Business

“Our democracy will develop better thanks to DAOs,” says Yat Siu of Animoca

The rise of Web3 has paved the way for new business models that could shape the next phase of the Internet. For example, non-fungible tokens (NFTs) will play a large role in the open metaverse as the underlying assets that people interact with. Decentralized Autonomous Organizations (DAOs) are also coming into play to enable community governance in virtual environments.

The growth of Web3 has essentially allowed NFTs and DAOs to thrive. For example, current data from DeepDAO – a DAO statistics platform – shows that DAOs have experienced 130X growth in the last year, reaching a market cap of $24.8 billion. In December 2021, DeepDAO noted that the total assets under management (AUM) of DAO Treasuries listed on the platform had increased from around $380 million in January to a peak of around $16 billion in mid-September. Non-fungible tokens are also on the rise as a number of crypto platforms and mainstream organizations continue to implement NFT use cases.

In light of this increased interest, Cointelegraph spoke with Yat Siu, co-founder and chairman of Animoca Brands — a Hong Kong-based gaming and venture capital firm — during NFT LA to better understand the impact NFTs and DAOs will have on the future internet.

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Cointelegraph senior reporter Rachel Wolfson sat down with Yat Siu at NFT LA. Credit: Larry Wong

Cointelegraph: Thanks for joining me Yat. Can you please explain what you were talking about during your fireside chat at NFT LA?

Yat Siu: Sure, I’ve talked about the future of NFTs and briefly discussed why I think non-fungible tokens will usher in human creativity that is truly valued. Currently, the content we create is an asset that is becoming a platform itself as it is the data we own. Regarding Web3, I think the idea of ​​the open metaverse is now permanent – it’s powerful. It represents hope along with the idea of ​​justice in a democratic way. To explain this, I compared the open metaverse to how people normally view America. America stands for freedom of speech, natural rights, self sovereignty and more. I’m optimistic because people building in Web3 are aiming for a similar goal.

CT: What role do NFTs and DAOs play in Web3?

YS: NFTs are crucial because they represent the assets and items of the metaverse, or things that we own. The way we govern this is through decentralized autonomous organizations. You determine our rights in the Metaverse.

Non-fungible tokens also offer greater opportunities than physical items in the real world. For example, if I own land in The Sandbox, I now have the opportunity not only to build on what Sandbox gave me as tools, but I can also bring in any third party and come up with a new idea and innovation. This means we can create a Cambrian creative explosion because we are free to build and compose on assets someone else has created.

We’ve seen small instances of this in Web2. Take YouTube for example. Users can upload a video to this platform, but I remember at first Hollywood execs didn’t think anyone wanted to watch anyone else eat or dance – check out YouTube now. YouTube has shown that we can combine the culture of user-generated content with our own experiences. In this case, however, the ownership rights do not lie with the creator, but with YouTube. Web3 returns this to the end user, and NFTs are critical assets in this equation.

CT: Right now there is an influx of DAOs. How does Animoca decide what to invest in?

YS: From an investment perspective, we look at where value is being driven within DAOs. If you look at ApeCoin (APE) or Sandbox (SAND), for example, owning these tokens is a way to be part of a network effect and empower the communities they represent. If you think The Sandbox will continue to grow, then having this token makes sense as these people most likely care about the future of this community. You also see this in countries. For example, America is one of the most desirable immigration destinations in the world. Therefore, the resources and systems within America are more valuable. If you have an interest in America, then you would do well over the long term because having a voice and being a citizen is desirable, so it’s also valuable. That’s what a DAO really is.

From an investment perspective, one can look at DAOs based on the strength of the community and whether it is a desirable place to be. It’s not just about how much money the DAO makes, but whether it’s durable or serving the community well. People will not be part of Sandbox, ApeCoin or any other community if the community members do not properly serve. DAOs that treat the community well have more loyalty and strength, and that’s what we believe in when investing in DAOs.

CT: What is the difference between centralized and decentralized metaverse environments?

YS: Sometimes a distinction is made between closed and open metaverses. For example, you can say that Facebook is a closed metaverse while The Sandbox is open. Animoca generally calls any metaverse that isn’t open a “fake metaverse”. We call closed metaverse fake because we don’t actually own anything. For example, everything on Facebook is owned by Facebook. They can delete users’ content and their legacies if they wish. For us, this cannot be a metaverse since we cannot have identity in these worlds. Therefore, the open metaverse is the only real kind of ownership. NFTs are a key ingredient here because we actually own these assets.

CT: Can you explain how DAOs act as governing bodies for NFTs?

YS: Decentralized Autonomous Organizations are living structures that exist on a blockchain network, allowing us to take leadership and control over decisions made in a democratic manner. DAOs iterate democratic systems at the pace of technology. So I think that our democracy will develop stronger and better through DAOs.

For example, countries might consider DAOs as a consensus mechanism that works well for a virtual society serving millions of users. Replicating democracy in the physical world can be risky, but that is not the case in a technological framework. You now have a sandbox to experiment with – some DAOs will fail, others will succeed, and different governance models will evolve. In this way we can innovate what could become the most optimal form of a democratic process that cannot be explored physically because it is too risky and expensive.

The ApeCoin DAO, for example, is fascinating because it’s a very vocal community that doesn’t have the same understanding when it comes to certain terms, but we believe it will evolve over time. This is a living example of a working DAO, where people can voice their thoughts on things they agree and disagree with.

CT: What excites you most about the future of DAOs and Web3?

YS: The framework and the idea of ​​jointly inventing and building democratic systems – even if people do not have the same level of understanding – is fair in itself.

We’re excited about Web3 because the future of work is all digital and Web3’s resources are user-created data. As such, we are the creators of our own equity, which offers everyone some form of universal share capital. Imagine Facebook viewing all of its users as workers who provide data to the company. Well we do that for free. We believe data should be a natural right, like ownership, which means users own the data they create. This will completely reshape how the digital world interacts with the physical world.