of the work is transient and self-directed.
This comes down to educating new DAO members on the processes for bottom up governance, setting expectations in a DAO setting, and providing proper incentivization for contributors.
Through your DAO incubator, you will support innovative DeFi projects. What type of projects would qualify as "innovative"?
We’re focused on projects that tackle at least one of the three following components: multi-chain interoperability, machine learning, and new digital asset classes.
Building on top of our thesis of machine learning and new digital asset classes, two of the three DApps we will be launching with this new ecosystem are [REDACTED] and H2O.
[REDACTED] is the first official branch of OlympusDAO focused on acquiring CRV, CVX, and other relevant governance tokens to expand Olympus DAOs reach beyond risk-free value and into a multi-token ecosystem.
The intention is to further democratize and incentivize the adoption of Curve, Convex, and Olympus by putting the good faith, long-term backers of these projects, and increasing their yield and influence by aggregating liquidity under a new meta-token model and improved governance process.
H2O is a new Non-Pegged Stable Asset, which will be used as the primary stable asset within the Ocean Protocol data marketplace. Users often complain about the pricing risk associated with digital crypto assets and H2O is a mechanism to avoid this risk as the price in USD will remain relatively constant. H2O is unique in that it uses data in the form of datatokens as the underlying form of collateral against which H2O tokens are minted.
How could the main DeFi stakeholders –venture creators, community builders, software developers– benefit from New Order’s incubator?
DeFi stakeholders can benefit from growth opportunities and utilize our community of industry professionals including developers, traders, and yield strategists to get the needed insight to scale a project's liquidity and community.
Our network has access to a wide range of VC’s, PR companies, and exchanges with specific domain expertise in the crypto space. In order to complement growth, we provide the needed contacts tailored for a project needs.
From the fundraising perspective, we will be providing the required resources to bootstrap ideas including introduction to crypto focused funds and even anonymous founders. Our plan is to guide projects through the various fundraising phases, from pre-launch SAFT sales to post-launch treasury sales.
From an engineering perspective, we have a core team and a community of partners with deep expertise in token economics and dApp design. Teams accelerated through the DAO will find they need tokens, mining, and treasury management frameworks tailored to their specific use cases, and our community can help with that.
Having worked with thousands of developers over the past year and a half, we’ve created a great DeFi-specific community and we plan to augment teams’ internal resources with this network. By working with New Order, teams can ensure they’re using the latest standards in contract development and security practices both pre and post launch.
Finally, it’s important to mention that we missed the most important stakeholder –the users of these protocols themselves. With New Order’s radical transparency and public governance process we plan to make these users central to decision making and what is being built for them.
A key DeFi trend is the market expanding towards multi-chain support and new digital assets. What are the challenges startups and investors are facing in this regard?
With all the new chains popping up, it’s tough for investors to keep track and up-to-date with everything happening in each DeFi ecosystem, while still maintaining an edge. And from a startup perspective, recruiting can be quite difficult because of the technical requirements for building secure software on each chain.
Sourcing talent can be challenging because, firstly, there is a lack of ready talent and there are not enough people with the relevant chain experience to build secure software. And secondly, teams may lack the connections and reputation to draw the top developers and community leaders required to launch a DeFi project.
These technical barriers can manifest as UX challenges or insecure contracts, resulting in stuntened user growth, or more catastrophically, the loss of all funds within a buggy contract and consequently the teams’ reputation.
It's incredibly challenging for DeFi projects to rise above the thousands of projects in this space in bootstrapping both a community of users and liquidity for their tokens.
By leveraging the DAOs Dapp marketplace, teams will have an in-built stream of users and traders who have tried other Dapps from New Order and this will give them a running start right upon launch.
Moreover, after projects are accelerated through our program, they continue operating in our ecosystem creating another revenue stream for the DAO which can be further invested in building the future of DeFi.
The marketplace then creates a virtuous loop where great products can be found attracting even more users and investors to participate in New Order’s ecosystem.